The Bank of Thailand said it has many tools left to manage capital inflows to curb the local currency’s strength, which is hurting growth prospects in the Southeast Asian economy.
The scope and speed of the baht’s appreciation is out of line with economic fundamentals such as the current-account surplus, Don Nakornthab, a senior director in the central bank’s economic and policy department, said in an interview.
What monetary policy makers have done so far are “baby steps,” he said in his office in Bangkok. “On capital-inflow measures, I think they have a lot of options,” he said, pointing to measures that some countries have used, such as holding periods, to curb hot-money flows.
The central bank in July imposed measures to counter short-term inflows and last month relaxed rules to spur outflows. The baht has climbed more than 8% against the dollar in the past 12 months, hurting exports and tourism and putting the economy on course for the slowest annual growth in five years.
The monetary authority has said it will review the relaxation of rules governing outflows every three months.
“Right now, there are some ceilings on certain limits, they could be lifted,” Don said.
Bank of Thailand Governor Veerathai Santiprabhob last month indicated scope for another interest-rate cut if economic growth disappoints. The policy rate has been lowered twice this year to 1.25%, matching a record low.
At the same time, Veerathai has cautioned against taking the benchmark interest rate below zero.