An interest-rate cut in Thailand may be the best option to slow inflows that drove the baht to a 16- year high as capital controls would deter investors and push up funding costs, according to the Thai Bond Market Association.
Thai Finance Minister Kittiratt Na- Ranong said the central bank should cut the key interest rate by more than a quarter of a percentage point or implement capital controls to stem the baht’s rise, which is threatening exports.
Thai Prime Minister Yingluck Shinawatra’s administration is pushing the central bank to cut its key interest rate to slow foreign inflows that drove the baht to its strongest level in 16 years last month.
The Thai baht’s biggest quarterly gain against the yen since 1998 was enough reason for Kornkarun Cheewatrakoolpong, a 32-year-old economics lecturer in Bangkok, to change her honeymoon destination to Japan from Italy.
The euro fell to a two-week low against the dollar as a report showed weakening services and manufacturing in the region, adding to speculation the European Central Bank will lower interest rates to spur economic growth.