Bankers support current policy rate, see risk in high inflow
Bankers have thrown their support behind the current interest-rate policy, while pointing to capital inflows as a major risk.
After a discussion with the Federation of Thai Industries and the Thai Chamber of Commerce on impacts from the appreciation of the baht, Chartsiri Sophonpanich, president of the Thai Bankers Association, said current interest rates remained appropriate.
The major risk to the exchange rate, which is now moving in line with the market and regional peers, is foreign capital flowing into Asia, he said.
Banks are attempting to get their customers to adjust to currency volatility, said Chartsiri, who is also president of Bangkok Bank.
Wasin Saiyawan, executive vice president of Siam Commercial Bank, expects foreign capital to flow into emerging markets consistently, given monetary easing.
The baht is forecast to weaken to 28.80 per US dollar, given a likely selling spree of the dollar, he said, expecting the Thai currency to hit 28.50 by midyear.
Wasin said large customers’ hedging position declined from 60-70 per cent in the previous year to about 60 per cent of their transactions at the present. Medium-sized customers have about 30-40 per cent hedging.
Padej Piroonsit, executive vice president of CIMB Thai Bank, said about 50 per cent of exporters took currency-hedging positions while the remainder were concerned about the Thai currency’s direction and likely measures by the Bank of Thailand.
He suggested that all business operators hedge against currency risk, given its unpredictability.
If they do, they will not waste time with headaches over currency volatility and can concentrate on running their businesses, he said.
