BANGKOK: Thailand’s central bank and the finance ministry will soon meet to discuss the baht after it tumbled to the lowest in nearly 16 years, signalling growing concerns among officials that the currency slump can threaten a tepid recovery and stoke inflation.

The ministry and Bank of Thailand (BoT) will discuss the baht’s weakness as the nation needs “to seek balance” in the currency, finance minister Arkhom Termpittayapaisith said.

Arkhom’s comments came after deputy prime minister Prawit Wongsuwan, who is also the acting prime minister, told the finance ministry to closely monitor the currency.

The central bank on Friday said it was closely monitoring the baht and may take steps, adding that the US dollar strength due to the Federal Reserve’s aggressive tightening was affecting neighbours too.

Last week, policy makers in Asia pushed back to stem declines in their currencies, with South Korea ramping up its rhetoric and Japan said to be calling banks for an indicative price at which it can intervene.

The baht’s plunge to its lowest level since 2006 has rattled Thai policymakers with the net oil importer already struggling to contain the highest inflation in 14 years.

While a weak local currency is seen as helping exports and tourism - the bright spots in the economy - sticky inflation is eroding purchasing power and hurting the poor.

The baht fell to the lowest since 2006 this month and has weakened the most in Asia in the past five days. It traded at 37.083 against the dollar yesterday, down by 0.3%

The slump in the currency couldn’t come at a worse time for the government, with the general election set to be called early next year.

The BoT has adopted a hands-off stance toward the baht, insisting its role is limited to curbing extreme volatility. While it has raised the policy rate by 25 basis points, it has said that it will stick with its “gradual and measured” approach.

 - Bloomberg