Thai baht dips after rate cut

The baht continued losses yesterday after the Thai central bank cut interest rates. Other Asian currencies dipped as markets assess the latest details of the US-China tariff talks.

The Bank of Thailand cut rates for the second time this year, with the benchmark one day repurchase rate now at a record low, as the bank tries to manage inflation and rein in the strong baht.

The bank is also relaxing foreign exchange rules, allowing exporters to keep more profits abroad.

Read more about that HERE.

The baht fell up to 0.63% after the announcement, its lowest level against the US dollar in weeks. The baht has emerged as Asia’s strongest and most stable currency this year.

Dutch megabank ING spokesperson said said that… “Asia’s most hawkish central bank finally conceded that the economy needed lower interest rates to stimulate domestic spending and rein in the rapid pace of appreciation that’s been dampening prospects of any near-term recovery.”

ING says the baht is likely to stretch its bull run at least until the year’s end.

A strong baht has hurt Thai exports and dented the rise and rise of Thai tourism, two crucial contributors to the economy.

“With one more policy meeting to go before the year end, and given the BoT’s reluctance to ease earlier this year, we expect no more rate cuts this year,” ING speculated.

In other economic news, China is insisting the US remove tariffs imposed in September as a part of the “phase one” trade deal, expected to be signed this month at an undisclosed location.

The Philippine peso fell .32% after data showed the nation’s trade deficit widened in September.

Markets however, expect a rebound in its third quarter GDP growth, according to a Reuters poll.

The Indonesian rupiah dipped .32%, to hold slightly below 14,000 rupiah to the dollar.

Against this trend, the Chinese yuan climbed about .14% after the People’s Bank of China set its midpoint at a three-month high. The yuan was also trading below its crucial level of 7 yuan to the dollar, showing strong gains in the perceived progress of US-Sino trade negotiations.

SOURCE: Reuters | Thai Visa