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Kittiratt woos BOT's committee
The Nation

Unprecedented invitation by finance minister

BANGKOK: -- Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong has invited members of the Bank of Thailand's Monetary Policy Committee for a meeting next Monday at Government House to discuss measures to curb the strong baht.

The move is unprecedented because never before in the panel's history have its members held a meeting outside the central bank's Bang Khunphrom headquarters.

It is not known yet whether the seven members of the MPC, one of who is BOT Governor Prasarn Trairatvorakul, would accept Kittiratt's invitation. Kittiratt said yesterday that he had invited the MPC members and representatives of the private sector to discuss measures to manage the exchange rates.

"All parties should work together to tackle the strong baht problem," he said.

The invitation is seen as reflecting Kittiratt's attempt to intervene in the MPC's affairs so that it agrees with him over a need to cut the interest rate sharply - by one full percentage point - to stem capital inflows. It is also being seen as a move to bypass Prasarn, who is not on good terms with Kittiratt, and lobby the MPC members directly.

Prasarn and the MPC have been resisting a rate cut. They have been showing concern over rising asset prices and household debt, although inflation is weakening. Further rate cuts would create further bubbles.

The BOT has proposed four measures to curb the baht's appreciation:

_ Prohibit foreign investors from purchasing the central bank's bonds;

_ Set a minimum period of 3-6 months for foreigners to hold government bonds;

_ Impose levies and fees on capital gains from bond investment by foreign investors; and

_ Mandatory foreign exchange hedging for foreign investors holding up the policy rate at 2.75 per cent.

The finance minister, however, has insisted on an interest rate cut as the only option to deal with the baht rise. He said it is now not necessary to implement any additional measures to curb the rise at this time.

The MPC has mainly focused on curbing inflation, but the current global trade and liquidity situation has considerable impact on the baht's exchange rate, Kittiratt said.

"We should now try to maintain the baht's exchange rate at a competitive level with those of trading partners and competitors, not just sticking solely with the US dollar," he said.

Prasarn yesterday softened his stance, saying Thailand's relatively high interest rate is a factor in attracting capital inflows and leading to the baht's appreciation. And there is more need to focus on the exchange rate management.

It is too early to say when the four measures to curb the strong baht, which were proposed to the Cabinet, would be implemented, the central bank governor said.

According to Prasarn, the baht's current exchange rate is not far off from other regional currencies, but has appreciated the most this year among the regional currencies.

The baht has weakened in relation to the US dollar in the past two weeks amid concerns of possible measures to curb the strong baht. The baht was moving between 29.42 and 29.47 against the dollar, which is 4 per cent stronger from year-end 2012.

At the MPC's next meeting on May 29, it is likely that the policy interest rate could be cut from 2.75 to 2.50 per cent, given the loosening monetary policy adopted by the European Central Bank, the Bank of Korea, the Reserve Bank of India, and the Reserve Bank of Australia.


-- The Nation 2013-05-10

[Pib]

The move is unprecedented because never before in the panel's history have its members held a meeting outside the central bank's Bang Khunphrom headquarters.

Finance Minister Kittiratt is probably footing the bill for a free lunch. On a serious note, as I read and see more news on the feud between the Finance Ministry and BOT it just amazes me how the cooperation between these govt bodies seems so minimal and adversarial...and like each expects the other to take the first steps to rein in the baht appreciation (maybe to save face or avoid being blamed for any negatives that occur). It's a shame...not to imply central banks and finance/treasury agencies in other countries are always the models of cooperation, which they are not.

[Locationthailand]

Whilst Kittiratt has the educational credibility it pales in significance when compared to the B.o.T.'s governors CV. Similarly, he was recently trying to sack the governor and now he is inviting him to lunch. I'll back the B.o.T.'s decisions.

[yoshiwara]

The move is unprecedented because never before in the panel's history have its members held a meeting outside the central bank's Bang Khunphrom headquarters.

Finance Minister Kittiratt is probably footing the bill for a free lunch. On a serious note, as I read and see more news on the feud between the Finance Ministry and BOT it just amazes me how the cooperation between these govt bodies seems so minimal and adversarial...and like each expects the other to take the first steps to rein in the baht appreciation (maybe to save face or avoid being blamed for any negatives that occur). It's a shame...not to imply central banks and finance/treasury agencies in other countries are always the models of cooperation, which they are not.

