Thai Prime Minister Abhisit Vejjajiva on Thursday dismissed calls for market intervention to help stem the bahts appreciation, saying the central bank could face a huge loss as its intervention may not be successful, as seen in many countries’ attempts to stem their own currency surges.
“Some countries spent a large amount of money to intervene in their currency markets but are [still] unable to buck the market trend. In our case, just simply put, the central bank will face a heavy loss and in fact it would not be able to rein in the rising baht,” he said.”To spend a large amount of the country’s reserves for that purpose will not be worthwhile at all,” the prime minister stated.Mr Abhisit expressed confidence that Thailand will not experience a second round such as the 1997 financial crisis or the so-called “Tom Yam Kung” crisis.
The Thai government announced on Tuesday it has imposed a 15 percent withholding tax on interest payments and capital gains for government and state owned company bonds, indicating the government will take decisive steps to slow the inflow of ‘hot money’. Thailand’s decision to introduce a tax on foreign holdings of bonds is the latest in a series of efforts by emerging economies to decrease destabilizing capital inflows as fears of a global currency war increase.
The central bank’s Monetary Policy Committee (MPC) of Thailand has become increasingly concerned about foreign capital inflows as the economy has failed to grasp their benefit. The inflows have lifted the baht by 11% against the dollar so far this year, the largest gain in the region after the Japanese yen.
Analysts expect the interest-rate gap between the US and developing regional economies to widen, with the US Federal Reserve signalling it might renew its plan to inject liquidity into the private sector.
The Fed statement, coupled with the worsening trend of the US economy, has caused the US interest rate to continue to fall, with yields on 10-year treasury bills slipping below 0.5%.
Steady net gains in trade and services in Thailand have also drawn investment on expectation of continued baht strength. The total balance of payments surplus through August was US$18 billion, of which $6.6 billion was from the current account.
Thailand Saw $1.7 billion Applications in Bio-Circular-Green (BCG) Investments in 2020, BOI Says
The BCG model, as defined by the Thai Government, encompasses industries that allow inclusive, sustainable growth while reducing waste, pollution and dependence on finite resources.
In the first nine months of 2020, local and international companies applied to invest as much as $1.7 billion in Thailand in more than 300 projects in the sectors listed as “BCG”, or Bio-Circular-Green economic activities focused on environmental protection and sustainability, according to data collected by the Thailand Board of Investment (BOI).(more…)
Thailand BOI new measures to boost post-Covid-19 investment
Thailand’s Board of Investment (BOI) approved a series of measures to accelerate investments and to encourage businesses to adopt digital technologies.
Foreign Investors’ Confidence in Thailand Still High Despite Covid-19 Impact, BOI Survey Shows
Out of the 600 companies surveyed, 19.33% said they have plans to increase their investment in Thailand, while another 76.67% said they expect to maintain their current investment level.
Despite the COVID-19-induced economic hardship, as much as 96% of foreign direct investors operating in Thailand are confident in the country’s potential and have plans to expand or at least maintain their investment, citing attractive investment incentives, a strong supporting industry supply chain and the availability of raw materials and parts, according to the Thailand Board of Investment’s (BOI) annual Foreign Investor Confidence Survey.(more…)
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