Why the BOT’s Bold Move Could Shake Up the Baht—and What Every Investor Must Know Now
Ever wondered what happens when a central bank throws a curveball at the market, yet the currency keeps its cool and climbs anyway? Well, pull up a chair, because the Bank of Thailand just dropped an unexpected second rate cut—slashing the policy rate to 1.00%—and guess what? The Thai Baht didn’t just flinch; it bounced right off a key support level at 31.00 like a pro athlete on game day. Sure, the policymakers are sweating the Baht appreciating too fast, worrying about exporters feeling the heat, but here’s the kicker: positive real rates combined with a rock-solid external backdrop are still fueling an underlying uptrend for the THB. It’s like watching a tightly wound thriller where the plot twists keep coming—but the hero’s momentum never breaks. Curious to see how this balancing act plays out on the forex field? LEARN MORE
Brown Brothers Harriman’s (BBH) Elias Haddad reports USD/THB has bounced from key support at 31.00 after the Bank of Thailand unexpectedly delivered a second consecutive 25 bps rate cut to 1.00%. While policymakers voiced concern about Baht appreciation and exporters’ conditions, BBH notes Thailand’s positive real rates and solid external backdrop still support an underlying THB uptrend.
Surprise easing but THB trend intact
“USD/THB bounced off key support at 31.00. Bank of Thailand (BOT) unexpectedly delivered a back-to-back 25bps policy rate cut to 1.00% (no change was expected). The BOT Committee voted 4 to 2 to cut the policy rate by 25bps. Two members voted to maintain the policy rate at 1.25%.”
“Importantly, the Committee expressed “concern over signs of exchange rate misalignment from economic fundamentals,” adding that the “appreciation of Thai baht has tightened financial conditions for exporters, particularly for products facing intense price competition and low profit margins”. Nevertheless, Thailand’s relatively high positive real rates and favorable balance of payments backdrop continue to underpin the uptrend in THB.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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