Federation of Thai Industries suggests further cut in interest rate to tame baht

Source: Xinhua| 2019-09-16 19:28:15|Editor: Wu Qin
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BANGKOK, Sept. 16 (Xinhua) -- The Federation of Thai Industries (FTI) on Monday told the media that it is suggesting the Monetary Policy Committee (MPC) of the Bank of Thailand (BOT) to make another cut in the policy interest rate to tame the baht currency.

FTI vice president Kriangkrai Thiennukul expressed his concerns that the strong baht has been one the strongest in the Asian region and may worsen the economic slowdown in both the short and long term.

"The baht fluctuated between 30.40-30.50 baht per U.S. dollar last week and reached the highest level against the U.S. dollar in six years," said Kriangkrai. "And now the Thai baht has strengthened by 6 percent against the U.S. dollar since the start if 2019, making it stronger than other currencies in the region."

However, Kriangkrai said the strong Thai baht has made it a safe haven for foreign investors to park their Thai cash and in government bonds.

"I believe the BOT is monitoring the Thai baht to prevent its strength affecting Thai exports, which are already being hurt by the U.S.-China trade friction and the tourism sector."

The FTI, the Thai Bankers Association and the Thai Chamber of Commerce, the three main pillars of the Thai private sector, recently adjusted downward the export growth projection for this year to between minus 1 percent to 1 percent, and economic growth to between 2.9 percent to 3 percent.

Kriangkrai also said that the Thai government should speed up concluding the Free Trade Area (FTA) agreements with Thailand's trading partners, especially the European Union, to open up markets for Thai exports.

He raised another serious concern, which may affect the economy in the long term, namely the level of Thai household debt which, according to the latest findings by the National Economic and Social Development Board, is estimated at 13 trillion baht, the second highest in Asia after South Korea and the 11th highest in the world.

In the long run, he said, household debt will hurt people's purchasing power and, in turn, will affect the overall economy.