Thailand: FX, Fiscal and Monetary policies – UOB

Economist at UOB Group Barnabas Gan shares his views on the prospects for the THB and current fiscal/monetary policies.

Key Quotes

“It is clear that the resurgent wave of virus infections is taking a toll on the THB. The latest downgrade in Thailand growth will likely to weigh on sentiment on the THB in the near term. As such, we keep to our modest higher trajectory in USD/THB. Also, it is increasingly likely the trough of about 30.0 seen across January – February is becoming a mid to long term infection point.”

“Monetary policy will likely be kept at 0.5% in the year ahead. However, Thailand’s economic growth is likely to be uneven amid pronounced downside risks should COVID-19 worsens. Should macroeconomic fundamentals stay unexpectedly subdued into 2H21, a 25bps rate cut could materialise then.”

“Fiscal measures will remain as the choice policy tool. Beyond a THB350 billion package to aid COVID-19 businesses introduced in March 2021, BOT was said to be considering two additional measures: THB250 billion worth of soft loans and debt restructuring through an asset warehousing programme costing THB100 billion. Note that Thailand does not have a public debt issue: public debt to GDP remains manageable at 51.8% in 4Q20. It is expected to balloon to 57% of GDP by end 2021.”