Bank of Thailand urges exporters not to panic over rising baht |
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Published
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Thu, 01 Feb 2007 11:00
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BANGKOK (XFN-ASIA) - The Bank of Thailand (BoT) urged exporters not to panic over the strengthening baht, saying capital control measures currently in place will curb the currency's apprecation.The controls imposed since mid-December effectively lock up 30 pct of any foreign fund inflows coming into Thailand for financial investment.The baht, after initially holding steady after the BOT measure, began to strengthen again in recent weeks -- especially in offshore trading.By buying baht outside of Thailand, investors can avoid the 30 pct reserve requirement, which has sent offshore demand for baht soaring.'The baht has recently strengthened as investors sold dollars heavily to buy baht. They were worried that the onshore rate would get stronger in accordance with the offshore rate after the gap widened to two baht,' central bank governor Tarisa Watanagase said.'Actually, there is no relation between the onshore and the offshore market,' she said.'Investors then should not panic by selling dollars to buy baht,' she added.The baht softened in offshore trading to 35.00-15 to the dollar, down from a peak yesterday of 33.15 to the greenback.In the local market, the currency has held fairly steady, trading at 35.85-87 to the dollar.'The 30 pct withholding rules have helped to protect the onshore market,' Tarisa said.The onshore rate hit a nine-year high of 35.12 against the dollar in December, prompting the BOT to impose stringent currency rules to help exporters from the rising baht.The rules triggered a 15-pct plunge in the stock the next day, but the market rebounded after authorities allowed an exemption for investment in shares.afp/net
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Thai central bank says it may ease capital controls if baht steadies 