BANGKOK, March 21 – Thailand’s central bank chief admitted that the Thai baht has strengthened too rapidly, mainly due to speculation and manipulation by currency traders and buyers.
In yesterday’s economic cabinet meeting, Bank of Thailand (BoT) Governor Prasarn Trairatvorakul explained that the appreciating Thai currency was not related to huge inflows of foreign capital.
Describing the global monetary market as unstable, he said the Thai economy has fared positively amid news in neighbouring countries that has shaken foreign investor confidence.
“Malaysia is approaching a general election while Indonesia is having a budget deficit. Singapore is encountering a property bubble,” he said.
The BoT governor said the volume of capital inflow to Thailand has not been unusually large, and has mainly been for investment in long-term bonds.
Investment of foreign capital in short-term bonds reached Bt800 billion while the ratio of foreign ownership has increased from 5-6 per cent to 12-15 per cent of the total Bt4 trillion in bond investment, he said.
This is not unusual compared to Indonesia and Malaysia where foreign investors own local short-term bonds at 40 per cent and 30 per cent respectively, he said.
Mr Prasarn said the sharp decline in the Thai stock market index in the last two days was unrelated to central bank activities.