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
Thailand prepares for cryptocurrency challenges
Thailand is moving toward a cashless society. Bank notes and coins are set to become obsolete while transactions via electronic payments have increased over recent years.
How China’s role in global finance has changed radically
Within the space of just 15 years, China has gone from being the largest net lender to the world to now being a net borrower. The implications for the global economy, and China’s role within that economy, could be significant.
‘If you owe the bank $1 million, you have a problem. But if you owe the bank $1 trillion, then the bank has a problem’. It’s an old gag, but it underscores an important point: the size of your borrowing or lending can have profound implications for your role in the world.(more…)
Bangkok Tops Mastercard’s Cities Index For The Fourth Consecutive Year
Bangkok remains the No. 1 destination, with more than 22 million international overnight visitors, but Dubai tops the list for spending.
The Global Destination Cities Index—which ranks 200 cities based on proprietary analysis of publicly available visitor volume and spend data—reveals that Bangkok remains the No. 1 destination, with more than 22 million international overnight visitors.(more…)
Thailand Ecommerce Market: Shooting For Success
At present, the Thai ecommerce market is valued at USD 3.5 billion. According to a Google Temasek study, Thailand’s e-commerce...
Aspire Set to Become First SME Neobank in Southeast Asia with US$32.5 Million Raise
The recent financing has been led by Mass-Mutual Ventures Southeast Asia with participation from Silicon Valley’s Arc Labs and existing...
How is Thailand Bringing Technology to the Table?
In Asia, a country like Thailand has taken the initiative to implement agricultural biotechnology in its industry. The country has...