The Thai Baht has fallen, heading towards its biggest decline since 2008 over concerns that government authorities will intervene in the nation’s currency market in a bid to slow down the currencies pace of gains.
The Bank of Thailand and the government have expressed their concern over the currencies rapid rate of appreciation and have caused traders to speculate that it may intervene to prevent the currency rises from further harming national exports. According to Boonsong Teriyapirom, the Thai Commerce Minister, export growth may have fallen below 5% this year, far below the nation’s target of 8 to 9%.
So far today the currency has depreciated by 0.4% and 1.9% for the week, the Baht’s biggest weekly loss since June 6th 2008.
In a sign that the Thai government is taking the issue seriously, Prime Minister Yingluck Shinawatra called governmental meetings on the issue. “It actually suggests that they are now becoming more serious and could potentially introduce further measures down the road,” said Sacha Tihanyi, senior foreign-exchange strategist at Bank of Nova Scotia. “I think it will not only incentivize baht profit taking, but also open the door to baht shorts,” he said, referring to a selling stance on the currency.
The currency could fall further as a number of financial institutions said that it has room to fall further. Morgan Stanley for example sees the Baht declining to 29.50 per US Dollar in the short-term.
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