BANGKOK, Sept 24 — Bank of Thailand (BoT) Governor Prasarn Trairatvorakul today called on the country’s private sector to be more careful in their risk management given the predicted inflow of foreign capital into Thailand—an impact of the latest US stimulus package recently announced by the US Federal Reserve.
He said it is impossible for the BoT to always intervene in currency exchange matters, adding that the BoT will act on behalf of the Thai baht only when the market is volatile or the currency movement is not in line with the fundamentals of Thai economy.
The BoT has adopted a combined policy concerning the exchange rate, interest rate and regulations on financial institutes to avoid the burden of increasing cost, he explained.
Mr Prasarn admitted that he was concerned with accelerated inflation as a result of the US third quarter stimulus package, citing a marked increase in the value of certain assets including gold and stocks.
He said the US latest measure will not be beneficial to the world economy and small countries cannot resist the trend.
Capital will flow into Asia and Thailand but the highest impact will be in Latin America which offers a higher return than Asia, he said.
After the third quarter measure was announced, Thai currency has been stronger by 1-2 per cent which Mr Prasarn described as mild compared to other currencies in the region.
Capital movement in Thailand in the first eight months of this year is rather balanced with US$10 billion of foreign fund injected into the stock and bond markets and US$8 billion of foreign investment in the country, the BoT governor said, adding that Thailand’s balance of payments will see a surplus at US$500 million.