Thursday, April 30, 2015

Maybank FX Flash - THB: Second Surprise Cut By BoT - 29 Apr 2015


THB: Second Surprise Cut By BoT


§  The BoT cut its one-day repurchase rate by 25bp to 1.50% at its 29 Apr meeting. Once again, the decision to cut was not unanimous but by a vote of 5-to-2 with the latter two members voting to keep the rate at 1.75%. The rate cut comes in the wake of the Finance Minister’s urging on 16 Apr for the central bank to do more to help the economy.
§  The weak exports so far probably tipped the policymakers’ hands, especially after both the Commerce Ministry and the Finance Ministry cut their export forecast for 2015. At the same time, the growth outlook was also downgraded by the Finance Minister. In addition, the benign inflationary environment was also conducive to a rate cut.
§  The rate cut provided the USD/THB with a leg up with the pair now sighted around the 32.800-region. Given this market development, we are now revising our USD/THB to end 2Q15 at 33.000 and 3Q at 33.20. Going into 4Q, US growth should become more entrenched and should be supportive of Thai export and tourism sectors, and this should push the USD/THB lower to 33.10 by year-end.

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