Commercial banks are quite likely to raise both their deposit and lending rates following the Bank of Thailand (BoT) decision to raise the policy interest rate by 25 basis points on Dec 1, according to the central bank’s Deputy Governor Krirk Vanikkul.

In order to ensure Thailand’s competitiveness in the near future, Thailand needs to improve its productivity and investment climate.Experience from countries that have managed to increase productivity and rise up the value chain such as South Korea and Taiwan have shown that productivity improvements at the national level are achievable with a concerted efforts by the private sector, government, and academia.

On Dec 2, total trading volumes increased 228.3% to THB 1415bln. Outright transactions accounted for 7.7% of total trading, amounting to THB 109bln, 251.6% higher than the previous day. For the auction, CB10D20A and BOT133A gained 1.695-1.93 and 1.98-2.09% at average of 1.90344 and 2.06408%. The bid coverage ratios were 1.15 and 0.46 times supply. For the secondary bond market, yields on bonds increased significantly, by approximately 2-6 bps due to the increased policy rate. At the end of the day, Government bond yields for all tenors changed by +1 to +10 bps.
FX RateNew York CloseTokyo Open
JPY/USD83.86//8883.74//76
EUR/USD1.3219/221.3209/15
GBP/USD1.5602/071.5589/94
CHF/USD0.9922/300.9927/37
SGD/USD///1.3079/89
HKD/USD///7.7659/69
AUD/USD0.9763/670.9755/76
LIBOR*USD$EURJPYCHF
1 month (%)0.26560.75880.11880.1350
2 months (%)0.28250.85250.14500.1550
3 months (%)0.30340.96880.18250.1683
6 months (%)0.46531.20630.35190.2383
12 months (%)0.79001.48750.58000.5250
Monetary Policy Rate
O/N2.0000 %
World Gorvernment Security
Yield (%)Spread
JGB 10 years1.20
Thai Gov’t 10 years3.61

Government in Thailand should take measures to improve the country’s investment climate such as streamlining the regulatory environment and improving public infrastructure which will help stimulate private investments as they help to reduce operating costs for firms.
Political stability would help to regain investors as well as assure them the clarity and continuity of policy directions.These could help promote investments in Thailand by the private sector amidst the unfavorable external environment.Greater public investments in infrastructure will also boost investor confidence and investments. Public investments would not only inject funds directly into the economy, but better infrastructure services will stimulate further investments and productivity of firms. Firms in the 2007 survey indicated that inadequate infrastructure services have led to increased costs, such as logistics costs, which have discouraged them from investing.

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BoT expects banks to raise deposit and lending rates

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