Bank of Thailand Says It’s Ready to Curb Recent Baht Strength

(Bloomberg) -- The Bank of Thailand said it’s concerned about a recent rapid appreciation in the currency and added it’s ready to take steps to curb a climb that could imperil an already fragile economy.

The baht’s near 2% rise against the dollar in the past month is among the steepest in Asia, aided by dwindling Thai coronavirus cases, an easing national lockdown and a shallower-than-expected first quarter economic contraction.

This backdrop may attract short-term capital flows to the baht, and its performance may be out of line with economic fundamentals, the central bank said in a statement on Monday.

“The Thai central bank is ready to take necessary steps to ensure baht strength doesn’t aggravate the fragility of the economy,” Deputy Governor Mathee Supapongse said in the statement, adding it will also scrutinize gold trading as that may have contributed to the currency’s performance.

Thailand’s economy relies on tourism and trade, both of which have been badly damaged by the novel coronavirus pandemic. Officials expect an economic contraction of as much as 6% this year and are sensitive to currency strength that could hamper competitiveness.

The baht strengthened 0.2% against the dollar as of 8:50 a.m. in Bangkok, appreciating for a fifth straight day.

©2020 Bloomberg L.P.