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Thai Finance Minister Pichai Seeks Collaboration with New Bank of Thailand Governor on Strong Baht
On June 30, 2025, The Nation Thailand reported that Deputy Prime Minister and Finance Minister Pichai Chunhavajira is prioritizing close collaboration with the incoming Bank of Thailand (BOT) Governor to address the baht’s “abnormally strong” performance, which he believes deviates from standard market mechanisms. Pichai is expediting the selection process for the new governor, with a focus on candidates who understand fiscal and monetary policy and can work effectively with the government.Link
Key Developments in Governor Selection
- Selection Process: Pichai plans to propose a single candidate to the Cabinet, following a selection committee’s shortlisting of two finalists—Dr. Roong Mallikamas, Deputy Governor for Financial Institution Stability at BOT, and Vitai Ratanakorn, Director of the Government Savings Bank—from six applicants. Further qualification screenings may delay the final submission.LinkLink
- Candidate Qualifications: Pichai emphasized that both candidates have expertise in fiscal and financial sectors, and he has personally engaged with them to assess their mindsets. The new governor must align with government policies and navigate challenges like high household debt and potential U.S. tariffs.LinkLink
- Timeline: The selection committee, led by former bureaucrat Sathit Limpongpan, interviewed candidates on June 24, 2025, with a final decision expected by early July, as incumbent Governor Sethaput Suthiwartnarueput’s term ends on September 30, 2025.LinkLink
Addressing the Strong Baht
- Baht’s Performance: The baht has appreciated significantly, gaining 10–12% against the U.S. dollar in 2025, driven by U.S. Federal Reserve rate cut expectations and foreign investment inflows. This strength threatens Thailand’s export and tourism sectors, with an estimated $1.5 billion in initial economic damage.LinkLink
- Pichai’s Strategy: Pichai seeks better coordination between fiscal and monetary policies to stabilize the baht without direct intervention, advocating for a shared understanding with the BOT to align its value with market forces. He previously pushed for interest rate cuts and a higher inflation target (around 2% versus the current 1–3% band) to boost GDP growth, projected at 3–3.5% for 2025.LinkLink
- BOT’s Stance: Outgoing Governor Sethaput has resisted rate cuts, maintaining the key rate at 2.5% to prioritize financial stability amid high household debt (89.6% of GDP) and currency volatility risks.LinkLink
Risks and Opportunities
- Risks: The baht’s strength could undermine Thailand’s export-driven economy and tourism, critical growth drivers. Ongoing tensions between the government and BOT, coupled with a sputtering economy and potential 36% U.S. tariffs by July 9, 2025, pose challenges. The new governor’s ability to balance independence with government collaboration will be critical.LinkLink
- Opportunities: A collaborative BOT governor could facilitate monetary easing and liquidity measures, supporting Pichai’s growth targets. Successful U.S. tariff negotiations, for which Pichai is traveling on June 30, 2025, could mitigate trade disruptions, while a stabilized baht could enhance import and debt repayment capabilities.LinkLink
Conclusion
Finance Minister Pichai Chunhavajira’s push for a collaborative Bank of Thailand Governor reflects Thailand’s urgent need to address the baht’s “abnormally strong” value, which threatens exports and tourism. With two qualified candidates under consideration, Pichai aims to align fiscal and monetary policies to boost economic growth while navigating U.S. tariff risks and high household debt. The incoming governor’s ability to work with the government and manage currency dynamics will be pivotal for Thailand’s economic stability in 2025, with a final selection decision expected soon.