Thailand’s national currency, the baht, has fallen to 37.78 per dollar, the lowest in 16 years
The Bank of Thailand (BoT) is closely monitoring the state of the national currency, but so far sees no serious cause for concern, although this week the baht/dollar exchange rate has fallen to its lowest point in 16 years.
“Nothing much can be done now but nothing serious has happened yet,” said Finance Minister Arkham Termpittayapaisit on September 26, when the Thai currency fell to 37.78 baht per dollar in the middle of the trading day (the official Central Bank exchange rate on September 27 – 37.53).
In total, since the beginning of the year, the baht has depreciated against the dollar by 11.5%, according to the Bangkok Post. One of the key concerns for the central bank remains inflation, which reached a 14-year high of 7.86% in August with a target of 1% to 3%. The central bank has no plans to adjust the targets, which are set once a year, but is trying to take monetary policy action. In particular, the next increase in the discount rate, aimed just at curbing inflation, is to take place on September 28.
The head of the monetary regulator, Sethaput Suthivarnaryput, said that the economy is recovering normally, though unevenly across sectors. This, in theory, opens the door for the Central Bank to tighten lending conditions to banks, raising the cost of money.
According to a World Bank forecast released on Sept. 27, Thailand’s GDP is expected to grow 3.1 per cent for the year. In June, the organization predicted 2.9%.
Thailand hopes the weak baht will attract tourists
The weak baht could benefit the tourism industry as foreigners’ purchasing power grows, although it may not be enough to offset high airfares, according to the Thai Hotel Association (THA).
Marisa Sukosol Nunbhakdi, president of THA, said the currency depreciation is just one of many factors contributing to the attractiveness of the Thai tourism industry in the post-pandemic period.
“The weak baht has definitely affected the industrial sector because it depends on imports of raw materials for manufacturing, but it can support the tourism industry because foreign tourists can now spend more in the country. But whether the weak baht will help offset high transportation costs such as airfares, I’m not quite sure,” she said.
She said the sharp rise in airfares has affected the number of international tourists traveling by air, as this market has remained lower than expected in the past few months. Marisa added that the positive momentum came after Thailand’s borders reopened without the Thailand Pass registration requirement and the elimination of RT-PCR testing.
The latest announcement by the Ministry of Health that since October Covid-19 has been downgraded to endemic disease in Thailand should be a milestone for tourism in the kingdom. Compared to other countries in Asia, the relatively rapid elimination of coronavirus protocols in Thailand should accelerate the pace of tourism recovery, she said.
Unlike the Tom Yam Kung crisis in 1997, when the baht fell to more than 50 per dollar, this year’s scenario is different in terms of the stakeholders who were affected.
“Covid-19 affected all stakeholders in the tourism sector, from hotel workers to those in the supply chain,” Marisa said. During the 1997 crisis, she said, tourist demand in Thailand remained high until the supply of rooms became insufficient to serve all guests, while during the coronavirus pandemic, tourists disappeared.
Acting Prime Minister Prawit Wong Suwon insists that the government will not interfere in the monetary policy of the Bank of Thailand.
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