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Thai Baht Lower After Central Bank Cuts Borrowing Costs

March 12, 2015 at 17:53 by Vladimir Vyun

Thai baht banknotesThe Bank of Thailand followed many other central banks of emerging economies in cutting its borrowing costs. The Thai baht suffered as a result of the monetary policy decision but managed to bounce versus the US dollar.

Like the Bank of Korea, the Bank of Thailand decided to reduce its main interest rate. What is more, the reduction was exactly the same — by 25 basis points to 1.75 percent. Unlike the South Korean won though, the Thai baht declined after the policy announcement but rebounded to the opening level against the dollar.

The central bank cited the following reasons for its decision:

In the policy deliberation, the committee judged that the outlook of the Thai economic recovery is weaker than previously assessed. Fiscal stimulus will take time to materialise, while headline inflation is projected to remain low for a certain period of time.

Still, the voting was a close call as the doves won by just one vote.

USD/THB was flat at 32.86 as of 17:51 GMT today after rising to 32.94 earlier. EUR/THB climbed from 34.6540 to 34.8750.

If you have any questions, comments or opinions regarding the Thai Baht, feel free to post them using the commentary form below.

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