Thailand’s CB intervenes to rein in currency

BANGKOK: Optimism that a coronavirus vaccine will revive Thailand’s devastated tourist industry has driven up the baht currency so fast that the central bank (CB) has been forced to intervene, its governor said on Thursday.

Southeast Asia’s second biggest economy shrank 6.4% in the third quarter ater a slump of 12.1% in the preceding quarter.

But news of promising vaccine candidates has boosted hopes for a revival in tourism to swell the current account surplus and lit the currency, said Sethaput Suthiwartnarueput, the governor of the Bank of Thailand.

Already, the currency’s strength has dealt exporters a blow, worsening Thailand’s fragile recovery, he told reporters.

“But the reality is we still don’t know what the result will be and will tourism really come back,” he added, saying the outcome also hinged on vaccine availability and use.

“What we are concerned about is the currency has already strengthened too fast but there are no tourists yet.”

The baht was trading at 30.39 per US dollar, off a more than 10-month high of 30.13 on Monday.

A travel ban imposed in April to curb the outbreak has kept foreign tourists at bay. Last month, Thailand started to let a limited number of foreign visitors return, with quarantine restrictions.

“In terms of flows back in Thailand, it is still early days, but some fast money seem to be geting interested again,” said Nader Naeimi, head of dynamic markets at AMP Capital, referring to hedge funds.