Central bank ready to unveil anti-currency speculation measures

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BANGKOK, Jan 22 – The Bank of Thailand (BoT) is closely monitoring the movement of Thai currency and ready to apply measures, if necessary, to tackle baht manipulation, Governor Prasarn Trairatvorakul said today.

He said financial losses to be incurred by the BoT are not an obstacle in taming currency speculation since the central bank is duty bound to maintain a balanced growth of the economy and stability of the monetary system as well as the movement of currency and fluctuation.

“We have the tool and we’ll use it accordingly if we find manipulation in the market,” said the BoT governor. “We still want the baht movement in line with the market mechanism.”

He would not disclose the BoT’s future actions to balance the currency.

Thai investment abroad totalled US$11 billion last year while foreign investment in Thailand was $8 billion, Mr Prasarn reported, adding that Thai investment in overseas securities was $8 billion but foreign investment in Thai securities and bonds was $12 billion.

Describing the values as “rather balanced” and not needing BoT intervention, Mr Prasarn said Thai investors will greatly expand their business overseas in the future – a trend that contributes to Thailand’s competitiveness and full use of the strong Thai currency.

He said the baht appreciation, though as high as 5-6 per cent this year, is in tandem with Malaysia’s ringgit and the Philippine peso.

He admitted that the Thai currency is too strong in the short term but, based on the economic fundamentals of Thailand and neighbouring countries, it has not departed from the trend in the last few years.

The low policy interest rate may indulge the private sector into excessive debt and stimulate depositors to invest in risk assets – factors that may lead to imbalance and a financial bubble situation, he said.

He added that foreign commercial banks will be given licences to operate in Thailand early next year while a framework negotiation will be set for Thai commercial banks to expand their businesses under the ASEAN Economic Community’s Qualified ASEAN Bank and penetrate into non-banking and micro finance services.