Chantavarn Sucharitakul, assistant governor for the Bank of Thailand’s Corporate Strategy and Relations Group, said the agreement was signed by Veerathai Santiprabhob, governor of the BOT, and Haruhiko Kuroda, governor of the Bank of Japan.

The facility under the arrangement is up to US$3 billion (Bt104 billion). 

The purpose of the BSA is to enable the two countries to swap their local currencies, either baht or yen, against US dollars in the event that an immediate need arises that would require short-term liquidity support and maintenance of balance of payments of the two countries. 

The mechanism will also supplement the existing Chiang Mai Initiative Multilateralisation (CMIM). Moreover, the BSA is expected to strengthen bilateral financial cooperation, reinforce the stability of the financial markets, and further develop growing economic and trade ties between the two countries. 

The agreement is effective for a three-year period commencing from the date it was signed. 

Under the framework of regional financial cooperation, this BSA is seen as a financial safety net against the emergence of future financial distress. It will be drawn on only when necessary. Currently, there is no need for Thailand to utilise the facility as its macroeconomic condition is sound, with a strong external-debt position. 

Thailand is experiencing neither balance-of-payments nor short-term liquidity difficulties. As of March, its reserves stood at a strong $180.9 billion.

Source: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30314376

 

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