Bank of Thailand exempts more foreign investment inflows from capital controls |
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Mon, 29 Jan 2007 13:30
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BANGKOK (XFN-ASIA) - The Bank of Thailand (BoT) took another step to ease its controversial capital controls that sent stocks plummeting last month, by exempting more foreign investments flowing into Thailand.From February 1 onward, fully-hedged offshore borrowings in foreign currencies by firms operating in Thailand will be exempted from the 30 pct withholding requirement, said the central bank's head of financial market operations, Suchart Sakkankosone.The exemption also covers borrowings brought in for buying warrants, capital increased shares, transferable subscription rights, and depository receipts related to equities.'The exemption is to allow a greater variety of investments, aiming to facilitate capital flows related to trade and services,' Suchart said.Offshore borrowing will be exempted by immediately swapping the proceeds into baht. Loans with maturities of greater than one year must be fully hedged for at least one year, he added.Exporters' packing credits of up to 180 days are exempted from the withholding provided that the borrower agrees to repay the credits with foreign currency proceeds from the impending trade.The imposition of the controls sparked a 15 pct drop in the stock market in December, prompting authorities to allow an exemption for investment in shares. Other types of investment have remained subject to the new rules.afp
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Thai central bank says it may ease capital controls if baht steadies 