Finance Minister says lowering key policy rate will weaken Thai Baht

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BANGKOK, 19 April 2013 Finance Minister Kittiratt Na Ranong has said lowering the policy interest rate is an appropriate way of controlling the rising Baht and the influx of foreign capital. 

The Finance Minister said that he hoped that the Bank of Thailand (BoT) and the Monetary Policy Committee would lower the policy rate by 1%. They should adopt a gradual approach to adjusting it down while keeping the influx of foreign currencies under surveillance in order to keep Thai exporters out of trouble.

Mr. Kittiratt added that Thailand has more than 1.8 trillion US dollars in its reserve given the positive balance of trade in the past years. Meanwhile, he added that the reason for a higher inflation rate was due to the fact there is a continuous influx of money pouring into the country.

The Thai Baht, he said, continues to rise even though the BoT has been keeping the market liquidity under control. Therefore, the Finance Minister said, it is an opportune time to lower the interest rate, and the move will not attract foreign investments as projected by the media. He explained that by reducing the rate, it will lure foreign investors away from investing their currencies in Thailand and will eventually weaken the Baht.