Baht set to remain strong, fiscal tightening in Malaysia

The authorities in Thailand this week unveiled a couple of further measures designed to put downward pressure on the currency. But unless more is done to reduce the country’s large current account surplus, upward pressure on the baht is unlikely to abate. In its annual budget the Malaysian government today widened its deficit target for next year from 3.0% to 3.2% of GDP. But while the headline figures point to a modest loosening, fiscal policy is likely to act as a major drag on growth next year.