In replacement of the barter system, currency was introduced several hundred years ago. Early currency was “commodity money,” which meant that the precious metals it was made of gave it its intrinsic value. However, today, the value of a currency is determined by supply and demand. According to recent reports, the Thai currency “baht” is weakening and has hit a monthslong low.
Thai Currency “Baht” Is Weakening!
On Thursday, Thailand Prime Minister Srettha Thavisin remarked that the baht hit multi-month lows and that Thailand’s central bank is keeping an eye on the weak currency. He further stated that it is not wholly terrible for the economy and might benefit the crucial export and tourism sectors.
The government, according to PM Srettha Thavisin, was not meddling with the central bank’s responsibility while he was on a visit to the US. According to him, the devaluation of the Thai baht was caused by capital outflows brought on by interest rate disparities.
Interest rates were maintained by the U.S. Federal Reserve, and the currency was made stronger by its hawkish position on monetary policy. Following a more than 10-month low of 36.32, the baht was trading at 36.16 to the dollar at 06:15 GMT.
So far this year, the value of the currency has fallen 4.4 per cent against the US dollar. The baht is not always negative if it is weak. Exports benefit from it, and more individuals will want to travel and spend money as a result. He further earmarked that they stand at gain!
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Economy Growth Anticipated To be 2.8%
The second-largest economy in Southeast Asia has had poorer than anticipated exports. In fact, they may decline 1 to 2 per cent this year. Economic growth is anticipated to be 2.8 per cent, which is less than prior forecasts. The economy is being held back by weak export demand and low investor confidence. The new government, which took office last month, is planning more spending to help finance new initiatives to revive the economy.
When asked if a substantial state borrowing strategy would affect private sector fund-raising, the PM responded that market liquidity remained sufficient. He continued by stating that the liquidity is substantial. But not to worry as it won’t be a problem. The government also intends to spur the economy by luring more travellers and by temporarily eliminating visa requirements for Kazakh and Chinese citizens.
Before the pandemic, China was a significant travel destination for Thailand. Thailand, a popular tourist destination in Asia, wants to welcome 40 million visitors in 2018 and 28 million in 2019. A record 39.9 million overseas visitors visited in 2019, including 11 million from China.
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This year, the administration anticipates that 5 million Chinese tourists will travel to Thailand.
Cover Image Courtesy: Canva