News Forum - BOT to mount rescue of crumbling baht

[Thaiger]

The Bank of Thailand (BOT) is attempting to steer the baht and the economy through some tricky times. As the government is apparently out of ideas to jump-start the economy due to high debt, the responsibility has fallen to the central bank. The central bank’s recent move to raise the key policy rate by 0.25 percentage points to 1% has, however, set some analysts wondering if the BOT had done enough to stem the rapid depreciation of the baht, caused by the widening gap between benchmark rates in Thailand and the US. The Fed has aggressively raised the fed funds rate […]

The story BOT to mount rescue of crumbling baht as seen on Thaiger News.

Read the full story

[EdwardV]

The US Fed is looking at a .75 raise in the interest rate for its November 2 meeting. They are still targeting a total rate of 4.6% in 2023. If the difference between the US Fed rate and that of the BOT is the main driver of depreciation of the Baht. Look for it to drop further against the USD as it appears the gap will be widening. 
 

https://www.reuters.com/markets/us/feds-brainard-policy-taking-hold-economy-with-full-impact-still-months-ahead-2022-10-10/

 

[BillO]

The US rate gets another bump in early November. I’ve made sure to keep a sizable amount in the US for when I travel back so I don’t get killed exchanging baht for dollars while bringing my monthly income over and loving the exchange rate! I don’t drive a car or motorbike here so don’t really notice any hit on this end from inflation other than a small bump in utilities. For an American living here it’s all good! I look for it to hit 39 or possibly 40 after the next interest rate bump in the US. 

[Cabra]

There is more to this than just interest rates (else everyone would just put their money in Madagascar where the interest rate is north of 40%). During uncertainty, money seeks safe harbor. The THA economy is not where money goes during these uncertain times. This BoT rate increase will have likely have little effect lasting effect on capital outflows and the  depreciation of the baht.