BOT expects light inflows, after Obama's victory
Play
Bank of Thailand Governor Prasarn Trairatvorakul expected light capital inflows to Thailand, after Barack Obama wins the second term as the US president.
"Inflows should not increase significantly, like in the past 3-4 years when Thailand came under huge pressure thanks to current account surplus and trade surplus. The pressure is light and the Thai baht is now supported by flexible mechanism," he said.
He also viewed that Asia's assets have enjoyed a big boost in prices, while other regions like Latin America are also generating high returns, which could be even higher than those in Asia. As such, any excess liquidity from the US would not be channeled to only Asia, he said.
"The central bank is closely monitoring the US economic policies," he said, adding that the policies should not change much from the past four years.
Following the 2008 financial crisis, the US had injected liquidity into the market. The US's near-zero interest rate has spurred outflows out of the US for better returns.
Alisara Mahasandana, Bank of Thailand's senior director for financial markets department, added that after the US presidential election, the Thai baht has been moving in line with regional currencies.
"We have not found any irregularity. There should be minimal short-term effect, as the US policies should not change much," she said.
However, it is too soon to predict the movement in the near term, she said. The US fiscal cliff would be closely watched, as the government's dealing with this could affect the regional foreign exchange market.
Deputy Prime Minister Kittiratt Na-Ranong also told reporters that the Thai baht along with other currencies could appreciate against US dollar, as the US government is expected to continue with the low-rate policy and quantitative easing. However, he noted that the Thai baht should not change much against other currencies under the Bank of Thailand's supervision. He noted that the central bank has won the government's support in keeping the baht in line with market condition.
"The Finance Ministry will not intervene in the market, but will instead promote public spending and private investment overseas as well as imports of capital goods for infrastructure projects. (To stem inflows), the central bank could also put a limit on foreign loans. This will balance demand and supply and effectively limit the baht movement," he said.
