BoT eases tight grip on the baht

[William]

BoT eases tight grip on the baht

Surayud maps plan to relax upward pressure

POST REPORTERS

The Bank of Thailand will introduce a package of relaxed capital controls this week to curb the continuing appreciation of the baht, BoT governor Tarisa Watanagase said yesterday.

The package includes relaxing regulations that control capital outflow for investment and allowing exporters to hold US dollars for longer, instead of forcing them to hastily sell them and put upward pressure on the baht.

"Other measures in the package are confidential," she said.

The package came after discussions with various parties, including exporters, academics and the Finance Ministry, said the governor.

Some of the measures to be proposed by the Bank of Thailand are in line with measures proposed to the government yesterday by the joint private-sector committee, she said.

The committee comprises the Federation of Thai Industries, the Board of Trade of Thailand and the Thai Bankers' Association. It submitted its proposals to the Commerce Ministry yesterday.

Meanwhile, Prime Minister Surayud Chulanont said yesterday the government is determined to map out measures to curb baht volatility and prevent its adverse impact on business operators and their employees.

He said the impact of baht appreciation was under control according to information from the BoT and the Finance Ministry.

The prime minister yesterday discussed the effect of baht appreciation with a group of representatives from the private sector.

Gen Surayud said his talks were in preparation for providing assistance to industries plagued by a strong baht and help them survive the currency crisis.

He also asked the Finance Ministry and the Bank of Thailand to keep close watch on movements by hedge funds, suspecting they have a hand in the currency appreciation.

Gen Surayud said the government could provide monetary help and other forms of assistance when business operators decide to move manufacturing facilities offshore and lay off workers.

The BoT is in charge of monetary measures, while the Labour Ministry will deal with lay-off issues, he said.

The prime minister ruled out, however, extreme measures that could shock the market.

The government is concentrating on stabilising baht values, since volatility affects both import and export businesses, he added.

Meanwhile, in a bid to boost the sluggish economy, the government is exploring the feasibility of injecting more than 116 billion baht into the grassroots economy.

The stimulus fund is likely to be spent on short-term measures with an implementation period of up to six months, Gen Surayud said.

The grassroots stimulus package was proposed by the National Legislative Assembly's committee on finance, banking and financial institutions, which was led by economist Sangsit Piriyarangsan and four state banks _ the Bank for Agriculture and Agricultural Cooperatives, the Government Savings Bank, the Small and Medium Enterprise Development Bank and the Government Housing Bank.

The prime minister is expected to table the fund bill for the cabinet's consideration soon.

Mr Sangsit said the four banks currently hold a huge amount of cash and are capable of disbursing the fund much quicker than can the state.

His panel suggested the banks provide soft loans with the interest rates lower than the market.

Mr Sangsit said his panel has outlined the stimulus plan with the four banks during the past two months. He said the soft loans are not the same as the ousted Thaksin Shinawatra administration's populist programmes.

All banks will be strict in their lending conditions and will educate loan applicants about sufficiency principles, Mr Sangsit said.

To make the stimulus programme possible, the cabinet needs to approve a fund of about 400 million baht to subsidise the interest rates and guarantee the risks, he said.
Once approved, this stimulus programme is expected to benefit up to five million people, while driving forward the country's economic growth, Mr Sangsit added.

source: Bangkok Post 17.07.2007

[in4zip]

wonder wtf they'll conjure up this time

"Other measures in the package are confidential," she said.

yea, sure ... save for the chosen few 'in the know'

[forreachingme]

Gen Surayud said the government could provide monetary help and other forms of assistance when business operators decide to move manufacturing facilities offshore and lay off workers.


They could just pay VAT returns on a more efficient way, would allready help many !

But looking abroad is a real focus actually for foreign business owners, seen efficiency and skills of workforce over here !

[Butterfly]

not sure if this is good news or bad news

so basically, Thai exporters couldn't hold USD and had to sell immediately ? what a stupid rule. Forced them into futures currency hedging, more risky and regulated, and too sophisticated for exporters. I am sure a few bank officials must have made a fortune with those stupid rules.

[keda]

"Other measures in the package are confidential," she said.

Yeah, wonder how this pink bit smells.

[Thormaturge]

"Other measures in the package are confidential," she said.

Just means they haven't thought of any yet.

[panama hat]

"Other measures in the package are confidential," she said.

Just means they haven't thought of any yet.

Bingo . . . I think many here credit the rulers with too much intelligence.

[Spin]

The BoT is in charge of monetary measures

Shame really, the occupants of the monkey house at London zoo could do a better job.

[mrsquirrel]

Thailand govt urges central bank to cut rates amid rising baht - UPDATE

BANGKOK (Thomson Financial) - Thailand's army-backed government Tuesday urged the central bank to cut its key interest rate further in a bid to rein in the volatile baht, which has hit 10-year highs against the dollar.
'I personally think that the (interest) rate should be slashed further. There is room to cut the rate,' Industry Minister and Deputy Prime Minister Kosit Panpiemras told reporters.
The calls for more rate cuts came on the eve of the Bank of Thailand's monetary policy meeting, but the market still expects the bank to leave the key rate unchanged at 3.5 percent.
Despite repeated official warnings against the rising baht, the Thai currency has jumped seven percent against the dollar since the beginning of this year, following a 12-percent appreciation last year.
The baht continued to hold firm at 10-year highs against the greenback, driven by massive capital inflows as investors snapped up Thai stocks they view as undervalued compared with regional rivals in Singapore and Hong Kong.
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The baht was quoted at 33.35-36 to the dollar in afternoon trade. In the offshore market, the Thai unit traded at 30.50 to the greenback.
Finance Minister Chalongphob Sussangkarn said the government would implement a package of measures aimed at curbing the baht's rise, adding that the package would be presented Friday to Prime Minister Surayud Chulanont.
'Boosting demand for the dollar will help reduce the BoT's burden to buy the dollar,' Chalongphob told reporters.
'We are hoping to create a flexible system to manage currency fluctuations in order to react fast to not only huge capital inflows but also possible outflows in the future,' the finance minister said.
The package would include a system encouraging Thai firms to invest overseas as a means to pressure the baht, he added.
The rising baht has raised concern over weak export growth. Exports are the key driver of the kingdom's economy.
The chairman of Export-Import Bank of Thailand also called on the central bank to cut the interest rate, saying the rising baht was a more serious issue for the Thai economy than inflation.
'It's time for the central bank and the government to choose between inflation and the fact that more factories are being closed down' due to falling export competitiveness amid the strong baht, Narongchai Akrasanee said.
On Monday, Thailand ruled out returning to a fixed exchange rate to stop the baht's rise against the dollar but said the government was trying to stabilize the currency.



Thailand govt urges central bank to cut rates amid rising baht - UPDATE | Latest News | News | Hemscott

[keda]

The money that matters is still in the process of forgiving their existence, so best they can do for now is as little as possible.

[Butterfly]

I think we could see a rebound of the THB to 35/36

forcing exporters not to hold USD was a stupid thing. This is definitely a major factor. The usual mess.