The first purchase of 1.39 billion shares, worth Bt22.24 billion, will be made by next January 10, with the remaining 610 million shares to be bought later.

Atchana Waiquamdee, Bank of Thailand deputy governor-designate, said the value of the baht would not be affected, because GE Capital International Holdings (GECIH) would not obtain baht to pay for the deal directly from the spot market.

The baht opened yesterday at 36.64 to the US dollar, stronger by 0.3 per cent than on Tuesday and 2.4 per cent stronger than at the end of September. It rose to a high of 36.62 to the dollar during yesterday's trading before closing at 36.65/36.67.

The baht reached its strongest point for nearly seven years last week, due to an influx of capital into Asian countries. Investors, depressed with the state of the US economy in the third quarter, are seeking to reap higher returns on Asian stock and bond markets.

"It [the GE deal] will not add pressure on the baht, because the company can manage the deal efficiently," said Tarisa Watanagase, BOT governor-designate.

Plans for the swap transaction call for GECIH to sell dollars to counterparties in exchange for baht, at an agreed exchange rate related to the market rate, and will undertake to buy the dollars back after a specified period. It will roll over the deal until it has sufficient baht to pay for its BAY shares, then buy the dollars back from its counterparties to make the swap transaction complete. Baht circulating in the market will feel no effect, unlike selling dollars on the spot market. GECIH will carry no currency risk and pay only for the swap points, or the difference between dollar and baht interest rates.

GECIH on Tuesday confirmed it would go ahead with the deal, after it was put on hold following the September 19 coup.

Anoma Srisukkasem

The Nation