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BOT predicts inflation fallout from Russia-Ukraine war

BOT predicts inflation fallout from Russia-Ukraine war

TUESDAY, March 01, 2022

The Bank of Thailand (BOT) expects Russian banks’ removal from the Swift international transaction system to trigger a rise in inflation, volatility of the baht against the dollar and limited impacts on Thai trade and investment in Russia.

"However, Thailand's financial stability is still in good shape, while its trade and investment ratio in Russia is not very high," BOT senior director Chayawadee Chaianant said on Monday.

The BOT Monetary Policy Committee will re-evaluate its current inflation forecast of a sharp rise in the first half of this year and then a decline in the second half, she added.

Meanwhile, the Thai central bank is monitoring Western countries' moves closely, including how many Russia banks are being removed from Swift and which activities are being suspended. Chayawadee said moves will affect the global transaction system in the short term but said it would not affect Thailand’s transaction system.

Many countries had emergency plans to deal with this issue, while Russia had alternative transaction systems but none as convenient as Swift, said the senior director.

BOT is also monitoring financial and capital markets as well, she said, adding that Thai businesses investing in Russia would have guidelines to deal with this issue.

She also expressed confidence the Thai economy would continue to recover, following better-than-expected growth in the fourth quarter of 2021.

Finance Minister Arkhom Termpittayapaisith said the ministry will assess with the BOT whether the Swift sanctions against Russia would affect Thai tourism and exports. Russia is a key market for the Thai tourism industry.