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THAILAND
Baht Appreciation
July 18, 2007

Central bank cuts key rate to ease pressure
The Bank of Thailand on July 18 cut its key interest rate by 25 basis points to 3.25 percent amid growing pressure from the army-backed government to take some measures to curb the rising baht, AFP reported.

It was the fifth consecutive rate cut this year and came amid government calls on the bank to tame the volatile baht, which has reached 10-year highs against the dollar. The baht finished at 33.46-48 to the greenback, slightly down from Tuesday's close of 33.35-37.

"The policy rate cut will help halt the baht's appreciation," Suchada Kirakul, an assistant central bank governor, told reporters after the rate-setting meeting. She said the move was "suitable" but a Bangkok Bank dealer said the rate cut was too small to curb the strong baht.

"It was too small and too late. The (Bank of Thailand) should have acted earlier," said the dealer from the country's top lender. The Thai currency has risen sharply, driven by massive capital inflows as foreign investors have snapped up Thai stocks, which have generally lagged the recent record-breaking advance seen in the region.

The Stock Exchange of Thailand (SET) composite index fell 7.35 points or 0.86 percent to close at 849.56 points July 18 on profit-taking and sluggish regional markets. AFP

 

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