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Thai baht strengthens as inflation cools, Bank of Thailand likely stays on hold

July CPI eased to 2.0% year on year, and Commerzbank expects the BoT to keep its policy rate at 1% through year end.

Reported · Written up by our desk · EM Currencies

Commerzbank strategists say Thailand’s July inflation softened, with the Consumer Price Index easing to 2.0% year on year, below consensus. They attribute much of the decline to softer retail fuel prices, even as core inflation has been gradually rising.

With overall price pressures described as manageable and under government forecasts, the strategists expect the Bank of Thailand to keep its policy rate at 1% through year end. They also point to subdued demand as a factor reducing the need for tightening.

In FX trading, FXStreet reports USD/THB fell 0.2% to 33.00, the pair’s lowest level since June 22. FXStreet also notes the Thai baht has strengthened over the past four sessions, supported by higher global gold prices.

Still, FXStreet adds that the baht remains among the weaker Asian currencies on the year, down 4.5% versus the US dollar year to date, compared with an average 1.9% decline for Asian currencies excluding Japan.

Latest closeGold $4,448.60 ▲2.5%

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