Baht to strengthen only in short-term

BANGKOK, January 23 (TNA) - The Thai baht is expected to strengthen only in the short-term, after the European Central Bank (ECB) decided to inject 60 billion Euro a month, aimed at spurring growth and averting deflation in the huge European economy. Ekniti Nitithanprapas, Deputy Director-General of the Fiscal Policy Office (FPO), under the Thai Ministry of Finance, made the assessment on Friday, noting that the Thai baht has strengthened by 0.3 per cent lately, which is considered too high. However, Ekniti insisted that the appreciation of the Thai currency is expected to last only in the short-term, while the Bank of Thailand (BOT) needs to keep monitoring updates to prevent the volatility of the Thai baht. Ekniti elaborated that ECB has injected money much more than earlier market expectations, resulting in the immediate depreciation of the euro currency and capital outflows for investment in equity and debt instrument markets overseas, including in Thailand, pushing the Thai baht to become stronger. European currency traders welcomed ECB's announcement on January 22 for the 60-billion-euro-a-month economic stimulus programme through September 2016 as a positive measure toward fighting the persistent low inflation in Europe by weakening the euro and boosting European exports. Meanwhile, Thai Finance Minister Sommai Pasi acknowledged that the ECB’s move would strengthen the Thai baht and affect Thai exporters. The finance minister called on BOT to, thus, lower its short-term interest rate to relieve capital inflows, pointing out, nonetheless, that other currencies in the region are also strengthening due to the ECB's decision. The finance minister said that his ministry would also speed up disbursements of state expenditure budgets so that money could enter the Thai economic system to also ease capital inflows and help weaken the Thai baht. (TNA)