The Bank of Thailand (BoT) is monitoring the baht movement closely and is studying additional measures to oversee the currency, according to senior Bank of Thailand officials.
Bank of Thailand Assistant Governor Suchada Kirakul said the central bank has been keeping a close watch on the strengthening of the baht against the US dollar.
However, she sidestepped a question on whether the central bank would impose more measures to rein in the appreciation of the baht.
Wongwatoo Potirat, senior director of BoT’s Financial Market and Reserve Management Department, said many people wanted the central bank to issue measures to contain the baht surge while some did not.
She said the bank was not in a position to tell whether it would issue additional measures to cope with the stronger baht.
However, many countries had begun to take measures to contain the currency appreciation.
For instance, in Brazil, the government raised a tax on capital inflow into the fixed income market from 2 per cent to 4 per cent.
At the same time, there were reports that the Taiwan government would oversee the position of financial institutions running foreign exchange business more closely and the Korean government would examine the position of commercial banks offering derivative products from October 19 onwards.
In Thailand, officials concerned are studying new measures or considering reapplying former measures to oversee the currency’s volatility since it is a transitional period of the central bank governorship.
The baht has surged to its highest level in 13 years on the back of speculation the US Federal Reserve will join the Bank of Japan in pumping funds into the market by stepping up purchases of government debt to revive an economic recovery.The baht appreciated by 0.7 % to close yesterday at 29.94 baht to the dollar, its strongest level since July 25, 1997.
The currency may reach 29.90 baht by tomorrow, some local bankers said.
The baht has climbed 11% this year as global funds bought 41.9 billion baht more of local shares than they sold.
As the US economy weakens, investment fund inflows to emerging Asian economies including Thailand’s are likely to quicken, further boosting regional currencies, bankers said.
The Bank of Thailand yesterday explained how it would deregulate currency transactions to enable local businesses to manage currency exchange risk.
Foreign capital continues flowing into Thailand in normal levels given the country’s sound economic fundamentals, according to Stock Exchange of Thailand (SET) president Jarumporn Chotikasathien.
He said that increased exports, the stronger baht, and higher interest rates had encouraged foreign capital to flow into the bond market in a large amount.
The capital had not overwhelmed the Thai bourse since foreign net buys totaled around Bt60 billion in the past few months compared with foreign net selling of Bt58 billion in May.
Consequently, he said, it is likely that foreign capital would continue flowing into Asian regional and Thai bourses.