BANGKOK, April 27 – Bank of Thailand (BoT) Governor Prasarn Trairatvorakul on Tuesday said that foreign capital would continue flowing in and out of Thailand and other Asian countries quite rapidly due to the sound economic growth of the region and high liquidity in the global financial system.
Although the country would probably enjoy a net inflow of foreign capital this year, he said, a capital outflow could not be ruled out given the fragile economic recovery of a group of three economic powers and the easing of the monetary policy in the United States.
Mr Prasarn said the central bank would attempt to manage the baht to prevent it from fluctuating too greatly, but it would not resist the market trend because it is capable of intervening in the market with constraints.
The bank would closely monitor speculation in the baht and attempt to maintain equilibrium of the capital inflow and outflow by giving the private sector more channels to invest directly in foreign countries and foreign stock markets.
He said the bank had studied a measure to oversee capital movements and is prepared to adopt it if necessary. It is also ready to encourage regional cooperation to cope with the currency fluctuation.
The BoT chief noted that capital had flowed into Thailand in the past two weeks as the Asian economy continued expanding satisfactorily, but the US experienced a budget conflict and the downgrading of its outlook by Standard and Poor’s.
He said domestic and overseas inflation rates remain a key risk factor to the economy.
The border conflict between Cambodian and Thai troops would not adversely affect the overall economy unless it escalates because exports to Cambodia represent less than 1 per cent of Thailand’s total export value, he added.