The Bank of Thailand is scrambling to find the sources behind the weakening baht as a meeting is called to discuss its impact. Finance minister, Arkhom Termpittayapaisith, says the depreciating currency is adding to the inflationary pressures and is vowing to determine whether the decline is linked to the country’s economic fundaments.
The finance ministry is set to hold talks with the Bank of Thailand to determine the cause of the baht’s decline. One contributing factor could be that of external forces, such as the strengthening US dollar.
“The currency’s value is affected by numerous factors and the ministry will be holding talks with the Bank of Thailand to see which ones are driving the baht’s volatility.”
Arkhom says the finance ministry can only do so much as the monetary policy is controlled by the Bank of Thailand.
“….So the planned talk will be a joint analysis to see whether the baht is depreciating too fast and how its decline in value is affecting the economy, businesses and consumers.”
Meanwhile, the government has reportedly introduced several measures to alleviate high energy prices in an attempt to help businesses manage production costs.
“A weak baht affects imports of raw materials, which are a key part of production costs The government has implemented measures to regulate retail prices. To control costs, we have used all the tools we have.”
Arkhom says the Thai baht will adjust accordingly with the US Federal Reserve after it finishes increasing interest rates. But, he says the gap between the US and Thailand’s interest rates has not significantly affected capital outflows.
Thailand’s deputy Premier, Prawit Wongsuwon, reportedly advised the cabinet that something needed to be done to manage the baht, with Arkhom agreeing to investigate the matter. Prawit, however, didn’t have an answer as to whether he was seeking to regain a rate of 35 baht to the US dollar.
“I used the word ‘should’ but authorities concerned will look into it and see what they can do.”
The baht has not been pegged to the US dollar since July 2, 1997.