Bank Of Thailand Under No Pressure To Cut Rate: Prasarn

[webfact]

'BOT under no pressure to cut rate'
Sarun Kijvasin
The Nation


Prasarn Trairatvorakul

BANGKOK: -- Bank of Thailand Governor Prasarn Trairatvorakul maintained that the Monetary Policy Committee was under no pressure, despite the renewed attempt by Finance Minister Kittiratt Na-Ranong to force a cut in the benchmark interest rate.

"All MPC members are mature. They will review all data. Whatever the resolution will be, the MPC will be ready to explain," Prasarn said.

The MPC will convene tomorrow, a week after the National Economic and Social Development Board revealed apparently dismal first-quarter data, which led it to revise the full-year growth forecast from 4.5-5.5 per cent to 4.2-5.2 per cent. The first-quarter growth of 5.3 per cent was lower than the BOT's 7-per-cent forecast and Bloomberg's 6-per-cent consensus.

Prasarn was surprised that some figures were worse than the central bank's expectation. A BOT team is looking into the details of the differentials and the governor is hopeful that the study will be completed for the MPC's consideration. "This will shed light on the growth momentum."

Kittiratt yesterday said the policy rate, now at 2.75 per cent, must be cut by more than 25 basis points. He hopes that the lower rate will weaken the baht and boost export demand.

"If the rate is not cut, or cut by only 25 basis points, the MPC is oblivious of the situation. It is so, even when the rate is cut by 50 basis points," he said.

Thailand's exports in the first quarter expanded only 4.3 per cent, on weak global demand particularly from China as well as the stronger baht. The currency has, however, weakened to near 30 per US dollar, from its peak of 28.53 in April.

External factors are mixed. While recession hurts Europe, the US economy shows some improvement and that country's Federal Reserve is considering a reduction in bond purchases. China signalled a tolerance for slower expansion to reduce environmental damage. Amid the mixed condition, the Stock Exchange of Thailand yesterday joined other Asian bourses' falls. The SET Index lost 0.89 per cent to 1,593.10 points.

Prasarn said to help limit foreign-exchange volatility on Thai exports, the BOT was further promoting the use of the baht for border-trade settlements. Now, baht settlements account for 10 per cent of total border-trade value, compared with zero in 1993. The use of the Thai currency now covers CLMV (Cambodia, Laos, Myanmar and Vietnam) countries and Malaysia, and the volume will grow in line with border-trade value, he said. The BOT is also pushing for baht-denominated invoices.


-- The Nation 2013-05-28

[rubl]

The Finance Minister Kittiratt has a very scientific approach to monetary issues, "he hopes that the lower rate will weaken the baht and boost export demand".

[Mosha]

Haven't Ford pulled out of Australia due to the strength of the dollar?

[chainarong]

The Minister is very keen to put Thailand into the Banana republic category, calling this morning for a cut of 50 points, strange man this one.

[Thai at Heart]

Haven't Ford pulled out of Australia due to the strength of the dollar?

That has been on the cards for years. Last i read ford Australia is hardly an exporting production facility.

[OldeBellPedr]

These high rates are killing business. The problem is that Mr. Prasarn and his friends in the ruling elite would be delighted if their exchange rates policy were to have an adverse effect on the democratically elected government. MPC's are only suitable for mature democracies - one of the issues the MPC in UK has to bear in mind is the effect of interest rates on the government. Thai business desperately needs a rate cut as well as other measures to weaken the Baht, but the governor and the MPC aren't going to cut whilst their rich friends are using the strong baht to buy up foreign companies, stocks and property and generally making themselves even richer than they were before.

[Thai at Heart]

These high rates are killing business. The problem is that Mr. Prasarn and his friends in the ruling elite would be delighted if their exchange rates policy were to have an adverse effect on the democratically elected government. MPC's are only suitable for mature democracies - one of the issues the MPC in UK has to bear in mind is the effect of interest rates on the government. Thai business desperately needs a rate cut as well as other measures to weaken the Baht, but the governor and the MPC aren't going to cut whilst their rich friends are using the strong baht to buy up foreign companies, stocks and property and generally making themselves even richer than they were before.

The other paper is reporting that it is doubtful that a cut in the BOT rate will feed through to business, because in this rather protected, traditional and sclerotic oligopoly of a commercial banking system, the banks normally pocket the difference before eventually passing it partially onto their customers.

Chuay Chaat and all that.......

[waza]

Haven't Ford pulled out of Australia due to the strength of the dollar?

More because despite a free trade agreement with Thailand, the Thais have a 800% import tariff on Aussies cars. The cars they produce are large vehicles that are out of favour and Australia has too many models for such a small population.

But back on topic..........

"Bank of Thailand Governor Prasarn Trairatvorakul maintained that the Monetary Policy Committee was under no pressure, despite the renewed attempt by Finance Minister Kittiratt Na-Ranong to force a cut in the benchmark interest rate."

This statement is obviously for international investors consumption, while the reality has been headline news for many months now. If we are to believe these headlines then Bank of Thailand Governor Prasarn Trairatvorakul would be the architect of all Thailands financial woes.

Edited May 28, 2013 by waza

[Thai at Heart]

Haven't Ford pulled out of Australia due to the strength of the dollar?

