became a hot topic

When the US Federal Reserve (Fed) raised interest rates by 0.75% to 3.00–3.25%, in line with what gurus and analysts had predicted.

But the key point that creates a shock

It became when the Fed signaled to continue raising interest rates throughout the next year.

It is expected to rise to 4.60% and maintain a high interest rate policy until 2024 to successfully control inflation.

Regardless of whether the economy will slow down, contrary to those market players who expect

Next year, the Fed will gradually cut interest rates.

Causing the global financial market to immediately turmoil

Major currencies have depreciated sharply!!!

This can be seen from the British pound.

The weakest in 37 years, the Japanese yen.

The weakest in 24 years. The euro has weakened in 20 years. The South Korean won has weakened in 14 years, while the Indian rupee.

and the Indonesian Rupiah

The weakest on record

The Thai baht

move in the direction of the global currency

depreciated to 37.45 baht per US dollar.

It was the weakest in 16 years.

Impact on major currencies around the world

This was due to the Fed raising interest rates.

with further pointing out that interest rates must continue to rise

causing global investment flows to return to the US

to receive higher returns

Investors flock to sell other currencies.

to buy US dollars instead

stopping the flow

capital outflow

One of the reasons for the depreciation of money is

The central bank could raise interest rates following the Fed.

to attract investments or use a currency intervention method

This was seen as soon as the Fed raised interest rates.

central bank of switzerland

and the Bank of England

has announced an interest rate hike immediately

Bank of Japan

not raise interest

But throwing money to intervene in the yen instead.

For this reason, at the Monetary Policy Committee (MPC) meeting of Thailand on September 28, 2022, most analysts considered

The MPC will raise interest rates by 0.25% to 1.0%, following the next two rounds of MPC meetings this year, which are expected to raise rates by 0.25% each to help prevent the baht from weakening too much.

At the same time, the Bank of Thailand (BOT) can also use other mechanisms to control the inflow of money, such as limiting the amount of money invested abroad by Thai people.

Which is contrary to the baht appreciation period that the Bank of Thailand announced to allow Thai people to invest in foreign countries without limits.

to help reduce the appreciation of the baht

with another strong current

In the event that the government expresses its stance that the baht will appreciate no more than 35 baht per US dollar

Fear of repeating the Tom Yum Kung crisis in 1997, ready for the Ministry of Finance to discuss with the Bank of Thailand

First of all, I must say

Conservative monetary policy

is good

But looking back in 1997, the Thai private sector had a lot of foreign debt.

when the economic crisis

therefore unable to pay the debt

and the debt was recalled until bankruptcy

spread to commercial banks and Thai financial institutions

who is a guarantor of debt, has been intervened by the authorities or increases the registered capital

In addition, during that time

Thailand maintains the Thai baht exchange rate at 25 baht per US dollar.

When being speculated on the currency, the Bank of Thailand has to go in and support it.

Intervene the currency at 25 baht per US dollar.

until the reserve funds run out

In addition, there is another debt burden. When the Bank of Thailand encounters a loss, it allows the baht to float until the present.

However, Thailand's current financial situation is different from that of 1997, as evidenced by the low foreign debt burden of Thailand.

and the baht floated

No need to spend money to support the baht.

More importantly, the reserve funds are sufficient to pay off foreign debts.

depreciation or appreciation of the baht

Depends on economic fundamentals and capital flows

At present, it cannot be determined that the baht must depreciate by more than 35 baht per US dollar.

or only this

The Bank of Thailand can only intervene from time to time.

to help reduce volatility

Do not let the baht depreciate more than regional currencies.

Financial industry gurus assess the Fed's signal of a fiery interest rate hike.

have the opportunity to make baht

Depreciated to 38 baht per US dollar and if the MPC raises the policy interest rate by 0.25%, the baht will return to 37 baht per US dollar.

important during this period

The US dollar continues to strengthen.

Major currencies around the world

In addition, the baht depreciated.

Thailand should not go against the trend.

Just take care of the Thai private sector not to be disadvantaged by competitors.

If at the end of this year, foreign tourists bring more money to visit Thailand.

Export to generate more income into the country.

better economy

The Thai baht will appreciate itself.

Prapat Netamporn