BANGKOK, March 14 – Two of Thailand’s financial heavyweights have called on the Bank of Thailand (BoT) to review the policy interest rate as a short-term prevention of foreign capital inflow.
Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said Wednesday that the capital inflow due to high interest rate in the Thai market will not be beneficial, but rather a risk, to the country.
He said the Finance Ministry has signalled the Monetary Policy Committee and the BoT Board to take into consideration an appropriate policy interest rate.
No matter how the decision is made, the Finance Ministry can take it, Mr Kittiratt said, saying an appreciating Thai currency is not completely negative for it enables industrialists to import products at cheaper prices.
The National Economic and Social Development Board (NESDB) said the inflow of foreign capital has not contributed to investment or employment in the country and the inflow is a short-term phenomenon.
Therefore, the policy interest rate should be reduced thanks to Thailand’s solid economic fundamentals and the country’s revival from the massive floods in 2011.
A reduced policy interest rate will stimulate investment and prevent short-term capital inflow, the NESDB said.