Here’s Another Sign Thailand’s Central Bank Is Struggling to Contain Baht’s Surge

(Bloomberg) -- Thailand’s foreign-exchange reserves jumped to a record, a sign of the central bank’s struggle to restrain a surging baht.

The reserves climbed to $222.5 billion in the week through Oct. 25, a Bank of Thailand statement showed Friday. That puts them at the highest level going back to 1992, according to data compiled by Bloomberg.

Here’s Another Sign Thailand’s Central Bank Is Struggling to Contain Baht’s Surge

The baht has strengthened more than 9% against the dollar in the past year, making it the best performer in emerging markets. It’s shrugged off periodic Bank of Thailand intervention against excessive swings, an interest-rate cut in August and steps against short-term inflows.

Speculation is growing the country may be added to a currency watchlist in a forthcoming U.S. report on the foreign-exchange policies of major trading partners.

Such a step would complicate currency and monetary policy, Citi Research said in a report. The U.S. on Oct. 25 said it will suspend some trade benefits for the Asian nation, which some analysts interpreted as a warning shot.

The central bank next reviews borrowing costs on Nov. 6, with nine of 16 analysts in a Bloomberg survey expecting a 25 basis points reduction to 1.25%. The rest expect the key rate to be left at 1.50%.

“More cuts will help the economy,” said Burin Adulwattana, chief economist at Bangkok Bank Pcl. “This is when you need it the most considering the weak economy, the very strong baht and falling inflation.“

©2019 Bloomberg L.P.

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