Asean bid to push local currencies
BOT, TWO OTHER CENTRAL BANKS SIGN MOU TO INCREASE USE FROM 15% AT PRESENT
A LOCAL-CURRENCY framework by three Asean central banks – Bank Indonesia, Bank Negara Malaysia and the Bank of Thailand – will help increase the usage of local currencies for Thai trades from 15 per cent currently, said BOT assistant governor Chantawan Sucharitkul.
The US dollar is the major currency for Thai trades, at 85 per cent, but local currencies will increase after the three central banks agreed to support the use of local currencies, she said.
The BOT yesterday signed a bilateral memorandum of understanding with Bank Indonesia after signing a similar agreement with Bank Negara Malaysia in March.
Bank Negara Malaysia yesterday signed an MoU with Bank Indonesia to promote the local-currency settlement of bilateral trade.
These bilateral MoUs were signed by Agus DW Martowardojo, governor of Bank Indonesia, Muhammad bin Ibrahim, governor of Bank Negara Malaysia, and Veerathai Santiprabhob, governor of the BOT.
Chantawan said local currencies could be an alternative choice for traders and this could help reduce foreign-exchange volatility caused by the US dollar. At present, annual bilateral trade between Thailand and Malaysia is worth Bt20 billion, and bilateral trade between Thailand and Indonesia is worth Bt15 billion.
Chantawan said that after signing the MoU with Indonesia, both nations would ease regulations on liquidity, allowing commercial banks of both countries to manage a sufficient amount of currencies to accommodate traders.
The BOT expects the appointed dealers will be announced in the second half of next year.
The appointed dealers for baht-ringgit settlements are Bangkok Bank, CIMB and Kasikornbank in cooperation with Maybank.
After the successful implementation of the agreement between Bank Negara Malaysia and the BOT, it is expected that these similar bilateral arrangements will efficiently facilitate economic and financial activities among the three countries.
The enabling environment is also expected to benefit businesses by reducing transaction costs and enhancing the efficiency of trade and investment settlements.
Amid the current volatile global financial markets, it is predicted that businesses will have more options in choosing currencies for trade settlements.
It is also expected that the new framework will pave the way for wider usage of local currencies in the Asean Economic Community and spur further development of the regional foreign-exchange and money markets, in support of wider economic and financial integration.
