Foreign capital flows after Fed rate cut

Its deputy governor Atchana Waiquamdee said yesterday foreign funds continued to flow in, particularly to the Stock Exchange of Thailand.

The Fed last week aggressively cut its fund rate by 0.5 percentage points to 4.75 per cent. This narrowed the gap between US rates and the Thailand central bank's policy rate of 3.25 per cent.

Inflows are illustrated in net foreign buying on the local exchange. Since the Fed cut, foreigners have been net buyers of Bt4.52 billion worth of shares.

As well as portfolio investment, there has been an influx of foreign direct investment. This is attributed to sound economic fundamentals, reflecting insignificant changes in national competitiveness, central bank Governor Tarisa Watanagase said.

"Direct investment inflows continue because the fundamental analysis from the outside still looks good," she said.

This has eased worries over competitiveness. However, some sectors of the economy have lost out to rivals in other countries, she said.

In addition, the bank noted the baht had not appreciated as much as some neighbours' currencies, in spite of capital inflow.

-The Nation

Anoma Srisukkasem