June 1, 2020 / 3:51 AM / 2 months ago

UPDATE 1-Thai c.bank ready to use necessary measures to temper baht

* Strong baht not in line with fragile economic conditions-dep gov

* Says investors may park funds in baht, which is unwanted

* BOT to investigate gold trade, consider additional steps (Adds detail, quotes)

By Orathai Sriring

BANGKOK, June 1 (Reuters) - Thailand’s central bank is worried that a rapid rise in the baht may not be in line with economic conditions which remain fragile due to the impact of the coronavirus outbreak, a deputy governor said on Monday.

The Bank of Thailand (BOT) is ready to consider necessary measures to prevent strength in the baht from adding to fragility in the economy, Mathee Supapongse said in a statement.

The baht has strengthened at a faster pace than most Asian currencies over the past two weeks helped by slowing coronavirus infections and better-than-expected first quarter economic figures, he said.

“The BOT is worried that a rapid rise in the baht may not be in line with economic conditions which remain fragile,” he said.

Several parts of the economy have been hard hit by COVID-19, which will be clearly seen after second-quarter economic data is released, Mathee said.

The baht traded at 31.74 per U.S. dollar at 0252 GMT, its strongest in more than two months. The currency, Asia’s best performer in 2019, is down 5.8% since the start of the year.

Mathee said that as the coronavirus situation improves, investors may park more of their short-term funds in Thailand, a situation that is not wanted.

“The BOT is ready to consider necessary steps to prevent the baht’s strength from exacerbating fragility in the economy.”

Recent high gold prices have helped push up the baht and the central bank will investigate gold transactions and consider additional measures to reduce its impact on foreign exchange rates, he said.

The baht is likely to be volatile given changing global developments, and also from transactions related to public and private investment, Mathee said. (Reporting by Orathai Sriring; Editing by Jacqueline Wong)

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