THE BANK of Thailand is keeping a close eye on the Thai baht which touched its weakest exchange rate to the US dollar today (June 15) as global markets brace for the sharpest rise in US interest rates in almost 30 years with the Federal Reserve taking action to halt rising inflation, INN News said.
The Thai central bank set today’s weighted-average interbank exchange rate at 35.079 baht/US dollar.
Ms. Daranee Saeju, senior director of the Bank of Thailand’s Financial Markets Department, said the central bank will accelerate the implementation of tighter monetary policy with concerns about a global economic slowdown leading to the greenback appreciating to a 20-year record high while regional currencies, including the Thai baht, continued to depreciate.
Since the beginning of the year, the baht has depreciated 4.5%, while other regional currencies have depreciated between 3 to 7%.
However foreign investment in Thai assets has remained in a net buy mode since the beginning of the year with about 150 billion baht flowing in, divided into 130 billion baht in stocks and 20 billion baht in bonds.
After days of frenzied investor speculation and signs of growing central bank anxiety, the Federal Reserve is expected to increase the official cost of borrowing by 0.75 percentage points for the first time since 1994, according to The Guardian newspaper.
The Fed meeting, with an interest rate announcement due at 7 p.m. UK time on Wednesday (2 a.m. in Thailand), will be preceded by an emergency meeting of the European Central Bank (ECB) to discuss crashing bond prices in Italy, Spain, Portugal and Greece.
The Bank of England is expected to raise UK interest on Thursday, after the rise in UK inflation to a 40-year high. Despite some speculation of a 0.5 point increase, the City expects a 0.25 point rise to 1.25%.
The Fed’s chairman, Jerome Powell, had previously ruled out a 0.75 point increase but the central bank appears to have had a change of heart after higher than expected US inflation was announced last week.
Federal Reserve Chairman Jerome Powell speaks at a news conference following a Federal Open Market Committee meeting on May 04, 2022 in Washington, DC. Photo: Win McNamee/Getty Images and published by Yahoo! News