Thailand's army-backed government said Friday it might introduce new measures aimed at offsetting the economic impact of a rising baht, which is at nine-year highs against the dollar.
"Everybody is concerned about the baht and the Bank of Thailand and the finance ministry are closely monitoring the situation," Prime Minister Surayud Chulanont told reporters after meeting top economic ministers. "Measures could be introduced to relieve the economic impact of the strong currency," the premier said, without elaborating further.
He met Finance Minister Chalongphob Sussangkarn and Industry Minister Kosit Panpiemras to discuss the strong local unit, which can undercut growth in exports, the key driver of the Thai economy.
The Thai baht was at 35.05 to the dollar in Friday afternoon trade after closing at 34.63-67 on Thursday. Dealers speculated the Bank of Thailand might have intervened in the market Friday to pressure the unit back to the 35 level. The baht was at around 40 to the dollar in early 2006.
Kosit, head of the government's economic team, also voiced concern over the rising baht but said it was in line with steady gains in regional currencies against the dollar amid hopes for robust economic growth in Asia.
"It is a global phenomenon as the dollar has weakened against other currencies. The Thai economy is being affected by something that is beyond our control," the industry minister said. The Thai baht has risen in part because of sustained speculation that the Bank of Thailand would soon remove controversial currency controls, which were introduced in December.
The capital measures aimed at halting the baht's rise required 30 percent of all incoming investment to be held by financial institutions for up to one year. But foreign investors saw them as a steep tax on their equity investments and quickly dumped shares, triggering a massive sell-off in December with market losses worth a staggering 23 billion dollars.
The government then reversed some of the rules - for example, dropping the 30 percent requirement for funds going into Thai stocks - but foreign investor confidence was badly damaged and remains very cautious about policy. Despite the strong baht, Thai exports rose by nearly 18 percent in January, giving the country a solid trade surplus, the government said Wednesday.