BOT to announce further easing in capital controls soon

[William]

BOT to announce further easing in capital controls soon



The Bank of Thailand will soon declare a further easing in capital controls, exempting fully-hedged investment in local debt markets and mutual fund units from the current 30% withholding requirement, Governor Tarisa Watanagase said Friday.

The central bank discussed the plan with bankers earlier this month.

To be eligible for the exemption, incoming funds will need to be fully-hedged through conversion to baht via the currency swap market.

The Nation

[Dougal]

The central bank discussed the plan with bankers earlier this month.

That makes a change.

[Butterfly]

Net loss of Bt174 bn at the BOT

Most put down to baht's appreciation

The Bank of Thailand (BOT) has announced it recorded an initial net loss of Bt174 billion for last year, Bt173 billion of which is unrealised loss from the valuation of international reserves, due to the baht appreciating 17 per cent last year. The remaining Bt1 billion is a realised loss.

The BOT's operating result is still pending endorsement by the Inspector-General's Office.

BOT Deputy Governor Atchana Waiquamdee yesterday said the loss would have been inevitable even if the central bank had not intervened in the baht. Most of it was due to asset appraisal converting foreign currencies in official reserves into baht.

Earlier, Atchana said the central bank recorded a total unrealised loss of about Bt300 billion from the valuation of the international reserves, due to the baht's appreciation from 41 to the US dollar at the beginning of last year to 36. However, interest income helped reduce the net loss to only Bt174 billion.

She said that last year, the central bank had intervened in the market, buying US$15 billion (Bt535 billion) worth of dollars, to curb the baht from too much appreciation. This boosted reserves from $52 billion early last year to $67 billion at year's end.

Achana said China also bought up to $270 billion worth of dollars to intervene in the market.

"Last year, we let the baht move in line with the regional market. If all the regional central banks had intervened in currencies, we had to do it for the same reason. If we hadn't, the baht would have been much stronger than this," she said.

Atchana said the new BOT Act, which is under consideration by the Finance Ministry, will allow the central bank to record its earnings from real operations rather than as an unrealised loss, as at present.

She said that whether the central bank recorded a loss again this year depended on whether the dollar weakened further.

Anoma Srisukkasem

The Nation