Thailand moves to cool baht rally that threatens pandemic recovery

• Nov 26, 2020

[BANGKOK] Thailand will ease rules on capital outflows to cool a currency rally that’s threatening to derail a rebound in exports and the economy’s recovery from the pandemic.

“Following the US elections and positive news on Covid-19 vaccine development, investors have turned toward investing in emerging markets, including Thailand,” the Bank of Thailand said in a statement Friday. The situation has “resulted in strengthening the baht quickly and can impact economic recovery”.

Measures to stem the baht rally follow a central bank assessment earlier this week that the currency’s rapid gains may affect Thailand’s “fragile economic recovery”. The government also called on the Bank of Thailand to restrain the baht to protect exports.

The baht has been the second-best performer in Asia this month after foreign investors turned net buyers of almost US$2.4 billion of bonds and stocks as appetite returns for riskier emerging-market assets amid a weak US dollar. The Thai currency had recently rallied more than 8 per cent from this year’s low in April, hitting a 10-month high last week.

With its borders closed to most visitors, Thailand is betting on trade to minimise the blow from the coronavirus pandemic. The government will focus on supporting exports, which have shown signs of revival, as its only source of external revenue, Finance Minister Arkhom Termpittayapaisith has said.

BLOOMBERG