BOT: No need to lower key interest rate; contingency plans ready to cope with capital outflows

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BANGKOK, 20 June 2012  – The Governor of the Bank of Thailand has stated that it is not yet necessary to lower key interest rate, but financial tools have been prepared to cope with possible capital outflows.

Governor of the Bank of Thailand Prasarn Trairatvorakul has confirmed that there is no need for Thailand to bring down the policy rate for the moment because there has not been any signal indicating severe risk following the recession of world economy. He says the policy rate at 3 percent is appropriate for the current economic condition. But if the economic problems in Europe develop to the point that brings the world economy to stagnation, Thailand will have to adjust its policy rate immediately while leniency will be given to non-performing loans.

Mr. Prasarn has also mentioned about plans to cope with capital outflows and cash withdrawals, saying that the Bank of Thailand already has tools to deal with the situation, by, for example, putting more money on overseas investment and restricting the buying of US dollars to only 300 million US dollars for the investors who do not live in Thailand and have no business plan to use that money, or letting exporters hold US dollars for up to 1 year without converting into Thai baht.