Money market more balanced, BOT says

 Earlier, the Bank of Thailand allowed market mechanisms to work while intervening to curb currency volatility.
“The [money] market mechanism is now performing better with two-way flow” of capital, said Singhachai Boonyayotin, senior director of the BOT’s financial markets department.
Now, foreign capital flows in and out of Thai stocks and bonds while Thai investment, particularly direct investment, has been expanding outside the country thanks to the central bank’s more relaxed rules in this area, Singhachai said.
The baht has strengthened about 1.7 per cent since the end of last year. It was trading at 30.88 per US |dollar as of 5pm Bangkok time yesterday.
Thai exporters have better risk management for currency volatility mainly because of the global developments, he said.
“This year is another story, which will see either appreciation or depreciation of the US dollar against other currencies, shaping the regional currencies to move in two ways,” Singhachai said. Previously, the US dollar moved in only one way, influencing regional currencies to move in the opposite way only.
The baht is relatively volatile in line with regional currencies because of sharp fluctuations of the euro in light of the European sovereign debt crisis, Singhachai said.
The baht’s daily volatility is currently about 6 per cent, Singhachai said. Some regional currencies have registered more than 10 per cent in daily volatility, he noted.
Previous exchange-rate intervention to keep the baht weak against the dollar resulted in a negative net worth of Bt400 billion. Former BOT governor Pridiyathorn Devakula recently said that a gradually improving US economy might lead to a rebound in the dollar, which would make the central bank’s task easier.
The BOT is under high pressure to make profits from its market operations as the government has ordered it to pay off public debt worth Bt1.14 trillion left over from the financial crisis of 1997.