Finance minister upset with inaction on Thai baht, policy interest rate

Friday, 08 February 2013 From Issue Vol. XXI No. 6 By  MCOT

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong has expressed displeasure over the sharp appreciation of the Thai baht and the high policy interest rate fixed by the Bank of Thailand (BoT).

He said the high policy interest rate may have its advantages but “we must admit that there are also disadvantages in every measure and a careful consideration is necessary.”

Kittiratt was apparently referring to a statement by BoT Governor Prasarn Trairatvorakul on Thursday assuring that the present policy interest rate of 2.75 percent would contribute to Thailand’s economic growth and a reduction was unnecessary for the time being.

The deputy premier said it is inappropriate for one person to set directions on state policies but the country’s economic mechanism is needed in adjusting the Thai currency to the most suitable level.

“Thai people should not be over-anxious [about the strong Thai baht]. The prime minister has expressed her concerns and instructed all related agencies to closely monitor the Thai currency’s movements,” Kittiratt said.

Dr Virabongsa Ramangkura, chairman of BoT Board and former finance minister, earlier called on the BoT to reduce the policy interest rate to narrow the variance with western countries, which set their interest rates at between 0.75-1.0 percent.

He lamented about his inability to speak with BoT executives to convince them, despite his chairmanship at the BoT Board.

Commerce Minister Boonsong Teriyapirom said he will meet with representatives of the Federation of Thai Industries and Thai Chamber of Commerce next week to obtain their feedback on the impact of the appreciating Thai baht on their businesses so that assistance measures can be worked out.

He said information from Thai industrialists will be used for a planned discussion with Thai commercial attachés in May to review the global market and Thailand’s export target.

However, the projected export growth of 8-9 percent will remain unchanged, he said, admitting that the strong Thai baht has affected purchase orders for Thai products in the second quarter of this year.

Small and medium businesses will feel the pinch and may have to increase the prices of their products to compensate for lost revenue, he said.

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