New savings bonds won’t affect liquidity, says BoT

The government’s plan to issue its first batch of savings bonds - an issue valued at Bt 50 billion - will neither fuel rising interest rates nor affect the liquidity in the system very much, according to the Bank of Thailand (BoT).
BoT Deputy Governor Atchana Waiquamdee said the issuance of the government savings bonds would result in financial institutions adjusting for improved services because depositors have more channels for savings.
She said the first batch of Bt50 billion in such bonds represents 0.5 percent of current total deposits of Bt9.6 trillion.
The bonds will offer an interest rate of 3 percent in the first two years, 4 percent in the third year, and 5 percent in the fourth and fifth years, unlike deposit rates offered by commercial banks, which remain at 1.5-2.75 percent.
Under the circumstances, some depositors might shift some of their deposits to the new government saving bonds.
“The BoT must monitor liquidity following the issuance of the bonds by the Ministry of Finance so that it can be used to establish the policy interest rate in a proper manner,” she said. (TNA)

Thailand - China to boost economic cooperation

Prime Minister Abhisit Vejjajiva and Chinese President Hu Jintao on Friday agreed to strengthen cooperation in the economy, trade and investment to fight the global economic downturn while planning to build roads connecting the two countries to mark the 35th anniversary of diplomatic links in 2010.
The Thai prime minister met the Chinese president at the Great Hall of the People in Beijing on the third day of his official visit to China, which ended Saturday.
Abhisit said the agreement reached at the meeting will be continued in the ministerial levels soon. The issue discussed during the meeting included investment, trade and pandas.
Transport development projects such as road connections and bridge construction to link Thailand and China will be tangible next year. Road connection will pass through Laos and Myanmar, and China also supports infrastructure development projects in Laos and Myanmar, he said.
Hu called Thailand a reliable friend and good partner of China in Southeast Asia. He said China placed great importance on its relations with Thailand and was ready to deepen bilateral links, according to China’s Xinhua news agency.
Noting that the two countries would mark the 35th anniversary of diplomatic links in 2010, Xinhua quoted Hu as saying he hoped the concept of “Jeen Thai Phee Nong Gan” (Chinese and Thais are brothers) would take deeper root in the hearts of the two peoples.
The Thai premier also visited Guangdong province, south China’s economic hub. (TNA)