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BoT cut rate to record low 0.5%

The Bank of Thailand cut the policy rate yesterday by 0.25 percentage points to a record low of 0.5%, saying that the Thai economy would contract more than the previous assessment

Boris Sullivan

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The Bank of Thailand cut the policy rate yesterday by 0.25 percent from 0.75 to 0.5 per cent effective immediately, Titanun Mallikamas, secretary of the MPC, said after the committee’s meeting on Wednesday (May 20).

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 In deliberating their policy decision, the Committee assessed that the Thai economy would contract in 2020 more than the previous assessment due to the more-than-expected contraction of the global economy along with the containment measures worldwide. Headline inflation would be more negative than previously assessed. 

The Thai economy would contract more than the previous assessment

Tourism and merchandise exports were affected by trading partners’ economies more than expected. Meanwhile, domestic demand, both private consumption and private investment, would contract more than previously assessed due to higher unemployment and the containment measures. Nevertheless, financial and fiscal measures would help partly to alleviate liquidity problems of households and businesses as well as support the Thai economy to recover gradually. 

According to the Bank of Thailand’s latest data release, Thailand’s GDP could contract by 5.3 per cent in 2020, a sharp lowering from its 2.8 per cent previous projections in December.

The financial institution system remained sound

Commercial banks had robust capital fund and loan loss provision levels. Nevertheless, there remains a need to monitor the risks that may pose vulnerabilities to the stability of the commercial banking system in the period ahead, particularly defaults by businesses and households after the phase-out of liquidity support measures. 

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Asian Development Bank

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

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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

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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.

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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.

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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.

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