Are Older Men in Thailand Trading Love for Financial Ruin

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BOT's deputy chief quits in surprise move

By The Nation

As new governor Prasarn takes office today, Bandid eyes regional job

The deputy governor of the Bank of Thailand, Bandid Nijathaworn, yesterday handed in his resignation in a sudden move just a day before the new BOT governor officially takes office.

Bandid, 57, who has worked for the central bank for 18 years, lost a recent contest for the BOT's top post to Prasarn Trairatvorakul, former president of Kasikornbank.

Bandid said he had applied for the directorship of a new regional agency called Asean+3 Macroeco-nomic and Research Office (AMRO), which is based in Singapore.

The BOT's board of directors yesterday approved Bandid's resignation, which will take effect on November 1.

"As a candidate [for the AMRO position], I would represent Thailand - even though quitting the central bank is a risk, because there are several candidates from several countries for the AMRO post.

"Yet it's a good opportunity to work at a higher, cross-border level. It's a new challenge, and I would regret it if I didn't take this opportunity," Bandid said.

AMRO will represent the 10 member countries of Asean, as well as China, Japan and South Korea.

AMRO is the institutionalisation of the Chiang Mai Initiative, the regional effort aimed at combining financial resources to help member countries cope with cross-border financial crises.

The regional cooperation followed the 1997 Asian financial crisis in which Thailand and other Asian economies were hit hard.

Bandid denied that his resignation had anything to do with not being picked as governor of the central bank.

"After meeting MR Chatumong-kol Sonakul, chairman of the central bank, and incoming governor Prasarn, it was easier for me to make the decision because I'm confident there are competent people who could continue the work," he said.

Since last October, Bandid has been in charge of maintaining stability in the country's financial system. Appointed a deputy governor in 2004, Bandid has had extensive experience in supervising financial institutions and in monetary policy.

Bandid is also a member of the Monetary Policy Committee, which is responsible for setting the country's policy interest rates.

Over the past several years, Bandid has earned wide recognition at international and regional economic forums.

In his most recent interview last Friday on the sidelines of an International Monetary Fund conference in Singapore, Bandid said the world had entered a two-speed economic system with Western economies - the United States, the European Union and Britain - growing at a much slower pace.

On the other hand, the economies in Asia, led by China, are expanding at a faster rate of more than 7-8 per cent.

Given this scenario and the US monetary policy of 0-0.25-per-cent interest rates, a huge amount of capital is flowing into Asian economies, including Thailand, resulting in the relentless strengthening of the baht and rapid rise in equity prices.

Since the beginning of this year, the Thai currency has appreciated more than 8 per cent against the US dollar, dealing a severe blow to the export sector, which is a key engine of economic growth.

In Bandid's opinion, a strong baht has merits and demerits, but he urged the government to help small and medium-sized enterprises to manage their exchange-rate risks by providing more affordable hedging products.

He also warned that the country could face economic bubbles if there are huge capital inflows for a prolonged period. In this context, there should be precautions in spending and bank lending while keeping a close watch on inflation, Bandid said.

-- The Nation 2010-10-01

[asiawatcher]

I cannot see huge capital inflows right now despite Khun Bandids prediction. There may be some speculative buying of the Baht as other currencies weaken. But the Baht by its perceived strength is going to need to level if inflation is to remain at 3.3% as reported in another forum today.

Business sectors will need stimulation and right now the next 24 months in Thailand will see Thailand rise up against other Asian neighbours if the politics can stay clean. But if the Baht strengthens then the inflation rate may drop and the pressure will then be on the Govt to 'create' stimulus packages and that will have to be backed by the Bank of Thailand. Thus the new governance will certainly have their work cut out.

Interesting times. As Expats it can be exciting to think the Baht will stone the USD to almost 25 and allow Baht to buy up internationally and save a lot of money. Cashed up right now in Baht is a good thing.

[HereIAm]

Huge amounts of foreign capital are also flowing into other Asian economies whose currencies versus the US dollar, however, are not strengthening as sharply as the Thai Baht. I think the government and / or the central Bank (depending on how independent the bank is of government influence) are / is following a deliberate dear money policy in case of the exchange rate. I think, it is largely good for Thais and expat residents whose main currency is the Baht.