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BOT Governor: Core Inflation Rate to Rise Next Year

The outgoing Bank of Thailand governor says the core inflation rate may rise and exceed the target range next year in line with economic recovery, while regular monetary policy will be used to govern inflation and stabilize the economy.

Outgoing BOT Governor Tarisa Watanagase said the Thai economy will continue to grow in the second half of this year, as the political tension has eased up.

She added that the upward trend of the inflation rate prompted the Monetary Policy Committee to employ normal monetary policy.

Regarding the issuance of so-called debt-cutting cards as a follow-up to the government's effort to tackle informal debt, Tarisa said state-run banks operate the cards, and it is the duty of the Finance Ministry to manage the scheme to prevent problems of NPLs or non-performing loans.

She believes all banks will be careful in providing credit in this scheme. The cards will be given to those who already participate in the government's informal debt rehabilitation program.

The cardholders who are able to make their repayments without fail for one year will be entitled to take out loans valued at up to half of the amount that they repay.

Regarding the appreciation of the Thai currency, Tarisa said the value of the Thai baht is on par with other currencies in the region.

The Thai baht now stands at about 31.7 baht per dollar, as the value of the U.S. currency has been on the decline. So far, the value of the baht has gone up by 5 percent.

The Indonesian currency has also gone up at the same rate, while the value of the Malaysian ringgit against the U.S. dollar has increased by 8 percent.

She attributed the appreciation of the baht to the expansion of export and capital inflow at a value of 20 billion baht, from investors after the political tension eased up.

She added that Thailand remains a competitive country and the BOT will try to stabilize the value of the Thai baht. Regarding the depreciation of the Vietnamese dong by 2 percent, which will come into effect today, Tarisa said it will not impact other currencies in Asia.

She suggested that business operators take advantage of the stronger value of the Thai baht by importing capital goods to make their production more effective in the long run, or by making trips aboard to find new opportunities for investment.

-- Tan Network 2010-08-19