BoT intervenes to stabilize baht upon US dollar plunge

The Bank of Thailand (BoT) has intervened to tame the baht’s fluctuation upon finding that the US dollar had weakened rapidly, according to a senior central bank official.
Pongpen Ruengvirayudh, senior director of BoT’s Financial Markets and Reserve Management Department said economic indicators in the United States had significantly improved, showing investors have confidence in the economic recovery and are ready to take greater risk.
Under the circumstances, the US dollar had flowed into the stock and bond markets more than usual, resulting in the baht strengthening quite rapidly.
Thailand’s central bank official believed it necessary to intervene in the baht’s movement to ensure that the currency neither fluctuates nor strengthens too rapidly.
“We are not the only central bank intervening to supervise (the national currency) in the past one or two days. Other central banks in Asia have attempted to oversee their currencies because the greenback has weakened rapidly.
“We believe the global financial market remains volatile and the baht is likely to strengthen or weaken depending on economic indicators in the US,” she said. (TNA)

Thailand sustainable recovery relies on global, US economic conditions

The sustainable recovery of the Thai economy depends on the global economic conditions and the economic resilience of the United States, according to a former Bank of Thailand (BoT) governor.
Chatu Mongol Sonakul, who is chairman of the BoT Board of Governors, said whether or not the US economic recovery will be sustained needs to be monitored because some of the 400 major financial institutions in the US, which were extended combined loans amounting up to US$400 billion, are still at risk of going into bankruptcy like the now-defunct giant investment banker Lehman Brothers.
Should there be a collapse of additional financial institutions in the US, it would definitely affect the global economic recovery, and that of Thailand.
Political unrest continues as a major domestic risk factor for the Thai economy. The government’s decision to invoke the Internal Security Act in Dusit district from last week (September 18-22) to monitor the mass anti-government rally by the so-called red shirts was justified, but the action, however justified, might negatively affect foreign investor confidence if investors doubted the need to invoke the act.
Chatu Mongkol affirmed the central bank will not adopt a fixed currency exchange rate because the BoT’s monetary policy is focused on boosting economic stability and confidence.
Currently, he said, the BoT is already managing monetary policy efficiently.
Siam Commercial Bank Executive Vice President Sethaput Suthiwart-Narueput said political uncertainties have definitely affected consumer and investor confidence, particularly in the tourism sector.
He said that global and Thai economies had showed clear signs of recovery as could be witnessed by the country’s improved export performance, but it must be careful because the expanded purchase orders drew on stocks of Thailand’s nearly-depleted inventory rather than providing new production and new or continuing employment for production workers. (TNA)