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BANGKOK: — The Bank of Thailand on Monday intervened in the foreign exchange market to halt a rapid slide of the baht currency, officials said.

Suchada Gillakul, assistant to the central bank’s governor, said the intervention was deemed necessary after the baht dropped to 33.41 to the dollar Monday morning, its lowest rate in five months. It had closed Friday at 32.96.

“We will investigate whether foreign investors are speculating on the baht,” she told reporters.

After the intervention, the baht traded at 33.22 to the dollar Monday afternoon.

Like most Asian currencies, the Thai baht has steadily appreciated against the dollar, gaining almost 20 per cent over the past two years before starting to weaken last month in the wake of rising inflation, growing political instability, declines on the stock market and slowing growth projections.

By midday Monday, the Stock Exchange of Thailand index had fallen 1.3 per cent largely in response to a dramatic fall on Wall Street Friday.

– dpa 2008-06-09

Related link:
Thai Baht Currency Exchange Rates

Thai baht hit the highest record in ten years as it opened Thursday morning at Bt33.01 to Bt33.02.

Currency traders attributed the rise to the US Federal Reserve’s decision to cut the interest rate by another 50 basic points last night to 3 per cent, prompting certain speculators to buy Thai baht.

As a result, Thai policy rate is 25 basis point higher than the US rate.

Currency traders expected that if the US Federal Reserve further cut the interest rate again in March. The difference between Thai and the US rates will be higher. This may prompt much higher inflow of capital into Thai market. This could lead to further rise of Thai baht.

Source: The Nation - 31 January 2008

taken from http://www.thaivisa.com