Thailand's Reserves Hit All-time High Of $50 Bn

Reserves hit all-time high of $50 billion

BANGKOK: -- Thailand’s international reserves hit US$50 billion (Bt2 trillion) on November 18, reaching their highest level since the establishment of the Bank of Thailand 63 years ago.

Official reserves have continually risen - in total by as much as 56 per cent - since MR Pridiyathorn Devakula took office as governor on May 31, 2001, when they stood at $32 billion.

The central bank’s international reserves have increased by 85 per cent since the end of 1997, when they stood at only $27 billion.

The rise of official reserves over the past several years has been due to higher income from the central bank’s investments, the BOT’s operation in managing liquidity, and asset appraisal, a source from the central bank said.

Pridiyathorn yesterday welcomed the stronger reserves.

“It’s going up, and there will be a decline too. The increase is from asset appraisal. Now everything is good, good, good,” the governor said yesterday.

The source from the BOT also said that in fact foreign reserves had not changed much.

“It would be frightening if they had,” the source said yesterday.

Pridiyathorn has made it clear in the first two years that he has served as BOT governor that he intends to build up foreign reserves to restore foreign investors’ confidence in the country’s financial status.

The current high international reserves have lowered the short-term debt-to-reserves ratio and are also in preparation for a possible current-account deficit.

International reserves as of November 18 had in fact increased by $200 million from the previous week alone.

Usara Wilaipich, senior economist at Standard Chartered Bank (Thai), said yesterday that the $50 billion of international reserves had not had much of an impact on the overall economy.

She said it was premature to say whether the higher reserves were due to improving trade and current-account balances as the official figures had not yet been announced.

However, higher international reserves represent a positive factor similar to a corporation’s higher cash flow or an individual’s higher assets.

Usara added that Thailand’s foreign reserves were likely to increase in the first quarter of next year according to the seasonal factor of capital inflow into the region.

She added that the current account should also turn to surplus in the first quarter of next year.

--The Nation 2005-11-26