Virabongsa : Rate should be cut sharply with baht target at Bt36

Speaking at a seminar held by Export-Import Bank of Thailand, Virabongsa said the central bank should cut at least 100-150 basis points. The BOT's Monetary Policy Committee is to consider policy rate movement tomorrow. The one-day repurchase rate is currently at 3.5 per cent.

He suggested the central bank to keep the baht at a certain target of Bt36 per dollar.

The former deputy finance minister said the baht problem has turned to a crisis and urged Prime Minister Surayud Chulanont to handle the issue as the nationa agenda by himself. Not only exporters would get troubled from the stronger baht but also farmers, manufacturers, suppliers and finally financial institutions.

In addition, Virabongsa also suggested both private and public sectors to convert their foreign debts into baht-denominated debts. Total foreign debts are currently accounted at US$60 billion, of which US$40 billion was borrowed by private sector.

"These short-term measures will immediately stop the baht (from going upward further). If the rate cut is sharp enough, the BOT would be more comfortable to intervene the baht. When they issue bonds to absorb liquidity, the central bank won't get too much loss," Virabongsa said. - The Nation

Wichit Chaitrong