THURSDAY, March 28, 2024
nationthailand

Thailand ready for capital inflows

Thailand ready for capital inflows

Bank of Thailand is on alert for more capital inflows to be driven by the US's third round of quantitative easing (QE3) which has so far strengthened the Thai baht by 1-2 per cent, said governor Prasarn Trairatvorakul.

 

 
 
Yet, he personally believes that much of excess liquidity would go to Latin America, where return on investment is higher than Asia.
Prasarn noted that fund flows in the last eight months showed some balance, with inflows to the equity and bond markets worth US$10 billion against outflows of some $8 billion. This has helped limit the baht appreciation against US dollar. 
"The private sector should come up with risk management measures, as the central bank will  strike foreign exchange stabilisation only when the rates are not in line with economic fundamentals. We won't run against market mechanism. The central bank has tools which are somewhat effective. However, such action carries a cost. This requires the combination of foreign exchange and interest policies, as well as other regulations. Certainly, consequences from the euro crisis require a close watch by the central bank," he said. 
 
 At 30.87 per dollar, Thai baht today has indeed weakened from 30.79 recorded at the end of August and yesterday. 
 
Against greater risks of economic slowdown, he noted that the Monetary Policy Committee would maintain the policy rate at this level. A rate cut is not in the picture, he said, due to robust bank lending. A rate cut would only fuel the lending and serve as a wrong signal to the market, and could pose risks to the economy, he added.  
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