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Govt considers cutting national oil reserves

Businesses warned to prepare for baht volatility

Govt considers cutting national oil reserves

The Thai government is considering cutting the country’s national oil reserve level, according to deputy prime minister and finance minister, Somkid Jatusripitak.

“The government is reviewing whether it is necessary to maintain the nation’s oil reserve at the current level of 5% of total demand, in the face of continuing high global oil prices,” Dr. Somkid told TNA last Tuesday.

Thailand currently holds reserves of both crude and refined oil at 5% of its total domestic demand, or enough for 36 days in case of any crisis.

Meanwhile, the private sector and state agencies were instructed to prepare their energy import figures, which were submitted to the government on July 1, the permanent secretary for energy, Cherdpong Siriwit, said.

These figures will help the government draw up a comprehensive policy for fuel imports to ensure that the energy issue does not affect the country’s economy.

Thailand has had a trade deficit over the last five months because of skyrocketing global oil prices. (TNA)

Businesses warned to prepare for baht volatility

Businesses should prepare for the possibility of further fluctuations in the value of the Thai currency, a leading economic think tank warned last week.

According to the Kasikorn Research Centre (KRC), the baht could take a further slide over the coming months, after falling to 41.358 points last week, the lowest value in eight and a half months.

Pressurized on one side by the appreciation of the US dollar, the baht is also facing an onslaught from Thailand’s lower than expected economic growth figures, including the current account deficit, poor stock market performance, soaring oil prices and the continuing insurgency in the country’s southern border region.

Although the KRC predicts that the baht could well pick up in the final quarter of the year, as the current account balance improves and exports and tourism pick up, it also warns that this currency revival will come amid bad news and continuing uncertainty.

Further pressure on the baht is likely to come if the tourism sector fails to pick up, and if investors remain concerned over the political situation and water shortages.

Warning businesses to prepare for further volatility, the research centre predicts that the currency is likely to fluctuate over the next few months. (TNA)