Thai authorities foresee further fallout from the crisis in the euro area on Thailand’s financial market and export sector, but the Bank of Thailand (BoT) is confident that the strength of the Thai financial system and economic fundamentals are sufficient to not require issuing any special measures in response to potential risks of the euro zone crisis.
The worst is not yet over given the fundamental problems in the euro area, the Bank of Thailand’s Monetary Policy Committee and Financial Institutions Policy Committee said in a joint statement after their first-ever meeting yesterday.
But the Bank of Thailand (BoT) is confident that the strength of the Thai financial system and economic fundamentals are sufficient to not require issuing any special measures in response to potential risks of the euro zone crisis.
Speaking after the first meeting of the central bank’s Monetary Policy Committee and Financial Institutions Policy Committee on Monday, Dr Prasarn Trairatvorakul, BoT governor, said the meeting assessed the current economic conditions and concluded that the financial system remains stable with strong economic fundamentals.
In the near term, volatility in the domestic financial market is imminent on periodic tight demand and supply for foreign currencies. In the long term, Thailand will inevitably be affected when the euro crisis drags down the global economy, they said.
Policy options were discussed at the meeting to mitigate possible impacts on the stability of the Thai economy and financial market, central bank Governor Prasarn Trairatvorakul said. The committees see no need for any measures for now, but developments in the euro area must be closely monitored.
Financial institutions are secured and liquidity in the system is adequate to support recovery of the Thai economy, therefore the current situation does not warrant any special measures to protect the economy.
Mr Prasarn said there is a major risk of crisis in the euro zone countries, which lingers and may affect stability of the international monetary market and the world economy. In the short term, it can cause volatility to Thailand’s capital market.
According to Thai Bond Market Association data, global funds bought US$1.9 billion more Thai government debt than they sold this month through June 15. The baht was unchanged at 31.47 per US dollar after reaching 31.33 earlier, the strongest level since May 22, according to data compiled by Bloomberg.
Prasarn insisted that the central bank had nothing to do with the baht’s recent appreciation. He noted that despite the sell-offs in the bond and stock markets, foreigners remained net buyers and there was no sign of significant capital outflow.
As European companies are expected to face tight liquidity amid bank deleveraging, the Export-Import Bank of Thailand anticipates defaults or delayed payments for Thai goods. To help Thai suppliers, the bank is cutting the penalty rate for exporters and the export paper discount rate, as well as providing export credit insurance and risk-evaluation services. Kanit Sukonthaman, president of the bank, also urged exporters to buy export credit insurance to cover all orders.
Thai Mango growers complain of low prices and fewer exports
Because of the global COVID-19 pandemic, their mangoes are not being exported, due to fewer buyers, and their prices have plunged to between 10 and 20 baht per kilogram, depending on size.
Mango orchard owners in Thailand’s northern province of Phitsanuloke are seeking help from the provincial administration to promote the sale of their sweet fruit, particularly Barracuda Mango variety.(more…)
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