Connect with us

Banking

Thai central bank steps in to curb baht price’s surge

The baht has risen about 5.6 percent against the US dollar this year, becoming Asia’s best performing currency, putting more pressure on Thailand’s export-driven economy at a time when global demand is cooling

Avatar

Published

on

The Bank of Thailand is taking measures to control short-term capital inflows, while continuing to relax restrictions on outflows to cope with the strong baht, according to minutes of a policy meeting last month.

The monetary policy committee (MPC) felt rapid appreciation of the baht might not be consistent with economic fundamentals and could impact economic growth, according to the minutes of its June 26 meeting released on July 9.

At the meeting, policymakers left the benchmark rate unchanged at 1.75 percent.

Given moderating economic prospects, current economic data from various sectors reflected that the Thai economy would be more sensitive to currency appreciation, the minutes said.

The baht has risen about 5.6 percent against the US dollar this year, becoming Asia’s best performing currency.

That has put more pressure on Thailand’s export-driven economy at a time when global demand is cooling and the US-China trade war is disrupting supply chains worldwide.

Short-term capital inflow management measures

The committee deemed it necessary to prepare short-term capital inflow management measures ready to be implemented at an appropriate time, as well as to continue relaxing more capital outflow regulations to encourage a greater flow of outward portfolio investment by residents.

The Thai Central Bank reduced the outstanding balance of non-resident baht accounts (NRBA) and non-resident baht accounts for securities to 200 million baht per non-resident, from 300 million baht, effective July 22.

“For accounts with outstanding balances at the end of the day higher than 200 million baht per non-resident, financial institutions are required to tell owners to comply with the changes before that date.”

On July 8, governor Veerathai Santiprabhob said the central bank was not happy with “hot” money moving into the country and was ready to impose measures if inflows were unusually large.

The details of the measures are as follows.

1) Enhance “Measures to Prevent Thai Baht Speculation” by reducing the limit on the outstanding balance of Non-resident Baht Account (NRBA) and Non-resident Baht Account for Securities (NRBS) from Bt300 million per non-resident to Bt200 million per non-resident with effect from July 22.

For NRBA and/or NRBS with outstanding balances at the end of the day higher than Bt200 million per non-resident, financial institutions are required to notify the corresponding non-resident account holders to comply with these changes by reducing the outstanding balances within the effective date.

NRBA holders who are non-financial corporates with underlying trade and investment in Thailand, and have opened accounts directly with Thai financial institutions, may submit requests to the BOT for waivers of this outstanding balance limit, which will be considered on a case-by-case basis.

2) Enhance the reporting requirements for non-residents’ holdings of debt securities issued in Thailand where the names of end beneficiaries shall be reported for all non-residents’ holdings of Thai debt securities. This measure will help enhance the BOT’s surveillance of non-residents’ investment behaviours and will come into effect as of the July 2019 reporting period.

The BOT will continue to closely monitor the Thai baht movements as well as non-resident behaviours, and stand ready to use additional measures if undesirable speculative behaviours persist.

The BoT projects economic growth will slow to 3.3 percent this year, from last year’s 4.1 percent, but it is counting on a second-half rebound that some analysts doubt will materialise.-VNA

Comments

Asean

12 Things to Know about the ASEAN Catalytic Green Finance Facility (ACGF)

The ACGF is an ASEAN Infrastructure Fund initiative managed by ADB’s Southeast Asia Department Innovation Hub. It helps Southeast Asian governments prepare and finance infrastructure projects promoting environmental sustainability and contributing to climate change goals.

Asian Development Bank

Published

on

Southeast Asia faces an infrastructure investment shortfall of more than $100 billion a year, which may have worsened amid the COVID-19 pandemic.

Loading...
(more…)

Continue Reading

Banking

Thai cabinet approves 350 billion baht Aid for COVID-hit Businesses

Thailand unveiled new measures to help small and medium COVID-hit businesses in the tourism industry hit by a liquidity crunch.

Olivier Languepin

Published

on

The Thai cabinet has approved assistance worth 350 billion baht($11 Billion) to help businesses affected by COVID-19 with soft loans and asset warehousing.

Loading...
(more…)

Continue Reading

Banking

APAC Banks to Face Portfolio Valuation Losses As Yields Rise

The latest data suggest that Fitch-rated banks in Hong Kong, India, Indonesia, Malaysia and Taiwan have the largest AFS securities portfolios, and display particular sensitivity to changes in yields.

Avatar

Published

on

Fitch Ratings-Hong Kong/Singapore-21 March 2021: A rise in yields for long-dated sovereign bonds will result in near-term losses for Asia-Pacific (APAC) banks as they recognise valuation changes on their available-for-sale (AFS) bond portfolios, but the capital impact should be manageable for most rated banks, says Fitch Ratings.

Loading...
(more…)

Continue Reading

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,974 other subscribers

Latest

Trending