The country faces the risks of inflation quickening further from a 14-year high if the baht continues to weaken, according to the central bank.
About 75% of imports are quoted in dollars while the rest are in sellers’ local currencies, according to a Bank of Thailand (BoT) presentation in a meeting with analysts on Monday. In this regard, monetary authorities said they’re closely monitoring the exchange rate given the pass-through cost.
The baht is emerging as Southeast Asia’s worst-performing currency in the second half, losing 7% during the period and hitting a 16-year low. Still, the BoT, which has raised its policy rate only by a total of 50 basis points, is sticking to its gradual tightening approach as the “appropriate path.”
“The BoT’s monetary policy will continue to support continued recovery in the economy and the central bank will refrain from adding uncertainty,” Assistant Governor Piti Disyatat told analysts. The central bank will not aim at slowing economic growth to curb inflation as price increases are due to higher costs rather than demand, Mr Piti said.
The nation’s foreign currency reserves are robust enough to handle capital flows, and the drop in stockpiles is due to asset revaluation against a stronger dollar, Mr Piti said.
