The Bank of Thailand (BoT) says it has intervened in currency markets at times to ease any excessive moves in the baht, adding that the current policy rate is robust and conducive to economic recovery.
Although volatility was high, it was not unusual and the baht was moving in line with regional currencies, assistant governor Piti Disyatat said on Wednesday, in remarks that came after the baht breached 37 to the dollar this week, a more than six-month low.
The baht was trading around 36.9 to the US dollar in offshore markets on Wednesday afternoon, after falling past 37 on Monday and Tuesday.
The central bank has no specific levels for the baht in mind, he added.
The current policy interest rate is robust and could handle future risks to the economy, the central bank said amid continued pressure from the government to lower borrowing costs and help jumpstart sluggish growth.
“The current policy rate is close to neutral,” Mr Piti said, adding that the central bank was ready to adjust it if needed.
He said, however, that any big rate cuts would not be appropriate for the economy at the moment and lower rates would not help with financial access for smaller businesses. The BoT left its key interest rate unchanged for a third straight meeting on April 10. The next rate review is on June 12.
Cutting rates could help lower debt in the short run but could also induce risks in the longer term, the central bank said on Wednesday, adding that by holding rates steady at 2.50% it created “policy optionality”.
The economy was still challenged by structural pressures while inflation remained low due to government measures and supply side factors, the BoT said.
Now that the 2024 fiscal budget has finally been passed, government expenditure would help support the economy, senior director Pranee Sutthasri said.
Overall economic conditions were stable with loans expanding, but small businesses and households faced tighter credit conditions.
Prime Minister Srettha Thavisin has repeatedly urged the BoT to deliver a rate cut, saying the current level is hurting businesses and investor sentiment and that the economy is in “crisis”.
Central bank governor Sethaput Suthiwartnarueput has openly disagreed with Mr Srettha’s depiction of the economy as being in crisis, saying it was in need of structural reforms.