Thailand cuts interest rate to record low to rein in surging baht

Bangkok: The Bank of Thailand cut its benchmark interest rate for the second time in three months and said it will ease rules on outflows to curb a surging currency.

Five of the seven Monetary Policy Committee members voted to cut the key rate by a quarter-percentage point to 1.25 per cent, the central bank said in a statement. That matches a record low and was in line with the forecasts of 16 of the 26 economists in a Bloomberg survey.

Officials told reporters in Bangkok that the central bank is worried about the strength of the baht, which may continue to weigh on the economy. The bank will ease rules on outflows and consider further steps to rein in the currency, they said.

The baht extended losses, falling as much as 0.7 per cent to 30.399 per dollar, and was at 30.327 as of 3pm in Bangkok.

Thai authorities are stepping up monetary and fiscal support to spur an economy that’s on course for its weakest growth in five years in 2019. The baht has gained more than 8 per cent against the dollar in the past year, the best performer in emerging markets, curbing exports and tourism in the trade-reliant nation.