Cautious bias may give way to Bank of Thailand's further easing

Bank of Thailand also left rates unchanged this week. While the decision was unanimous, the bank remains cautious on growth. Poor weather and weak external demand are bearing down on activity, which has been supported by government spending and tourism. 

As such, a weaker currency looks to be preferred by policymakers, who maintain that further utilisation of policy space may be warranted if the growth outlook worsens. 

This view has been repeated by the BoT through the year, and given low commodity prices and negative inflation, the risk of a rate cut in Q4 after the US Fed meeting in September remain elevated. 

"While the BoT is expected to remain on hold this year, any reversal in THB weakness or further deterioration in the growth outlook in 2H could be triggers for rate cuts", says Barclays.