Exporters ditch foreign-currency holdings
Exporters yesterday rushed to offload their foreign-currency holdings on concerns that the Bank of Thailand's decision on Thursday to maintain capital controls would cause the baht to appreciate.
However, the central bank did announce some exemptions for non-residents wishing to invest in debt securities, mutual funds and property funds. The baht opened yesterday at 35.40-35.42 against the US dollar and fluctuated all day. The unit hit 35.32 at one point. A currency expert doubted that the central bank had intervened in the market because the weight of dollar buying had brought the baht down to 35.45-35.46 against the greenback. Bank of Thailand assistant governor Nitaya Pibulratanagit maintained that Thursday's decision had not caused the baht to appreciate, as the central bank requires non-residents to fully hedge their money invested in debt securities, mutual funds and property funds. Hedging by non-residents in relation to the central bank's announcement on Thursday would not have an impact on the exchange rate, as they are borrowing in baht with the dollar as collateral. "Two exporters called us asking if the measure will cause the baht to appreciate, as many exporters were unloading their dollar holdings thinking it would," Nitaya said. A foreign-exchange dealer said selling of the dollar had emerged on Thursday after companies were disappointed that the measure announced was not aimed at capping baht appreciation. The central bank has exempted from the 30-per-cent capital reserve requirement those non-residents who hedge their money invested in debt securities and mutual funds. The minimum hedging duration is three months, but non-residents are allowed to buy government bonds with a maturity of less than three months.
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