BANGKOK, May 25 – Bank of Thailand (BoT) Governor Prasarn Trairatvorakul on Tuesday said the global financial system is in great imbalance as seen by the currency fluctuations.
Mr Prasarn said the baht is more volatile at present due to rapid change in external economic factors, particularly the persistent public debt problem in the European Union and fragile economic recovery in the United States.
“We rarely intervene in the baht movement when the currency weakens because [Thailand] counts on exports to earn foreign exchange,” he said. “What we must do now is to ease the volatility of the baht to ensure it does not fluctuate too heavily,” he said.
The US economy represented around 20 per cent of the gross domestic product (GDP) of the globe when it experienced the economic recession.
About 80 per cent of countries worldwide use the US dollar for trading. Simultaneously, China whose economy has expanded rapidly, has a small money supply in the market.
The current situation has many countries continuing to experience the volatility of the US dollar, which looks set to continue to weaken. However, no other currencies can replace the dollar for the time being.
“At present, all countries have been negatively affected by the US economic woes and currency volatility. Thailand is no exception,” the BoT chief said. “Strengthening the baht last year caused [the Bank of Thailand] to lose currency exchange from intervening in the baht movement to ensure its stability.”