This implies that despite the  central bank's draconian capital-reserve requirement, there has not been a significant capital outflow.

BOT Governor Tarisa Watanagase said the baht's appreciation yesterday indicated that the outflow of capital was not as high as earlier expected. The unit has been stable of late, in line with other regional currencies, she said.

The baht yesterday opened at Bt35.84 to the greenback, 0.64 per cent stronger than the end of last year. It has appreciated by 1.52 per cent and 0.55 per cent against the euro and the yen, respectively.

"The baht has moved up and down slightly since the measure was launched. We could not allow the baht to move against the trend of regional currencies," said Tarisa.

Suchart Sakkankosone, the BOT's Financial Markets Operations Group director, said that despite the $600 million of capital outflow during the past few weeks, many foreign investors had maintained their money in the Thai bourse and bond market.

Outstanding non-resident baht accounts (NRBAs) stood at Bt26 billion-Bt27 billion last week, compared with Bt22 billion-Bt23 billion before the central bank curbed the amount of an account at Bt300 million in October 2003. The money in NRBAs used to reach more than Bt40 billion prior to the BOT's introduction of the ceiling.

The BOT yesterday allowed non-residents to open a new account called the Non-resident Baht Account for Securities (SNS) for investing in the stock market, non-voting depository accounts, the Thailand Futures Exchange and the Agricultural Futures Exchange. Those who failed to open an account by January 8 are required to lodge 30 per cent of their money at the central bank.

Each non-resident can have an SNS sub-account with the same bank, in order to facilitate cash management. They are permitted to open many SNSs, but the combined outstanding amount must not exceed Bt300 million. Any non-resident can shift to an SNS anything exceeding Bt300 million remaining in an NRBA.

The central bank does not allow the custodians to net the stock investment with other assets or transfer the money from an SNS to an NRBA for other investment purposes.

The non-resident must lodge as a reserve 30 per cent of the money brought in to invest in other financial instruments.

However, Kongkiat Opaswongkarn, CEO of Asia Plus Securities, said yesterday that the Cabinet's approval of the planned amendment of the Foreign Business Act would inhibit foreign investment.

He said foreign investors would perceive the move as a discouraging one for investment, particularly in the retail business, telecommunications and the auto industry.

"I've warned several times that if we approve the amendment, it would mean that we don't welcome foreign investors," Kongkiat said. "Thailand still needs foreign investment. I'm not sure whether foreigners will counter this by any measures to raise trade barriers against Thai exports."

Meanwhile, BOT assistant governor Suchada Kirakul said the Monetary Policy Committee would evaluate the impact on the economy of the year-end spate of bombings, particularly the effect on private investment, which is expected to be a key economic engine this year. The committee's meeting will be held next Wednesday.

Suchada said the investment and tourism sectors would not be affected if the government were able to find the bombers, which would help the situation to recover.

But if these sectors are affected, exports - which are targeted to grow by 12-13 per cent by the Commerce Ministry - would help compensate for the slowdown in domestic demand.

Anoma Srisukkasem

The Nation