Excerpted from Bloomberg News

The Bank of Thailand is seeking to backstop market stability after a jump in bond yields stoked concerns that stresses are building up.

The monetary authority pledged late Friday to ensure sufficient liquidity for markets to function well as it unveiled an emergency interest-rate cut to counter the economic shock of the coronavirus outbreak.

“We have been running down international reserves and providing baht liquidity to facilitate the normal functioning of the financial market,” Bank of Thailand Assistant Governor Chantavarn Sucharitakul said in an email.

The coronavirus crisis has created funding stresses across the world after upending a range of investments and sparking a dash for cash. There are indications high net-worth investors in Thailand have been making mutual fund redemptions, according to Maybank Kim Eng Securities (Thailand) Pcl.

The reduction in the policy rate to 0.75% from 1% takes effect March 23. In its statement, the central bank said the overall financial system is stable but added the coronavirus outbreak had affected the functioning of Thai markets.

The Thai stock market has plunged 29% this year and the baht is Asia’s second-worst performing major currency. The yield on the 10-year Thai government bond jumped to 1.68% on March 20 from 0.83% on March 9.

Foreign investors have pulled out a net $4.6 billion from stocks and bonds so far in March, according to data compiled by Bloomberg.

The central bank has said that it spent more than 100 billion baht ($3.1 billion) from March 13 to March 19 to buy government bonds. Foreign reserves were $229.2 billion on March 13, down $7.1 billion from a week earlier, the biggest such drop since 2008.

https://www.msn.com/en-us/finance/news/bank-of-thailand-vows-market-stability-after-jump-in-yields/ar-BB11vjva

 

From Bloomberg News

Thailand Faces Biggest Economic Contraction Since Asian Crisis

The Bank of Thailand left its benchmark interest rate unchanged after an emergency cut last week, while projecting the worst contraction in the economy since the Asian financial crisis more than two decades ago.

The bank slashed its growth forecast for this year, now expecting the economy to shrink 5.3% compared with an earlier estimate of 2.8% expansion. Exports and tourism, the key drivers of Thailand’s economy, have both been hard hit as the coronavirus outbreak spreads around the world.

The policy rate was maintained at a record low 0.75% Wednesday following a 25 basis-point reduction at an unscheduled meeting March 20. Four of the seven monetary policy committee members voted to hold, two called for a cut and one wasn’t able to attend.

“We believe they can cut by another 25 basis points. They could have used all the space they have now,” said Burin Adulwattana, chief economist at Bangkok Bank Pcl. “The economy is on the brink of a recession with huge downside risk, so it’s time to do all they can.”

Bank of Thailand Assistant Governor Titanun Mallikamas said Wednesday that policy makers stand ready to lower rates further if needed and will keep a close watch on markets, including the baht exchange rate. In a statement delivered through the Bank of Thailand’s Facebook page due to social-distancing precautions, he said the economy would recover only next year.

The benchmark SET Index extended gains after the decision, surging 6.3% to 1,099.32 as of 3:32 p.m. in Bangkok. The baht fell 0.3% against the dollar, paring an earlier loss of as much as 0.5%.

Quantitative easing is looking more likely for Thailand’s central bank, in our view. Conventional policy ammunition is running low. The road ahead is long for the recovery of the country’s all-important tourism sector.

https://www.msn.com/en-us/finance/markets/thailand-faces-biggest-economic-contraction-since-asian-crisis/ar-BB11FKx5

at least we can say that virus is devastating  all major economies so no country will gain undue advantage by avoiding it