BOT capital movement plan ongoing

“We’re developing the second phase and believe that it’ll be completed this year,” Governor Prasarn Trairatvorakul said last week.
The plan would enable the bank to create a balance between inflows and outflows of capital in the long run.
The central bank implemented the master plan in 2011, aiming to support Thai businesses making overseas investments and acquiring new sources of natural resources and labour. This will create two-way flows of the baht and stem baht speculation to some extent.
The implementation of the master plan is like the installation of a “gate”, which will function according to the situation in the market. If the central bank detects excessive outflows, it will close the gate a little to slow down the outflow.
Chantavarn Sucharitakul, assistant governor in charge of the Financial Markets Operations Group, said Thai businesses invested US$3.46 billion in foreign frontiers in the first quarter this year, split evenly between $1.73 billion for direct investment and $1.72 billion for portfolio investment.
Foreign investment in Thailand reached $7.40 billion, of which $6.07 billion was portfolio investment and $1.32 billion for direct investment.
“We can see that in the first quarter, the inflow exceeded the outflow, prompting the baht to appreciate. Last year outflow and inflow were very balanced, so the baht movement was rather stable,” she said.
Last year saw inflow of $20 billion, of which $14.12 billion was foreign direct investment and $8.62 billion portfolio investment. Outflow was likewise $20 billion, of which $11.92 billion was direct investment by Thai investors in markets abroad and $9.70 billion was portfolio investment.
The central bank is closely watching the overseas investment plans of Thai businesses for the rest of the year. It found that many companies have asked their shareholders’ for approval to invest overseas. This indicates that overseas investment by Thai companies will tend to continue, she added.