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Emerging Trends Advisors Co., Ltd.
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Restraining the Thai Baht

As scepticism grows amongst other World Economies

Thailand’s Central Bank is in a direct discussion on how to lessen the dramatic upsurge in the Thai Baht just as the rest of the world keeps a watchful eye for signs of unfair currency policies.

Bank of Thailand officials intensified verbal intervention in the past week leading to the monetary authority mulling over how the Baht can be restrained muting the possibility of an interest-rate cut.

The Thai Baht has climbed 8.3% against the USD in just the past 12 months, the best performer globally. It is viewed as a safe haven; given Thailand’s history of current-account surpluses and near-record foreign reserves.

For now, verbal intervention, physical intervention and closely monitoring non-resident Thai Baht accounts are options for the Central Bank, but capital controls are unlikely. Intervention in the foreign-exchange market isn’t as easy as before because of growing U.S. and other leading economic nations’ criticism.

The Bank of Thailand has previously rejected allegations of currency manipulation and said it doesn’t seek an unfair advantage in trade. Nothing official has been relayed as to which steps could be taken to restrain the currency or when these could be rolled out, but one option may be to ask banks to be stricter on short-term transactions by non-residents. 

This is something that all non-residents, not just local businesses, should be keeping a watchful eye on also. If you wish to learn more about this and want to know how your money can be better used than just sitting in your non-resident bank account – please contact one of our consultants.

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