The Bank of Thailand needs to determine an appropriate policy rate today amid growing concerns the baht value may fall to 39 to the US dollar, says the Federation of Thai Industries (FTI).
The plunge in baht value not only worries importers of oil and raw materials, said FTI chairman Kriengkrai Thiennukul, but it could also cause problems for the country's trade deficit.
The baht depreciated to 37.75 per dollar on Monday, a 16-year low.
"The FTI is closely monitoring the foreign exchange rate and hopes the government can handle it," he said.
The Monetary Policy Committee (MPC) is scheduled to meet today to discuss a rate hike to its benchmark policy rate.
The MPC is expected to raise the rate by 25 basis points from the current 0.75%, which could strengthen the baht to 37 to the dollar, but after that the baht would slide as the dollar firms, Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said earlier.
"In my opinion, the MPC will gradually increase the rate by 25 basis points," said Mr Kriengkrai.
An increase is expected after the US Federal Reserve last week hiked its benchmark interest rate by 75 basis points for the third consecutive time to calm raging inflation.
The rate hike caused the dollar to strengthen against the baht.
Mr Kriengkrai said baht depreciation can have both negative and positive impacts for the Thai economy. Importers face higher costs for raw materials and machines purchased from foreign countries, while tourist operators are expected to benefit as more foreign tourists can travel here for less.
Thailand imports fuels, especially liquefied natural gas (LNG), which is priced high currently, but the country needs it as a fuel for electricity generation.
"We import both crude oil and LNG. Their expensive prices will affect us," said Mr Kriengkrai.
