BOT to stem 'overshooting' exchange rate
Play
Bank of Thailand Governor Prasarn Trairatvorakul assured Japanese investors that the central bank stood ready to expedite measures to stem what he called the "overshooting" exchange rate and "excessive" capital inflows.
At the Japanese Chamber of Commerce’s dinner talk last night, Prasarn stressed the big challenge for the authorities in balancing policies.
On dollar/baht movement, he said the Thai currency had been on an appreciating trend due to various factors, including capital flows surging into the region, structural change in the world economy, the growth differential between advanced and emerging economies, and accommodative monetary policy in advanced economies.
However, the strong baht is supportive for the upgrade of technology and productivity, to shift from labour-intensive to capital-intensive industries, he added.
“So, as the first line of defence, the exchange rate should be determined by the market mechanism and, from both the market and our own assessment, the baht still remains broadly in line with economic fundamentals. However, the central bank stands ready to use policy instruments at our disposal to prevent and manage dysfunctional market conditions, excessive speculation or exchange-rate overshooting,” he said.
See the full speech here: http://www.bot.or.th/English/PressAndSpeeches/Speeches/Gov/SpeechGov_25Mar2013final.pdf
