Tactic deals with dollar volatility
The Bank of Thailand is in discussions with China’s central bank over supporting the use of yuan-baht settlement to mitigate foreign exchange risk amid ongoing US dollar volatility.
According to central bank governor Sethaput Suthiwartnarueput, the Bank of Thailand and the People’s Bank of China have held talks over additional cooperation to encourage businesses to use yuan-baht settlement for trade between the two countries.
The Bank of Thailand plans to meet its Chinese counterpart next month to talk about the issue.
In 2021, both central banks
renewed their yuan-baht Bilateral Currency Swap Arrangement (BSA) with the aim of boosting trade and investment in local currencies and strengthening financial cooperation between the two countries.
The BSA is also meant to build private sector confidence in using local currencies for cross-border operations.
Under the local currency settlement framework, the Bank of Thailand has also cooperated with Japan’s Ministry of Finance, Bank Negara Malaysia and Bank Indonesia to support the use of regional currencies for intra-Asian trade and investment, as well as individuals’ payments.
Mr Sethaput said recently the baht has been fluctuating against the dollar because of the Federal Reserve’s monetary policy direction.
Although the baht’s volatility
has been higher than regional peers based on external factors, its levels remain moderate compared with other currencies, he said.
The fluctuation is expected to possibly continue amid global uncertainties, said Mr Sethaput.
Source: Bangkok Post
