Bank of Thailand likely to stay on hold for rest of 2017, USD/THB likely to rise to 36 by end-2017 - Commerzbank

On Wednesday, the Bank of Thailand kept its rates on hold at near-record low of 1.5 percent, as was expected. The central bank had last lowered its rates by a combined 50 basis points in the first half of 2015. Given the subdued inflation backdrop, the Bank of Thailand is expected to remain on hold for the remainder of the year, noted Commerzbank in a research report.

The focus continues to be on policy accommodation to assist lift private investment to supplement the boost to growth from tourism and exports. The central bank continues to be aware of the risk from the excessive appreciation of the Thai baht as it might undermine its export competitiveness.

On a year-to-date basis, the Thai baht has appreciated over 5 percent against the US dollar. This is higher than average for Asian currencies. The central bank has taken steps to dampen the appreciation of THB and does not rule out additional measures in the months ahead. According to Commerzbank, the USD/THB pair is expected to rise to 36 by the end of 2017.

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