(Bloomberg) -- The baht gained to its strongest level in 30 months as China’s stimulus boosted risk assets globally, adding pressure on the Bank of Thailand to act to curb its rally.
The currency rose as much as 0.8% against the dollar to 32.56 on Wednesday, a level last seen in March 2022. Robust inflows into equities and bonds are also boosting sentiment, with the benchmark stock index near a one-year high.
Pressure on Thailand’s central bank has risen as the baht’s best quarter in more than 25 years threatens the exports and tourism sectors of Southeast Asia’s second-largest economy. Finance Minister Pichai Chunhavajira on Wednesday repeated his call for lower interest rates to help slow the currency and shield an already struggling $500 billion economy.
Pichai and BOT Governor Sethaput Suthiwartnarueput are scheduled to hold talks next week and the baht’s strength will be on the agenda. The central bank is scheduled to decide on rates in October.
Read: Thai Finance Chief Makes Case for Rate Cut Ahead of BOT Talks
“The topic of strong baht is already on the agenda of policymakers,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. in Singapore. “But if a weak dollar is the dominant trend, then the measures may not be as forthcoming. At this point, it is likely they may wait and watch but we cannot rule out any responses.”
China’s stimulus is adding fuel to the rally in Asian currencies this quarter, with the baht’s surge the biggest after the ringgit’s 14% jump.
The Bank of Thailand is closely monitoring the currency and stands ready to deal with any abnormal swings that may impact businesses and the economy, Assistant Governor Pimpan Charoenkwan said Wednesday.
Global funds poured over $400 million into Thai bonds in September, the third straight month of net foreign inflows, according to data compiled by Bloomberg. They bought about $1 billion of local equities during the period — the first net inflow in five months — as the government’s plan to revive the local market with a new fund-subscription offer partly boosted stocks.
--With assistance from Liau Y-Sing and Pathom Sangwongwanich.
(Updates with comments from the finance minister in third paragraph.)
©2024 Bloomberg L.P.