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Capital inflow, outflow becoming more balanced, says BoT

BANGKOK, April 28 – Bank of Thailand (BoT) Deputy Governor Atchana Waiquamdee on Wednesday expressed optimism that Thailand’s capital inflow and outflow would be more balanced from now until next year since the economies of three major economic powers – the United States, Europe and Japan – are expected to continue growing.

She said inflation rates are likely to increase in an accelerated manner, so it is predicted that the three economies would raise their policy interest rates, leading to a narrowed interest spread between the three and Asian countries.

Under the circumstance, the capital, which had flown out of the three economic powers into Asia in a large amount due to the regional economic growth, might flow back the triad.

In addition, the central bank’s attempt to encourage Thai investors to invest overseas has begun to work. Given these factors, capital flows might begin to achieve balance.

Mrs Atchara said the movement of currency exchange rate direction remains unpredictable because it normally moves in conjunction with news reports at a particular time. Because of this, it is difficult to fix the currency at a particular level.

She said the central bank has a contingency plan to contain the currency exchange rate and the capital flow volatility, but given the current situation, the bank sees no need to initiate harsh measures in response.

The deputy BoT chief said the accelerated inflation rate would remain a key risk factor to the Thai economy this year. Inflationary pressure is expected to mount further in tandem with domestic and global economic growth.

She indicated that the BoT must continue to manage inflation to ensure it move at an appropriate level. (MCOT online news)

-- TNA 2011-04-28