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Thai Baht hits one-week low over interest rate cut speculation

Published: 10 May at 11 AM Tags: Dollar, America, Australia, USA, India, Japan, Thailand,

The Thai Baht declined to its lowest level in a week over speculation that the nation’s Central Bank will cut interest rates after Finance Minister Kittiratt Na-Ranong announced that he would meet the central bank’s policy committee on the 13 the of May.

The Minister has requested lower borrowing costs to stem fund inflows that sent the Baht to a 16-year high in April. Kittiratt has said that he wants the Central Bank to focus on the exchange rate and not just on inflation, The relatively high-strength of the Baht risks putting Thailand at a disadvantage of its exports being more costly than its neighbours. The speculation over a rate cut has been increased following the easing of monetary policy in India, Australia and South Korea whereas Thailand has maintained rates.

The Baht slumped 0.8%, the most since May 3, to 29.63 per Dollar as of 8:43 a.m. in Bangkok, trimming the week’s gain to 0.2%, it is still up 3.2% this year, the best performance in Asia. It reached 28.56 on April 22 and April 19, the strongest level since July 1997.

Thailand’s interest rate of 2.75% compares with a maximum of 0.25% in the U.S. and 0.1% in Japan. It is still lower than neighbouring Indonesia’s 5.75%, the Philippines 3.5% and Malaysia’s 3%.

Thai Central bank Governor Prasarn Trairatvorakul said that the rate differential is a factor influencing capital inflows. He signalled he may be inclined to cut rates if economic growth starts to cool in the county.

As of Friday, 10th May 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP USD exchange rate was 1.536, GBP AUD exchange rate was 1.5318, GBP INR exchange rate was 83.9508, GBP JPY exchange rate was 156.0912, and GBP THB exchange rate was 45.6321.
Dominic Lee About Author: (360 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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