Bank of Thailand rules out intervention despite sharp rise of baht

Bank of Thailand rules out intervention despite sharp rise of baht

	Published : Wed, 04 Jul 2007 10:01 By : Agencies Print this Story

BANGKOK (Thomson Financial) - The Bank of Thailand (BOT) on Wednesday ruled out any intervention to slow the rising baht, which was trading at a new 10-year high against the US dollar as foreign capital poured into the Thai bourse.

'The central bank sees no need to intervene in the exchange rate at the current stage. The baht is getting stronger because of the huge amount of capital flowing into the stock market,' BOT deputy governor Atchana Waiquamdee told reporters.

The Stock Exchange of Thailand broke through the 800-points barrier to close at a 10-year high Tuesday while the baht traded to a 10-year high of 34.31-33 to the US dollar.

The Thai currency continued to strengthen on Wednesday and was at 34.20-21to the US dollar this afternoon

The rising baht has drawn complaints from exporters who fear that the exchange rate is making Thai products too expensive overseas.

Exports, the key driver of the Thai economy, have remained robust despite the strength of the baht but the central bank has previously warned of a slump in export growth due to a possible slowdown in the global economy.

The baht has strengthened despite tough currency rules imposed in December, which required 30 percent of all incoming investment to be held by financial institutions for up to one year.

Foreign investors, who account for 40 percent of the Thai market, saw the rules as a steep tax on equity investments and quickly dumped shares, triggering the bourse's biggest-ever one-day drop in December with market losses worth 23 billion dollars.

The stock debacle later forced the army-backed government to reverse some of the currency rules.

The foreign currency controls have given companies an incentive to buy baht outside the country, making the currency even stronger in offshore markets where it trades at around 31.75 to the dollar.

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