Everyone's focus now the ogre of inflation

The market view is that this will be the last time the Fed lowers the fund rate this year - given concerns over inflationary pressures caused by skyrocketing oil prices, which are now approaching US$120 (Bt3,810) per barrel.

Apart from rising energy costs, we are all now experiencing higher food prices. These have also contributed to the inflationary situation, and although Thailand is a major rice producer and exporter, we may not be able to avoid the effects of inflation.

On the currency front, the US dollar is holding firm against the euro and the yen, at ¤1 and ¥104 per $1.

The situation in the credit market has improved and market players have managed to stay calm amid earnings announcements from major banks that continue to show huge losses from write-downs. However, we believe that the market views these as the last round of write-downs and that the banks will soon be able to recapitalise and get back on their feet.

On domestic issues, the Commerce Ministry has announced that the inflation rate jumped to 6.2 per cent in March, following 5.3 per cent in February. The Bank of Thailand's latest economic figures show that the country registered a trade surplus of $340 million in March with import growth of 31 per cent and export growth of 15 per cent. The possibility of the Bank of Thailand lowering interest rates is diminishing.

Padej Piroonsit is head of treasury sales from Bankthai. E-mail: Padej.piroonsit@bankthai.co.th