Thai baht weakest in three years

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BANGKOK, Jan 2 – Thailand’s baht depreciated to Bt32.94 against the dollar today, the weakest in three years, due to the unfavourable economic, investment and political climate, the central bank announced today.

Roong Mallikamas, Bank of Thailand spokeswoman, said the US Federal Reserve, buoyed by a strengthened US domestic economy, will possibly reduce its economic stimulus measures via quantitative easing while stock markets in several countries remained closed for the New Year holiday.

Other factors contributing the falling baht include most investment funds shifting investments overseas, resulting in stock sell-offs on the Thai bourse, and the political conflicts which have been negative to investment, she said.

She said the baht movement will depend heavily on related situations but it would not accelerate inflation given total imports at only 20 per cent of Thailand’s total consumption.

Prices of electricity and cooking gas will be higher this year but business operators are compelled by the low public consumption capability to not increase the prices of their products.

Ms Roong said household debt, which increased from 79.2 per cent/GDP in Q3 to 80.1 per cent/GDP in Q4 was due to higher loans under the government’s first-time car buyer scheme – a factor which did not pose concern to the central bank despite a slower economy.

Non-performing loans slightly increased from 2.2 per cent in October to 2.3 per cent in November while commercial banks have become more cautious in extending loans, she said.