Thailand Looks to Rein in Baht as It Hits 6-Year High

(Bloomberg) — The Bank of Thailand is considering imposing additional measures to rein in the currency amid further gains in the baht to a six-year high and worries about economic growth.

The economy could be more sensitive to greater currency appreciation, the Bank of Thailand said in minutes of the Sept. 25 monetary policy committee meeting published on Wednesday. This would be an “additional pressure” on softening domestic demand, particularly exported-related manufacturing and services, it said.

The committee “saw the need to closely monitor developments of exchange rates, capital flows, and impacts on the economy through various channels, as well as consider implementing additional measures at an appropriate timing if necessary,” the central bank said.

The monetary authority took steps in July to curb short-term inflows, worried that a strengthening baht will add further pain to an export-reliant economy already being hit by the U.S.-China trade war. The currency has gained more than 7% against the dollar this year, making it the best performer in Asia.

More Steps

Additional currency measures could include continued relaxation of capital outflow regulations to encourage Thai residents to increase their portfolio investment abroad, the central bank said. It could also consider measures in collaboration with other organizations, “including efforts to stimulate investment to reduce the elevated current-account surplus.”

The comments came on the same day the baht rose to as high as 30.334 per dollar, the strongest level since June 2013. It was up 0.3% at 30.345 as of 10:33 a.m. in Bangkok.

The central bank left its benchmark interest rate unchanged in September after reducing it to 1.5% in August.

The MPC “saw the need to preserve policy space in order to cushion against possible risks in the future and deemed it necessary to monitor the impacts of the policy rate cut and fiscal stimulus measures on the economy,” according to the minutes. The panel will be “data-dependent” going forward, and will monitor growth, inflation and financial stability risks, it said.

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Thai baht leads Asia's bullish prospects; yuan long bets on the mend: Reuters poll

© Reuters. Thai baht notes are seen at a Kasikornbank in Bangkok © Reuters. Thai baht notes are seen at a Kasikornbank in Bangkok

By Aby Jose Koilparambil

(Reuters) – Investors remained bullish on China’s yuan for a third straight fortnight, a Reuters Poll showed on Thursday, as markets turned optimistic about the progress in Sino-U.S. trade talks.

Long positions on the yuan rose to their highest since February last year, the poll of 10 analysts showed, with investors regaining some of their lost appetite for a currency that shed nearly 6 percent against the dollar in 2018.

Global markets have taken heart from U.S. President Donald Trump’s decision earlier this week to extend a deadline to increase tariffs on imports from China, although he did not give away any clear-cut indications whether a resolution is possible or not.

Progress in trade talks between the world’s top two economies offset any dent in sentiment from soft economic data out of China lately.

Official survey results released on Thursday showed China’s service industry slowed in February, with analysts expecting further weakness this year as a slowing economy makes consumers more cautious on the spending front.

The poll respondents maintained bullish positions on the Singapore dollar, the Indonesian rupiah, the Malaysian ringgit and the Philippine peso as well.

Bullish sentiment for the Thai baht remained the strongest in the region for a third successive poll, with long bets at their highest in 13 months.

Thailand’s strong economic fundamentals, which consist of steady exports and domestic production, have made the baht a bastion of stability in Asia.

The Taiwan dollar, however, remained under pressure with bearish positions on the currency piling up in the past month and a half.

Taiwan’s export orders contracted in January for a third month on the trot, data showed last week, adding to evidence of a global tech slowdown that will likely hit profits for the island’s many technology manufacturers this year.

Meanwhile, short positions on the Indian rupee fell to their lowest since early April last year, when investors were bullish on the currency.

A bulk of the poll responses came in before India and Pakistan got involved in a military conflict this week, prompting leading powers to urge the nuclear armed neighbors to show restraint.

That sent Indian and Pakistani stocks lower on Wednesday, and caused the Indian rupee to weaken.

The Reuters survey is focused on what analysts believe are the current market positions in nine Asian emerging market currencies: the , South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3.

A score of plus 3 indicates the market is significantly long U.S. dollars. The figures included positions held through non-deliverable forwards (NDFs).

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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