The Bank of Thailand reiterates its commitment to taking care of the strong and volatile baht to reduce its impact, resulting in an increase in international reserves. It sees the measure to hand out 10,000 baht to vulnerable groups and the disabled as supporting economic activities, but the overall picture needs to be assessed again.
Ms. Chanawadee Chaianan, Assistant Governor for Corporate Relations and Spokesperson for the Bank of Thailand (BOT), said that the baht’s rapid appreciation was due to several factors, including the weakening of the US dollar after the US Federal Reserve (Fed) cut interest rates by 0.50% more than expected, leading to the view that the US economy would slow down, coupled with the strengthening of the Japanese yen and the strengthening of the Chinese yuan, causing the baht to strengthen in line with regional currencies. However, the Malaysian ringgit strengthened the most by approximately 11%, while the Thai baht strengthened in 2nd-3rd place. In addition, Thailand also has spe
cific factors such as the government becoming more stable, the start of economic stimulus policies, the overall investment in the stock market improving, and the price of gold increasing, which the BOT took care of during the period when the baht was highly volatile in order to reduce the impact, resulting in an increase in international reserves.
However, Ms. Chanawadee admitted that the stronger baht would affect income in the export sector. As for the export volume, it depends on the agreement with the trading partners. As for the concerns about the impact of the baht on the tourism sector, the BOT spokesperson said that it depends more on which group of tourists. Because if it is Chinese and Malaysian tourists, the currencies of these countries have also appreciated. Therefore, it is believed that there will be no impact. And this is not the first time that the baht has appreciated the most ever.
Ms. Chanawadee also mentioned the economic stimulus measures in 2024 for vulnerable groups and disabled peop
le. We still have to wait and see how much they can stimulate the overall economy. Because if it is used to buy consumer goods or invested, it will lead to future income. But if it is used to pay off debts or buy imported goods, the money will be released from the system. But what is certain is that economic activities will be more active. As for Phase 2, we still have to wait and see what the payment conditions will be.
For the economic and financial situation in August 2024, the overall Thai economy was stable from the previous month. Private consumption increased slightly from the non-durable goods category, while the consumer confidence index continued to decline due to concerns about the high cost of living, the slow expansion of the Thai economy, and the flood situation.
Exports of goods improved in several categories, some of which were temporary. Government spending expanded from both regular expenditures of the central government and investment expenditures of both the central government and state
enterprises. However, the tourism sector slowed down in line with the number of foreign tourists declining after accelerating in the previous period, while private investment declined in the machinery and equipment category. Industrial production contracted after accelerating in the previous month, coupled with high levels of inventories in many categories.
Economic stability: Headline inflation rate decreased from the previous month mainly from the energy category, due to both the high base effect of the previous year and the gasoline price which decreased in line with the world oil price. However, the core inflation rate increased from the food category following the price of prepared food. The current account surplus increased from the trade balance, mainly following the decrease in the value of imports. Meanwhile, the deficit in services, income, and transfers slightly increased from the previous month. The overall labor market improved from employment in both the manufacturing and service sectors. In th
e future, we need to monitor the recovery of production and exports, the results of accelerated budget disbursements and government measures, the impact of the flood situation on economic activities, and geopolitical conflicts.
Source: Thai News Agency