BANGKOK - Thailand's prime minister said the central bank could take more action to ensure stability in the baht after Wednesday's interest rate cut, which the government had pushed for as a way of holding down the currency.
"I strongly believe that the central bank will probably impose more measures to alleviate the impact of the baht on exporters," Yingluck Shinawatra told reporters on Thursday, adding that the Bank of Thailand might want to see the impact of the rate cut first.
"The government has long wanted to see a rate cut. It wants to see the baht stable and competitive. The level the baht should be at is the job of the central bank and relevant agencies to consider," she added.
On Wednesday, the Bank of Thailand's seven-member monetary policy committee (MPC) voted unanimously to cut the benchmark interest rate by 25 basis points to 2.50 per cent.
For months, Finance Minister Kittirat Na Ranong had called on the MPC to ease policy to deter capital inflows, which in April pushed the baht up to a 16-year high of 28.55 per dollar, and to help exporters.
He kept up the pressure after data last week showed the economy contracted in the first quarter. He was not particularly pleased with the cut when it came, saying the quarter-point trim was too late and too small, but "better late than never".
PEAKING, THEN EASING
Since the baht's April peak - when put it up 7 per cent against the dollar this year - the Thai currency has slipped back. On Thursday, it was trading at around 30.17, up just 1.5 per cent against the dollar.
Kittirat said on Wednesday that laws had been amended to allow speedy action on the currency if required, but he did not elaborate. Previously, he has said he reached agreement with the central bank on measures to hold down the currency but these have not been announced.
The finance minister and central bank officials have ruled out tough capital controls because that could hurt investors' confidence in the country.
Various sources have said the measures could include restrictions on foreigners' buying of short-term central bank paper and minimum holding periods for government debt they buy.
Heavy inflows into the bond market, especially into short-term paper, were a big factor behind the rise in the baht in the early months of this year.
Prime Minister Yingluck said the government wanted to see less foreign money flowing into the bond market but more coming into the real economy.