They are not supposed to be. The central banks are on the whole supposed to act independently of the government of the day.

[Neilly]

[SICHONSTEVE]

Whilst Kittiratt has the educational credibility it pales in significance when compared to the B.o.T.'s governors CV. Similarly, he was recently trying to sack the governor and now he is inviting him to lunch. I'll back the B.o.T.'s decisions.

Kittirat is a dim wit!!!

His first uttered words when he was given his position were " Don't worry, the 300 Baht minimum wage will have no long term affects on the budget as it is a ONE OFF TAX"!!!

Do you not think that they might not have an ulterior motive such as the fact that it makes all their mega projects even more expensive than they already are to implement??

[chiangmaikelly]

Whilst Kittiratt has the educational credibility it pales in significance when compared to the B.o.T.'s governors CV. Similarly, he was recently trying to sack the governor and now he is inviting him to lunch. I'll back the B.o.T.'s decisions.

Kittirat is a dim wit!!!

His first uttered words when he was given his position were " Don't worry, the 300 Baht minimum wage will have no long term affects on the budget as it is a ONE OFF TAX"!!!

Do you not think that they might not have an ulterior motive such as the fact that it makes all their mega projects even more expensive than they already are to implement??

If the baht is worth more and the supplies for the mega projects are imported would not that make the mega projects less expensive? As a side note in 10 years I never ran into anyone who made less than 300 baht an hour.

[SICHONSTEVE]

Whilst Kittiratt has the educational credibility it pales in significance when compared to the B.o.T.'s governors CV. Similarly, he was recently trying to sack the governor and now he is inviting him to lunch. I'll back the B.o.T.'s decisions.

Kittirat is a dim wit!!!

His first uttered words when he was given his position were " Don't worry, the 300 Baht minimum wage will have no long term affects on the budget as it is a ONE OFF TAX"!!!

Do you not think that they might not have an ulterior motive such as the fact that it makes all their mega projects even more expensive than they already are to implement??

If the baht is worth more and the supplies for the mega projects are imported would not that make the mega projects less expensive? As a side note in 10 years I never ran into anyone who made less than 300 baht an hour.

What makes you think that the supplies will be imported? The main reason behind the added expense is that the cost of the borrowings will be significantly higher so it will cost them an 'arm and a leg' to keep up the massive interest payments.

What someone earns has got nothing to do with it. Implementing this 300 Baht minimum wage is NOT as he implies a ONE OFF COST to companies - unless of course they pay it for 1 month only then revert back to their original salary payments that is!!!

[chiangmaikelly]

Whilst Kittiratt has the educational credibility it pales in significance when compared to the B.o.T.'s governors CV. Similarly, he was recently trying to sack the governor and now he is inviting him to lunch. I'll back the B.o.T.'s decisions.

Kittirat is a dim wit!!!

His first uttered words when he was given his position were " Don't worry, the 300 Baht minimum wage will have no long term affects on the budget as it is a ONE OFF TAX"!!!

Do you not think that they might not have an ulterior motive such as the fact that it makes all their mega projects even more expensive than they already are to implement??

If the baht is worth more and the supplies for the mega projects are imported would not that make the mega projects less expensive? As a side note in 10 years I never ran into anyone who made less than 300 baht an hour.

What makes you think that the supplies will be imported? The main reason behind the added expense is that the cost of the borrowings will be significantly higher so it will cost them an 'arm and a leg' to keep up the massive interest payments.

What someone earns has got nothing to do with it. Implementing this 300 Baht minimum wage is NOT as he implies a ONE OFF COST to companies - unless of course they pay it for 1 month only then revert back to their original salary payments that is!!!

I was thinking high speed trains and I don't think there are many of them in Thailand right now. If the price of the baht goes up then it makes the cost of repaying the loans go down eh? And the 300 baht minimum wage is a non entity as everyone was already making more than that anyway. If anything the 300 baht would mean a decrease in pay for most Thais.

Edited May 10, 2013 by chiangmaikelly

[SICHONSTEVE]

Sorry!!! but i just don't understand your logic at all.