BoT to diversify away from US dollars

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BANGKOK, 14 May 2011  – The Bank of Thailand (BoT) is diversifying its risks by holding various types of foreign currencies instead of just the US dollars following mounting concerns over the fragility of the US economy. 

BoT Governor Dr Prasarn Trairatvorakul admitted that the world, including Thailand, is worrying about the risk that the US credibility could be downgraded; therefore, the BoT must diverse its capitals away from the greenback to other currencies and bonds with lower risks despite lower returns.

Dr Prasarn stated that the fiscal policies of the US must be monitored closely since the US might extend its public debt ceiling if it is to keep implementing expansionary monetary policy; nonetheless, its debt management plan must be made clear or else its credibility might be downgraded.

The governor disclosed that the BoT is trying to increase its investment in four emerging BRIC nations, including Brazil, Russia, India and China, but the operation will take some time since there are some liquidity limitations.

Dr Prasarn noted that the BoT has reduced the amount of the US dollars in foreign exchange reserves and has bought more gold in the global market to maintain the level of gold at 3% of the foreign exchange reserves.