Baht likely to surge to 28 to US dollar next year, says SCB economist

BANGKOK, Nov 24 – Thailand's baht is likely to strengthen further and break through the level of 28 to the US dollar next year, according to a leading private sector economist.

Dr Sethaput Suthiwart-Narueput, head of the Siam Commercial Bank (SCB) Economic Intelligence Center, said the Chinese central bank is expected to let its currency, the yuan, appreciate by 4-6 per cent or 5 per cent on average.

So, it is very likely the baht will strengthen in the same direction as the yuan by 5 per cent to around 28 late next year from its level of 29 to the US dollar now.

So far, he said, the yuan had appreciated sharply by 21 per cent while the baht had surged by 27 per cent.

Dr Sethaput said he believed the Bank of Thailand (BoT) Monetary Policy Committee will not raise the policy interest rate at its meeting on Dec 1 since it did not want to see the baht strengthen further.

He said the inflation rate projected by the central bank is higher than it should be since it believed the government will extend its measures to help ease the cost of living for low-income people.

The SCB chief economist projected that foreign direct investment (FDI) will continue flowing into the country next year, but at a slower pace and the current account balance will continue in surplus.

Regarding the planned arrangement of having a balanced budget within five years, Dr Sethaput said it is hard to do that because most of the budget involves government expenditure, which cannot be cut back.

Should the government need to invest in any project, it has no alternative but to seek loans, he said. (MCOT online news)