Foreign capital starts to flow back to US
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Foreign capital starts flowing back to the United States, said Bank of Thailand governor Prasarn Trairatvorakul, following the improvement in the US economy.
He said on Tuesday that Thailand has witnessed some outflows as well. He urged all businesses dealing with foreign income to stay fully alert for volatility.
Thanks to the outflows, US dollar has gained against major currencies. The Thai baht has fallen to a new 1-year low, near 31 per dollar. At 8am today, the baht was at 30.78 per dollar, against the end-2012 closing at 30.60.
More foreign capital is expected to return to the US, if the US Federal Reserve Board decides to end the quantitative easing before 2014. The Stock Exchange of Thailand has tumbled today, losing 66.97 points at 2.35pm to 1,461.58 points.
Standard & Poor's Ratings Services yesterday also revised the ratings outlook of the US from "negative" to "stable" on receding fiscal risks. The US's ratings "'AA+/A-1+" were affirmed.
In a statement, S&P said that the credit strengths of the US include its resilient economy, its monetary credibility, and the US dollar's status as the world's key reserve currency.
"Similarly, in our view, the US's credit weaknesses, compared with higher rated sovereigns, include its fiscal performance, its debt burden, and the effectiveness of its fiscal policymaking."
The rating outlook is revised to indicate its current view that the likelihood of a near-term downgrade of the rating is less than one in three.
