BOT will wait a little longer before taking action: Paiboon
Paiboon Kittisrikangwan, an assistant governor of the Bank of Thailand, conceded that the baht had risen too quickly, but signalled that the BOT preferred to wait a little longer before taking any action.
“We have put all the measures in place, but we need to monitor the situation. As BOT governor [Prasarn Trairatvorakul] said earlier, the baht has started to gain too quickly and become too strong. But we still have to see how markets adjust to that and if we need to take any action. All action have positive and negative repercussions, aside from long-term effects,” he said yesterday.
He attributed that the baht has been strengthening on good economic fundamentals. The BOT earlier revised up the 2013 economic growth forecast to 5.1 per cent, taking into account the strong baht impact. The central bank is of the view that economic engines are functioning well enough. However, BOT considers that the appreciation pace is slightly beyond fundamentals and this requires close monitoring.
He noted that most exporters have taken care of Forex risks. At present, about 60 per cent of export value has been hedged. Meanwhile, some businesses have taken advantage of the strong baht, as machinery necessary for productivity enhancement becomes cheaper. Some businesses have adjusted to stronger baht by investing overseas, to take advantage of lower wage overseas.
Paiboon noted that the BOT remains committed to upholding economic as well as financial stability.
“The MPC [Monetary Policy Committee] has mentioned its concerns on financial stability several times, in light of expansion in household debt, loan growth and huge transactions in the property market. Risks in the financial stability stem from the accommodative policy rate, which allows huge loan growth and huge liquidity,” he said.
Asked if the MPC would call for an urgent meeting ahead of the May 29 schedule, he said there are criteria for such urgent meeting.
