KUALA LUMPUR: The increase in value of Thailand’s baht is not conducive for the country, but advantageous to Malaysia on the flip side, said Phillip Capital Management senior vice-president (investment), Datuk Dr Nazri Khan Adam Khan.
He said the baht’s appreciation is good for Malaysian exporters as the rise in value would encourage more monetary inflow into Malaysia.
“The baht’s strength will entice Thai tourists, as well as investors to Malaysia, as there would be spending power,” he told Bernama today.
Nazri said the International Monetary Fund (IMF) had predicted that both Malaysia and Thailand would post better gross domestic product (GDP) figures this year.
However, he highlighted that Malaysia doesn’t need to worry about the rising strength of the baht, as its economy is competitive and export-oriented.
He noted that the baht had been overvalued, and it was now up to the Bank of Thailand (BOT) to curb the rise and it would depend on how the central bank reacts to the ongoing US-China trade war.
Meanwhile, Malacca Securities Sdn Bhd analyst, Kenneth Leong said Thailand’s move to cut interest rates is seen as a catalyst to boosting growth.
“However, the 25 basis points is not enough, as other countries in the region are also cutting their interest rates at a similar quantum,” he added.
The Thai baht has been growing exponentially in strength over the past four quarters and is aptly dubbed Asia’s best-performing currency for this year, and following the government’s more than US$10 billion stimulus package backed by an expected steady benchmark interest rates.
In the first quarter of 2019, the Thai baht stood at 12.82 versus the ringgit and maintained its momentum of 12.76 against the local note in the second quarter, and 13.67 in the third. In the fourth quarter, it recorded 13.82 when compared to the ringgit.
According to reports on Thailand’s stimulus package quoting Finance Minister Uttama Savanayana, the 316 billion baht (US$10.23 billion) includes support for farmers and the tourism industry, in an effort to boost the economy.
Uttama said the stimulus package would help cope with a global slowdown and enable the Thai economy to grow as targeted.
Thailand’s economy expanded 2.8 percent in the first quarter with GDP growth of at least 3.0 percent this year and 3.5 percent in 2020.
The BOT has lowered its 2019 economic growth forecast to 3.3 percent as growth is slowing amid escalating trade protectionism, which is likely far from over.
Its governor, Veerathai Santiprabhob said: “We are not comfortable as the baht has strengthened against the currencies of trade partners and competitors.
“The central bank will have to intervene when there are large foreign funds coming in. If we don’t do it, the baht will appreciate too rapidly. To prevent that, we will intervene.”
Meanwhile on Aug 7, the BOT cut its policy rate for the first time since April 2015, by a quarter point.
A Reuters poll indicated that Thailand is expected to leave its benchmark interest rate steady after the August cut. – Bernama
