By PHUWIT LIMVIPHUWAT
Bank of Thailand (BOT) governor Veerathai Santiprabhob said there would be no concrete consequences if the US, as speculation suggests, is poised to add Thailand to the list.
Veerathai’s comments come with a warning that the BOT may reduce its forecast for growth in gross domestic product and exports for this year, citing pressures from the intensifying trade war between the US and China.
This month the US Treasury will release a report into the countries that it is scrutinising for policy actions aimed at weakening their currencies. It is speculated that 20 more countries will be added to list, with Thailand among the new entrants.
“Thailand has no policies which manipulate the value of the Thai baht,” Veerathai said. “We have been continuing our dialogue with the US side on this issue and making sure it is clear that Thailand has no such policies.”
He was speaking to reporters after the opening of the Money Expo 2019 exhibition yesterday.
The governor claims that the reason Thailand may appear on the watch list is due to the country’s trade surplus with the US.
In the first quarter of this year, Thailand’s total trade with the US was valued at US$14.5 billion, with $8.7 billion in exports and $5.7 billion in imports. That left the Kingdom with a bilateral trade surplus of up to $3 billion for the three months, according to figures from the Commerce Ministry.
With the trade surplus being the key issue that could put Thailand on the watch list, the governor does not expect any concrete penalties to be meted out to Thailand.
As Thailand has an exporting economy, it is normal practice that the central bank oversees the flow of capital within the country to manage financial risks. However, no manipulation of the currency has been committed, Veerathai said.
He said the baht’s value has been volatile over the past few months and has even appreciated significantly, adducing this as evidence that Thailand has not been manipulating its currency to gain exporting advantages from a weaker baht.
As for the trade war, Veerathai said that the recent escalation in the conflict would have ramifications for the Thai economy.
“The BOT may have to adjust down the economic forecasts for 2019, such as reducing exports and GDP growth figures,” he said, while keeping tight-lipped on what the revised figures might be.
“Global trade is now more uncertain due to the recent events regarding the US-China trade tensions,” he said. “Thailand will be impacted by this as we are an exporting economy. While some businesses may face the negative impacts of the increased tariffs, others may benefit from being able to export more to the US economy to replace Chinese goods.”
The trade war may also hurt the country’s financial markets, as investor confidence could dwindle due to the increased tariffs imposed by the two economic superpowers on each other’s goods, Veerathai said.