Thailand’s weakening baht not all bad for economy

BANGKOK (Reuters) – Thailand’s central bank is monitoring the weak baht, which is not entirely bad for the economy and could help the key export and tourism sectors, the prime minister said in remarks aired on Thursday, as the baht hit multi-month lows.

Srettha Thavisin, speaking during a visit to the United States, said the government was not interfering in the central bank’s duty.

The Thai currency’s depreciation was driven by capital outflows due to interest rate differentials, Srettha told reporters.

The U.S. Federal Reserve held interest rates steady and its hawkish stance on monetary policy strengthened the dollar.

The baht traded at 36.16 per dollar at 0615 GMT, after hitting a more than 10-month low of 36.32 on Wednesday. The unit has weakened by 4.4% against the greenback so far this year.

“A weak baht is not always bad. It helps exports … and more people will want to travel and spend money. We can benefit,” Srettha said.

Southeast Asia’s second-largest economy has seen weaker than expected exports, which might fall 1% to 2% this year, with economic growth expected at 2.8%, less than earlier projected.

The new government, which took office last month, is planning higher spending to help finance fresh policies to stimulate the economy weighed down by soft demand for exports and low investor confidence.

Asked whether a large public borrowing plan would affect fund-raising by the private sector, Srettha said market liquidity remained ample.

“There is a lot of liquidity. Don’t worry. It’s not a concern at all,” he added.

Srettha’s government also plans to boost growth by attracting more tourists, waiving visa requirements for visitors from China and Kazakhstan for five months. China was a major travel market for Thailand before the pandemic.

Thailand, a key Asian travel hotspot, is targeting 28 million foreign arrivals this year and 40 million next year.

In 2019, there was a record of 39.9 million foreign tourists, including 11 million from China.

The government earlier said it was aiming for five million Chinese tourists this year.