World Bank says manipulation unrelated to stronger baht


BANGKOK, Jan 23 – A World Bank economist today ruled out an attack on Thai currency as the factor leading to the rapid appreciation of the baht.

Kirida Bhaopichitr, World Bank senior economist for East Asia and Pacific, pointed to an influx of foreign funds moving into Asia in general, as well as Thailand, to invest in stock markets and short-term bonds, and high liquidity in the global financial system.

An upswing in the Thai baht currency is unstoppable if foreign funds continue flowing into the country, she said, urging exporters to be cautious regarding the fluctuations and risk management.

Businessmen and exporters adjusted well to the situation in the past and they should have purchased risk insurance, she said, adding that despite the baht appreciation, Thai exports once expanded more than 10 per cent thanks to favourable global economy and trade.

The strongest impact of exports is on global trade, not currency appreciation or depreciation, while a stronger currency is advantageous to the private sector in importing raw materials and machines, Ms Kirida said.

The World Bank economist said the baht movement is moving in tandem with regional currencies and the Bank of Thailand is believed to be capable of managing the Thai currency or intervening in the baht by buying US dollars.

Calling on the private sector to be cautious, Ms Kirida said the influx of foreign funds is mainly for speculation in the stock and bond markets – a short-term activity.

The Thai currency will be weakened and fluctuate once foreign funds are pulled out, she warned.

A leading Thai industrialist earlier today blamed the rapid appreciation of Thai currency on attack by speculators and urged the government to tackle the problem by implementing a policy of deterrence, not prevention.