Bank Of Thailand Unworried By Strong Baht, Bourse Investment

[george]

BoT unworried by strong baht, bourse investment

BANGKOK: -- In a bid to dispel anxieties among investors and the business sector, Pridiyathorn Devakula, Bank of Thailand Governor, said that the central bank was closely monitoring stability of the baht, inflation, and capital inflow and outflow.

The current strong baht, capital inflow-outflow and stock market investment are being watched closely by the Bank, he said.

"If the baht is allowed to become too weak it could affect inflation and if it is too strong, Thailand could suffer a greater trade imbalance," he said, "as Thai products will become more expensive and less competitive in the international market."

He said it is better to maintain the currency value at an appropriate level as the baht is now not too strong and not too weak, and inflation rate is at a level acceptable to the BoT.

What needs to be watched is the overall situation as the country moves towards the Oct. 15 general election, and the fiscal and investment policies of whatever new government takes office.

Pridiyathorn projected that the Thai economy may be sluggish during the first half of 2007 and that the new government may come up with measures to boost the economy late in the year.

"Inflation is expected at an average of 4 per cent next year--which is acceptable to the BoT," he said.

"If inflation is too high, it could hurt economy. Most importantly," the BoT governor said, "fiscal and financial policies must go together in order to maintain Thai economic growth."

--TNA 2006-08-19