Sat, January 28, 2023

Thai Central Bank Delivers Rate Slash

Wibest – USD to Chinese Yuan: Thai baht bills over a keyboard.

As traders get more and more confident over the strength of the Thai baht, its central bank releases more stimulus. Yesterday, the Central Bank of Thailand finally delivered the much-awaited rate slash.

On Wednesday, the bank took its policy to an all-time low of 1.25%. The global financial crisis back in 2009 was the last time such a controversial decision was instituted.

The Thai currency immediately fell after the news broke out.

Prior to the central bank’s decision, Thai investors were enjoying the baht’s strength. According to local reports, the local investors milked the best out of the baht’s performance. The business people invested in the currency and traded it overseas.

Currency experts believe that yesterday’s rate cut will be the last in a relatively short-easing cycle of the bank.

The central bank slashed its policy interest rate by 25 bps on Wednesday’s meeting. That will mark the second rate cut this year by the most hawkish Asian central bank.

There is no surprise to the decision of the central bank as experts were already anticipating it. The slash is also part of the broader consensus view of the market.

While the policy rate is already at all-time lows, there is not much room left for the monetary side. Moreover, further rate cuts are expected to fix the politically plagued Thai economy.

Bigger Fish in Asia

Wibest – USD to Chinese Yuan:US dollar and Chinese yuan bills over a trading chart.

Another currency that took the spotlight yesterday in Asian sessions is the Chinese yuan. Aside from the news about the Thai central bank, the yuan also made waves in Asian forex sessions.

Tuned in traders are recording the fluctuation of the yuan’s pair with the greenback.

On Tuesday, the USD to Chinese yuan exchange rate reached its three-month highs and has lingered near resistance.

Then yesterday, the pair finally went down as the Chinese yuan overpowered the US dollar. Both currencies received strength from investors’ hope for the trade war.

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