disagrees with lower baht

The governor of the Bank of Thailand (BoT) opposes measures to weaken the baht currency while confirming that the baht value now accords with the market mechanism.

BoT Governor Prasarn Trairatvorakul said on Thursday he disagreed with Deputy PM and Finance Minister Kittiratt Na-ranong who wanted the central bank to manipulate the exchange rate to make the baht lower in value. He said the BoT now used a managed floating exchange rate which fluctuated in line with the market and believed this regime posed no harm to trade and investment of the business sector.

As for an idea to use a current account deficit to weaken the baht, the governor said it was not a tool for monetary policy and voiced his support for the current account surplus which Thailand is enjoying and is reflecting the country’s prosperity.

On the policy interest rate of 3%, Mr.Prasarn deemed it suitable and sufficient for economic revival. During the past two months, there were signs of economic recovery in the consumption, tourism and industrial sectors. He also forecasted that the Thai economy would gradually pick up in full force by the third quarter of 2012 but high oil price, increasing minimum wage and government spending would continue to affect inflation.