Thai cenbank announces measures to contain baht rise

By Kitiphong Thaichareon and Orathai Sriring

 

FILE PHOTO: The Bank of Thailand logo is pictured in Bangkok, Thailand, August 5, 2016. REUTERS/Chaiwat Subprasom

 

BANGKOK (Reuters) - Thailand's central bank unveiled on Friday new measures aimed at balancing capital flows after warning a rapid jump in the baht <THB=TH> risked undermining the economy amid renewed inflows into emerging markets.

 

The Bank of Thailand (BOT) will allow Thais to freely deposit and transfer funds in foreign currency deposits (FCD) accounts and to directly invest more in foreign securities, assistant governor Vachira Arromdee told a briefing.

 

FCD accounts may also be used for residents to diversify investments into assets denominated in foreign currencies such as overseas equities and gold denominated in U.S. dollars.

 

The limit on Thai investors to directly invest in foreign securities was raised to $5 million a year from $200,000, Vachira said.

 

The BOT will lift the limit on buying foreign assets by investors regulated under the Securities Exchange Commission, and allow the listing in Thailand of foreign securities such as exchanged traded funds, she said.

 

Investors will have to pre-register before being allowed to trade bonds, Vachira said, adding this would be effective early next year, while other measures should be in effect this month.

 

"The rapid appreciation of the baht may affect the fragile recovery of the Thai economy," Vachira said, noting the central bank "had closely monitored and intervened in the market as necessary to limit excessive currency volatility".

 

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, was sceptical the measures would have much impact given they were not all new and fundamentals remained the same.

 

He also warned they undermined the inflation target mandate by encouraging "investment offshore and reducing economic activity onshore".

 

The baht shrugged off the announcements and rose to 30.28 per U.S. dollar at 0606 GMT, though still above a more than 10-month high of 30.13 on Monday.

 

The U.S. presidential election outcome and signs of progress developing COVID-19 vaccines had strengthened confidence in the global economy, sparking inflows into emerging markets, including Thailand, Vachira said.

 

(Reporting by Kitphong Thaichareon and Orathai Sriring; Editing by Ed Davies)

 

-- © Copyright Reuters 2020-11-20

 

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Well, step one would be to criminalize currency speculation! But, what do I know.

So there are ways to manipulate currency.....and the value has gone up to $5 mill which should make washing money a bit easier.

I will applaud the effort, and hope these changes work.  But as long as they keep the foreign inflow taps wide open—the Baht will remain overpriced.  I wouldn’t want to own an export business.