BENGALURU: The Thai baht trimmed early gains, while equities extended their rally on Wednesday after the central bank cut interest rates by a quarter point in a surprise decision.
The baht was last trading 0.1 percent firmer at 31.04 per dollar, after gaining as much as 0.3 percent earlier in the session.
Thai equities jumped as much as 2.2 percent to hit their strongest level since late September, extending gains to a third straight day.
Thailand’s central bank cut rates again as economic growth remains weak and below potential, because of a recent one-off fiscal spending, while underlying demand is soft and inflation is deeply subdued with core prices barely rising.
Poon Panichpibool, a market strategist at Krung Thai Bank, said it is increasingly evident that the 31-per-dollar level is shaping up as strong near-term support for the baht.
“The central bank’s concerns about the baht’s recent strength likely played a role in persuading most board members to back a rate cut,” he said.
Additional easing would help relieve upward pressure on the baht, which has appreciated by nearly 9 percent against the dollar over the past year.
A stronger baht is not always positive because it erodes export and tourism competitiveness, squeezes baht revenues for dollar-earning firms, and can further dampen already weak inflation by making imports cheaper.
Elsewhere, equities in South Korea and Taiwan climbed to record highs, buoyed by another leg-up in heavyweight chipmakers as investors doubled down on the artificial intelligence trade.
South Korea’s benchmark stock index extended its rally to a fifth straight session, rising 1.91 percent. Taiwan notched a sixth consecutive day of gains, advancing 2.1 percent.
Currencies firmed in tandem with equities.
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