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146080
Thu, 10/14/2010 - 20:02
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https://oananews.org//node/146080
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Thai PM rules out market intervention to curb baht rise
BANGKOK, Oct 14 – Thai Prime Minister Abhisit Vejjajiva on Thursday dismissed calls for market intervention to help stem the baht's appreciation, saying the central bank could face a huge loss as its intervention may not be successful, as seen in many countries’ attempts to stem their own currency surges.
"Some countries spent a large amount of money to intervene in their currency markets but are [still] unable to buck the market trend. In our case, just simply put, the central bank will face a heavy loss and in fact it would not be able to rein in the rising baht," he said.
"To spend a large amount of the country’s reserves for that purpose will not be worthwhile at all,” the prime minister stated.
Mr Abhisit expressed confidence that Thailand will not experience a second round such as the 1997 financial crisis or the so-called “Tom Yam Kung” crisis.
“I don’t believe there will be a repetition of Tom Yum Kung crisis . At that time there had been attempts to buck the market trend, but this time the government will not do so. What we are doing instead is to ease the adverse impact [ of the rising baht].”
The baht fell sharply against the dollar after coming under massive attack from speculators, leading to bankruptcies and unemployment. The currency was devalued on July 2, 1997. The International Monetary Fund (IMF) then stepped in to bail out the Thai economy.
The baht has been strengthening by 11 per cent against the dollar so far this year, the largest gain in the region after the Japanese yen. The unit was trading on Thursday at 29.79/82 against the dollar, up from 29.82/85 on Wednesday.
The Cabinet on Tuesday endorsed measures proposed by the Finance Ministry to curb the rising baht and to ease the damage being caused to small- and medium-sized exporters.
Among the measures put into effect from October 13 are the reimposition of the 15 per cent withholding tax on interest gains for foreign investors in the local state bond market.
The prime minister added that there will be additional measures to speed up investment and machinery imports to boost foreign currency demand.
In response to calls for the Bank of Thailand to slash its key interest rates or keep the rate unchanged to counter the baht appreciation, Mr Abhisit said the BoT’s Monetary Committee would take the matter into consideration at its upcoming meeting. The committee is scheduled to convene its meeting on October 20.
Federation of Thai Industries (FTI) Chairman Payungsak Chartsutipol said the baht strengthening has caused Thai industries' losses in revenues of around Bt90-100 billion. The industries most heavily affected are the food industry, textiles, and industries which depend on the use of Thai raw materials.
He said the FTI will call for entrepreneurs to convene to assess the impact of the strong baht and the Bank of Thailand (BoT)'s interest rate adjustments. (MCOT online news)
"Some countries spent a large amount of money to intervene in their currency markets but are [still] unable to buck the market trend. In our case, just simply put, the central bank will face a heavy loss and in fact it would not be able to rein in the rising baht," he said.
"To spend a large amount of the country’s reserves for that purpose will not be worthwhile at all,” the prime minister stated.
Mr Abhisit expressed confidence that Thailand will not experience a second round such as the 1997 financial crisis or the so-called “Tom Yam Kung” crisis.
“I don’t believe there will be a repetition of Tom Yum Kung crisis . At that time there had been attempts to buck the market trend, but this time the government will not do so. What we are doing instead is to ease the adverse impact [ of the rising baht].”
The baht fell sharply against the dollar after coming under massive attack from speculators, leading to bankruptcies and unemployment. The currency was devalued on July 2, 1997. The International Monetary Fund (IMF) then stepped in to bail out the Thai economy.
The baht has been strengthening by 11 per cent against the dollar so far this year, the largest gain in the region after the Japanese yen. The unit was trading on Thursday at 29.79/82 against the dollar, up from 29.82/85 on Wednesday.
The Cabinet on Tuesday endorsed measures proposed by the Finance Ministry to curb the rising baht and to ease the damage being caused to small- and medium-sized exporters.
Among the measures put into effect from October 13 are the reimposition of the 15 per cent withholding tax on interest gains for foreign investors in the local state bond market.
The prime minister added that there will be additional measures to speed up investment and machinery imports to boost foreign currency demand.
In response to calls for the Bank of Thailand to slash its key interest rates or keep the rate unchanged to counter the baht appreciation, Mr Abhisit said the BoT’s Monetary Committee would take the matter into consideration at its upcoming meeting. The committee is scheduled to convene its meeting on October 20.
Federation of Thai Industries (FTI) Chairman Payungsak Chartsutipol said the baht strengthening has caused Thai industries' losses in revenues of around Bt90-100 billion. The industries most heavily affected are the food industry, textiles, and industries which depend on the use of Thai raw materials.
He said the FTI will call for entrepreneurs to convene to assess the impact of the strong baht and the Bank of Thailand (BoT)'s interest rate adjustments. (MCOT online news)
