webfact Posted May 2, 2013 Share Posted May 2, 2013 Tussle between Kittiratt, Prasarn worries BOT chairmanAnapat Deechuay,Sarun KijvasinThe Nation VirabongsaBANGKOK: -- Bank of Thailand (BOT) chairman Virabongsa Ramangkura yesterday expressed his "uneasiness" over the ongoing disagreement between the finance minister and the central bank's governor as to how to deal with the baht's continuing appreciation.However, he said his board has no power to remove the governor. The finance minister, meanwhile, said he has no mandate to do so either, amid rumours of a possible sacking.Virabongsa said that in the year and a few months in which he has been in his post, the central bank and the Finance Ministry "have always had problems between them" regarding financial and monetary policies.What worried him, he said, was that Finance Minister Kittiratt Na-Ranong and BOT Governor Prasarn Trairatvorakul were often involved in a war of words."I speak today because I want to tell you about my suffering," Virabongsa told a press conference at Government House. "Both sides have blamed each other … and if the situation continues like this, it's the country and the economy that will suffer severe damage."As the board chairman, I have been uneasy and worried about what lies ahead. No concrete measures have been implemented to deal with this problem," Virabongsa said, referring to what he called the "unusually strong appreciation" of the baht.Virabongsa said he has often warned Prasarn about the negative impacts of a strong baht. "It seems the central bank governor is not worried about what happens. If we don't take any action, the country will be heading for economic collapse," he said.The BOT chairman said his board has no power to remove the governor. "I have to ask the prime minister to deal with this problem. It's within the power of the Cabinet to dismiss the Bank of Thailand governor. But I don't think that's necessary."The Bank of Thailand's Monetary Policy Committee (MPC) is expected to bow to government pressure and slash its policy rate by more than 25 basis points to curb inflows that last month drove the baht to a 16-year high, given a relatively sharp drops in bond yields.The move is considered more likely following the statement issued after the April 30 MPC meeting. Most investors expect the MPC to cut its policy rate to deal with capital inflows at its regular meeting on May 29 - if no measures are introduced even sooner. The expectations have been raised in part because the yield on below-five-year bonds fell sharply on buying sprees by both foreign and local investors, senior economist at Standard Chartered Bank (Thai) Usara Wilaipich said.The currency's recent volatility is not justified by economic fundamentals and the MPC said in its April 30 statement that it had agreed to use an appropriate policy mix to restrain the baht if required."The market believes that the MPC would cut the policy rate, as bond yields have dropped relatively sharply in the past two days. If it cuts the rate, other measures like macro-prudential steps may also be implemented to ease pressure [that could lead to asset] bubbles," Usara said."Some investors are pricing in a potential rate cut in Thailand as the government pressure intensifies," Bloomberg quoted Tsutomu Soma, manager of Rakuten Securities Inc's fixed-income business unit department in Tokyo, as saying.The MPC left the policy rate unchanged at the previous four meetings at 2.75 per cent.Prasarn said the central bank has submitted to the Finance Ministry its recommended measures to slow the pace of the baht's rise, while declining to give any comment until the proper time comes.Kittiratt, who is also deputy prime minister, said yesterday, "We don't have any clear solutions after many discussions" on measures to curb the baht's appreciation.In response to rumours that he seeks Prasarn's removal as BOT governor, Kittiratt said the Finance Ministry has no mandate to dismiss the BOT governor, while the full mandate for such action belongs to the board of governors.In the April 30 MPC statement, it was agreed that the BOT would work closely with the Finance Ministry to oversee the exchange rate.However, after the baht weakened to 29 per US dollar, Areepong Bhoochaoom, permanent secretary for Finance, said the government would not impose any measures.-- The Nation 2013-05-03 Link to comment Share on other sites More sharing options...
Locationthailand Posted May 3, 2013 Share Posted May 3, 2013 Look on the bright side. If the Baht keeps getting stronger Thailand can put its hand up as the Reserve Currency and then open the worlds coffers to the Shin clan to scam. 1 Link to comment Share on other sites More sharing options...
Popular Post NongKhaiKid Posted May 3, 2013 Popular Post Share Posted May 3, 2013 Now, where have we heard stories like this before ? Power trips, petty jealousies, grabbing headlines etc. etc. with no concern for the national interest. 4 Link to comment Share on other sites More sharing options...
Soi Dog Posted May 3, 2013 Share Posted May 3, 2013 There is no obvious right course. Lowering interest rates might help weaken the Baht but could worsen inflation. This whole Kabuki dance is blame shifting in the absence of leadership. Link to comment Share on other sites More sharing options...
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