Bank of Thailand Dismisses Abnormal Capital Inflows Despite Baht Appreciation
The central bank attributes the strong baht to the current account surplus and political stability, clarifying that 'Net Error' is a statistical gap, not a new pressure on the currency
- The Bank of Thailand (BOT) has officially stated it has not detected any abnormal capital inflows or speculative activity, despite the recent appreciation of the baht.
- The central bank clarified that a statistical discrepancy known as "Net Error & Omission" (NEO) is not a sign of new capital but a statistical gap that has already influenced the exchange rate.
- The baht's strength is attributed to local factors like a high current account surplus, political stability, and its correlation with gold prices, rather than unusual foreign investment.
The Bank of Thailand (BOT) has confirmed it has not detected any abnormal capital inflows into the country, despite the recent rapid appreciation of the baht.
The central bank is reassuring the public and the market that the so-called "Net Error & Omission" (NEO) is not a sign of speculative capital or an additional pressure on the currency.
Chayawadee Chai-anant, Assistant Governor of the BOT’s Corporate Relations Group, stated, "We have not observed any abnormal capital inflows or signs of speculative activity on the baht."
She explained that NEO, a statistical discrepancy in the Balance of Payments, does not represent a new flow of money.
"The capital flows that become part of NEO have already influenced the exchange rate. NEO is simply a statistical gap," she clarified.
As of 17 September, foreign investment in Thai bonds amounted to a net inflow of approximately $534 million, while a net $100 million flowed out of the stock market. For the year-to-date, there has been a net inflow of $1.2 billion into bonds, but stocks remain in a net outflow position.
Chayawadee reiterated that these movements were "not abnormal."
While the U.S. dollar's strength is a primary factor in currency movements, the baht has recently outperformed other currencies due to several local factors.
These include a higher-than-expected current account surplus, increased political stability, and a strong correlation with the price of gold.
The BOT is in discussions with gold traders to mitigate the currency's sensitivity to gold price fluctuations.
Chayawadee also addressed concerns about potential "grey money" linked to gold exports to Cambodia. She stated that while the BOT can see the export data, it cannot determine whether the transactions are illicit.
The central bank has therefore requested that the Anti-Money Laundering Office (AMLO) investigate the matter.
The BOT is scheduled to release its latest Balance of Payments data on 30 September, which will include updated NEO figures.
Chayawadee noted that a significant portion of the NEO from the past year has already been revised and reduced as new data becomes available.
She confirmed that, when compared to international trade, Thailand's NEO ratio remains below the average for other developing economies in the region.
