Thailand pushes yuan, ringgit use to curb baht volatility, reduce risks against US dollar
- Thailand’s move comes amid a growing backlash against the hegemony of the US dollar across the globe
- Important to have more tools to cope with rising dollar-baht volatility, says Bank of Thailand official
Thailand plans to promote the use of yuan and other Asian currencies in trade and investments to curb wild swings in the baht against the US dollar, according to a central bank official.
The Bank of Thailand (BOT) expects greater use of regional currencies to help reduce exchange risk as they often move in tandem with the baht, assistant governor Alisara Mahasandana said in an interview in Bangkok last week.
While Thai efforts to promote currencies other than the dollar are more than a decade old, they are gaining momentum now with a slew of bilateral central bank arrangements and development of financial infrastructure, she said.
Trade and tourism-reliant Thailand is among a number of nations taking steps to mitigate the risks of a still-strong dollar that has weakened local currencies and become a tool of economic statecraft. BOT has been working with its counterparts from China, Malaysia and Indonesia to promote local currencies in their countries. More progress will be seen in the second half, Alisara said.
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Thailand’s move comes amid a growing backlash against the hegemony of the US dollar across the globe. China has signed a slew of deals to boost trade in the yuan, India is promoting the rupee and countries from Brazil to Argentina are actively seeking alternatives to the dollar.
The baht rallied 3 per cent in July – the most among major Asian currencies – after falling for three straight months. A gauge of expectations for price swings in the baht is near its highest level since May.