BANGKOK- Thailand’s central bank saw a need to preserve monetary policy space to address possible future risks, when it kept its benchmark rate on hold last month, meeting minutes showed on Wednesday.
The Bank of Thailand (BOT) remains worried about the impact of the strength of the baht on Southeast Asia’s second-largest economy and will consider implementing additional measures as needed, according to minutes of its Sept. 25.
The baht is Asia’s best performing currency so far this year, up 7.3 percent against the US dollar, driven by Thailand’s hefty current account surplus and fund inflows. It traded at 30.32 dollar, the highest in more than six years.
“The Committee remained concerned about baht appreciation against trading partner currencies given the economic slowdown prospects, as the economy could be more sensitive to greater currency appreciation,” the minutes said.
“This would be an additional pressure on the softening domestic demand, particularly export-related manufacturing and services sectors”.
BOT Governor Veerathai Santiprabhob told Reuters on Friday the central bank planned to further relax rules on fund outflows by the end of the year to help balance flows.
At the Sept. 25 meeting, policymakers left the policy rate unchanged at 1.50 percent after August’s surprise cut – its first since April 2015.
The central bank also downgraded its 2019 economic growth outlook to 2.8 percent from 3.3 percent. Last year’s growth was 4.1 percent.
The next monetary policy review is on Nov. 6.
“The committee saw the need to preserve policy space in order to cushion against possible risks in the future and deemed it necessary to monitor the impact of the policy rate cut and fiscal stimulus measures on the economy,” the minutes said. – Reuters