Bank Of Thailand Predicts Cash Boom

[george]

BOT predicts cash boom

Central bank sets aside Bt300-bn reserve as election and holidays set to spur demand for banknotes

BANGKOK: -- Money will flood into the economy next month thanks to the general election and the festive season, banking experts said yesterday.

The Bank of Thailand (BOT) estimates that household spending in December will jump by about 8 per cent as politicians pour money into their election campaigns and the Thai public spends more during the festive season.

Chittima Duriyaprapan, senior director of the BOT's Banknote Operation Depart-ment, said notes distributed

to commercial banks in December are likely to total Bt192.5 billion, an 8-per-cent increase from the same period last year in response to rising demand.

The expansion of currency supply in December is also notably higher than in past months, with the Kingdom likely to report an economic growth rate of 4.3 to 4.8 per cent for the year.

Chittima said the escalating demand for money is a result of the many events that will be held next month, including the election, Christmas and New Year celebrations. Cash gifts at weddings, which are very popular in December, will also spur demand.

"In December, we are forecasting that people will require more money than normal. This would lead to a higher distribution of banknotes," Chittima said.

A source from the central bank said demand for Bt1,000 banknotes has risen, while demand for Bt100 banknotes has been declining. The source did not speculate on the reason for these trends.

Chittima said the central bank is preparing a reserve of Bt300.4-billion worth of banknotes to meet cash demand over the next two months.

In November, the total value of banknotes in circulation was Bt740.38 billion, rising by 4.84 per cent from the same period last year, according to the BOT. In October, Bt736.3 billion was in circulation, an increase of 6.41 per cent over October of 2006.

Aside from the surging distribution of banknotes in general, the central bank did not report any irregular patterns of distribution for particular denominations over the past few months.

The recent boost in currency circulation was partly caused by resurgent export activity, particularly in October when exporters stocked their inventories for the holiday season.

The spike in oil prices, the harvest season and hike in farm income, which has been spurred by the 23.3-per-cent rise in agricultural prices, also contributed to the increase of tender in circulation.

In October, the central bank reserved Bt263.5 million of Bt1,000 banknotes. However, the actual distribution to the banks totalled Bt106.4 million, accounting for about 40 per cent of the reserve.

For the Bt500 denomination, banknotes worth Bt28.1 million were distributed, accounting for 43.8 per cent of the Bt64.2-million reserve. For Bt100 banknotes, Bt139.9-million worth were reserved and Bt78.9 million, or 56.4 per cent, distributed.

About Bt9.7-million worth of Bt50 banknotes were reserved with a distribution of Bt5.7 million, accounting for 58.8 per cent. Thirty-one per cent of the Bt20-banknote reserve was distributed, or Bt78.7 million of Bt251.2 million.

-- The Nation 2007-11-28

[londonthai]

as politicians pour money into their election campaigns

it's politicians and not enterprenours who are the backbone of the thai economy.

I would imagine the great majority of the election funds being from the black market and corruption

[ukjackthai]

as politicians pour money into their election campaigns

I would imagine the great majority of the election funds being from the black market and corruption

Agreed.

Will there ever be a PM that cleans up thailand and their police force? I dobt it