Thailand's major commercial group, Srithai Superware, has called on the central bank to cut interest rates to support the government's monetary easing policies. The concern stems from the rapid appreciation of the Thai Baht, which could negatively impact exports.
The group's chief executive, Sanan Angubolkul, emphasized the urgency of the Bank of Thailand (BOT) to adjust interest rates. Market expectations suggest a 25 basis point reduction, with more cuts likely next year. Sanan pointed out that the current Baht levels are not competitive for exports, a critical driver of economic growth.
The US dollar to Thai Baht exchange rate recently hit a 31-month high at 32.125. The Baht has strengthened by 5.0% this year, making it the second-best performing currency in the region after the Malaysian Ringgit.
Srithai Superware maintains its economic growth forecast for this year between 2.2% and 2.7%, supported by government stimulus measures. To date, the first phase of the government's flagship relief program has injected 140 billion Baht ($4.29 billion) in cash to vulnerable groups.
The group continues to project export growth between 1.5% and 2.5%, despite concerns over the strong Baht. The push for a rate cut coincides with an upcoming meeting between the Finance Ministry and the Bank of Thailand to discuss inflation targets and monetary performance, untouched since 2020. The government has been pressuring the central bank for rate cuts to align with fiscal policies aimed at economic stimulation.
Finance Minister Pichai Chunhavajira is expected to reach an agreement with the central bank on inflation targets this month. A joint standing committee of commerce, industry, and banking sectors will also seek a meeting with the BOT to discuss interest rates. The Bank of Thailand held its key rate at a decade-high of 2.50% in August for the fifth consecutive time, with the next review scheduled for October 16.
The Thai Tourism Authority is monitoring Baht fluctuations, as its rapid appreciation impacts export profits and tourism spending, both crucial economic drivers. Southeast Asia's second-largest economy grew by 2.3% year-on-year in the April to June quarter, up from last year's 1.9% growth.