More because despite a free trade agreement with Thailand, the Thais have a 800% import tariff on Aussies cars. The cars they produce are large vehicles that are out of favour and Australia has too many models for such a small population.

But back on topic..........

"Bank of Thailand Governor Prasarn Trairatvorakul maintained that the Monetary Policy Committee was under no pressure, despite the renewed attempt by Finance Minister Kittiratt Na-Ranong to force a cut in the benchmark interest rate."

This statement is obviously for international investors consumption, while the reality has been headline news for many months now. If we are to believe these headlines then Bank of Thailand Governor Prasarn Trairatvorakul would be the architect of all Thailands financial woes.

Ironically, the baht is at a 3 month low already on the back of Bernanke saying that they will probably stop printing money soon enough.

[khunken]

These high rates are killing business. The problem is that Mr. Prasarn and his friends in the ruling elite would be delighted if their exchange rates policy were to have an adverse effect on the democratically elected government. MPC's are only suitable for mature democracies - one of the issues the MPC in UK has to bear in mind is the effect of interest rates on the government. Thai business desperately needs a rate cut as well as other measures to weaken the Baht, but the governor and the MPC aren't going to cut whilst their rich friends are using the strong baht to buy up foreign companies, stocks and property and generally making themselves even richer than they were before.

What drivel.

Prasarn has a mandate to control inflation & it is a reality for those who buy food and other daily necessities. This government, via the henchman Kittirat in this case, are hell bent on removing the independence of any agency that has the temerity to display different opinions to the party.

Thai business doesn't need any measures to weaken the Baht as it's already happening following a brief spike into the 28's to the dollar. Most exporters here (importers are certainly not complaining) use a substantial amount of imported raw materials so the exchange rate only has a marginal effect on their operations.

Politicians here are not trustworthy ( a lot less than the BOT) and will only make decisions that benefit themselves & are mostly under orders to do what they're told by Mr selfish in Dubai.

Conspiracy theories are of course grist for the mill here but yours seems more like PTP propaganda.

[Thai at Heart]

These high rates are killing business. The problem is that Mr. Prasarn and his friends in the ruling elite would be delighted if their exchange rates policy were to have an adverse effect on the democratically elected government. MPC's are only suitable for mature democracies - one of the issues the MPC in UK has to bear in mind is the effect of interest rates on the government. Thai business desperately needs a rate cut as well as other measures to weaken the Baht, but the governor and the MPC aren't going to cut whilst their rich friends are using the strong baht to buy up foreign companies, stocks and property and generally making themselves even richer than they were before.

What drivel.

Prasarn has a mandate to control inflation & it is a reality for those who buy food and other daily necessities. This government, via the henchman Kittirat in this case, are hell bent on removing the independence of any agency that has the temerity to display different opinions to the party.

Thai business doesn't need any measures to weaken the Baht as it's already happening following a brief spike into the 28's to the dollar. Most exporters here (importers are certainly not complaining) use a substantial amount of imported raw materials so the exchange rate only has a marginal effect on their operations.

Politicians here are not trustworthy ( a lot less than the BOT) and will only make decisions that benefit themselves & are mostly under orders to do what they're told by Mr selfish in Dubai.

Conspiracy theories are of course grist for the mill here but yours seems more like PTP propaganda.

The fuel price at the pump, the price of bunker fuel for industry, and gas for industry and other stuff should be pause for thought for ANYONE wishing to deliberately weaken the baht. Let alone the poor little old consumer filling up his car. Central banks should focus on inflation rather than targetting exchange rates, the next step should then be to remove inefficiencies in markets to make sure that reductions in the prices are pushed through to the market.

This is Thailand's biggest problem, whilst fuel is relatively under control, prices of imported capital goods and imported items should be getting cheaper, but they aren't. Why, because the market is set up with middle men, who simply pocket the difference.

[Nickymaster]

Haven't Ford pulled out of Australia due to the strength of the dollar?

I thought it had more to do with high wages and benefits.

[paulmw]

Haven't Ford pulled out of Australia due to the strength of the dollar?

Yes plus it costs Ford 25% more to build a Ford car in Australia than any other Australian car, and a whooping 4 times as much than any other car built in Asia.

[samran]

Haven't Ford pulled out of Australia due to the strength of the dollar?

Yes plus it costs Ford 25% more to build a Ford car in Australia than any other Australian car, and a whooping 4 times as much than any other car built in Asia.

At the end of the day, Ford were building cars that no-one wanted in Australia and made nothing that were for export, like Toyota and Holden do. Furthermore, they were doing so on production lines too small to acheive any economies of scale.

Dunno why Thai tarriffs are being cited as factor here. Their aren't any bogans in Thailand to buy Falcon utes even if Tariffs were lower. Ford was up poo creek for a long time.

Now back to the baht....

Edited May 28, 2013 by samran

[Thai at Heart]

MCOT reports that they have cut interest rates by 0.25%.

Lets see what it does to the baht. Very little I reckon.

[webfact]

UPDATE

Bank of Thailand cuts policy interest rate by 0.25% to 2.50%

Full story: http://www.thaivisa.com/forum/topic/642834-bank-of-thailand-cuts-policy-interest-rate-by-025-to-250/