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Prime Minister dismiss market intervention to stem Thai currency

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.

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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.

via Thai PM rules out market intervention to curb baht rise.

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.

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Investment

Thailand BOI Approves Measures to Promote Industry 4.0 Transformation

The measures approved include a 3-year corporate income tax exemption covering 100% of the investment into the Industry 4.0 upgrade.

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The Thailand Board of Investment (BOI) at a meeting today approved incentives to encourage companies to speed up Industry 4.0 transformation, and reported that total investment applications for the nine months to September 30 amounted to 520.7 bil-lion baht (USD15 billion), already higher than for the whole of last year.

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Thailand BOI Approves Measures to Support Carbon Reduction

greenhouse gas emission as well as an enhanced scheme for electric vehicles and measures to mitigate Covid-19 impacts and support local vaccine development

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The Thailand Board of Investment (BOI) approved incentives to encourage companies to reduce greenhouse gas emission as well as an enhanced scheme for electric vehicles and measures to mitigate Covid-19 impacts and support local vaccine development, Ms Duangjai Asawachintachit, Secretary General of the BOI, announced today.

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