Thailand Closely Monitors Chinese Currency

Thailand closely monitors Chinese currency

BANGKOK: -- The Bank of Thailand (BOT) is closely monitoring the value of the Chinese yuan as speculation mounts that the US government may put pressure on China to revalue its currency.

The central bank expects increased pressure on Beijing to increase the value of the yuan against the US dollar in 2005 to help solve Washington's massive current account deficit.

The BOT governor, M.R. Pridiyathorn, said the problem was not whether the baht strengthened or weakened, but the BOT needed to ensure that the baht was competitive against Thailand’s trading partners and rivals.

The current value of baht is considered appropriate when compared to Asian and European currencies because they have all appreciated against the

dollar, the governor said.

If the baht has problems against the yuan, it is up to the BOT to find the most appropriate level, though it would not be easy, he said.

However, if the baht strengthened, it would help Thailand save foreign exchange, especially on the imports of oil, which would also help control

inflation.

The BOT began monitoring the baht after clear signals from the US that it was unable to solve its current account deficit, and may try to influence

some countries to revalue their currencies against the greenback to help the US economy.

Thai exporters have hedged on their Forex risks, M.R. Pridiyathorn added.

Exports are vital to the Thai economy. It is also crucial to restore investor confidence and strengthen the investment climate, he said.

--TNA 2004-12-04