The Thai central bank stated on Friday that it will allow floating exchange rate on Thai baht in the second half of 2022, but will manage any excessive volatility in the currency. The move that could strengthen the weakening state of Thai baht. Meanwhile, the key policy rate will return to its normal state of rate hikes to slow down inflation.
Compared to regional currencies, the depreciation is mainly driven by a strong greenback, but weakness in the baht has been moderate, according to senior director at the Bank of Thailand (BOT) Daranee Saeju.
The statement came after Thai baht rose more to more than THB36 per one dollar, its weakest level in more than six years.
Director Nasha Ananchotikul said that the policy interest rate would have to be raised gradually, while timing for the hike would still need to be weighed.
In addition, Nasha Ananchotikul mentioned that rising headline inflation was not a surprise and it had not yet peaked. She expected that it might reach 8%.