No signs of speculation as baht soars: Prasarn

BOT governor points to balance in buying, selling

The Bank of Thailand has found no signs of baht speculation as it plans a meeting with the Federation of Thai Industries (FTI) to help exporters cope with the appreciating currency.

BOT Governor Prasarn Trairatvorakul said capital flowing into the country during this period was not speculation against the baht. The inflows to purchase the baht were because it had previously seen less appreciation than other regional currencies. Another reason is expectation of relatively satisfactory economic figures for Thailand this year.

"As far as we can see, it is not speculation, which is different [from what is actually happening]. Speculation is like leading, dumping or manipulation of prices. Now … buying and selling are relatively balanced," Prasarn said.

Most of the capital flowed into short-term debt instruments, partly reflecting investors' uncertainty about the baht's direction.

In the past week or two, the Thai currency has strengthened about 2-3 per cent against the US dollar, less than some of its regional peers, Prasarn said. Last year, it appreciated 3 per cent.

"In the first half of last year, investors might have been uncertain after Thailand's flood problems but started gaining confidence in the latter half, helping the baht - with less appreciation than its regional peers. This year, the improved economic figures show the country's strength, and that could have resulted in the baht's appreciation," Prasarn said.

From the beginning of last year to date, the baht has appreciated about 5-6 per cent, while South Korea's won strengthened 9 per cent, he said. The Philippine peso appreciated 7 per cent, while the Singapore dollar and Malaysian ringgit appreciated 5-6 per cent. The central bank earlier employed some measures, including limiting foreign holdings of the baht without underlying assets, to control the baht.

In response to a question on a meeting on Wednesday between Prime Minister Yingluck Shinawatra and relevant agencies over the baht's appreciation, Prasarn explained that it was a normal meeting. The BOT had explained the situation on the Thai currency after a question by the prime minister, who asked the central bank to monitor the baht closely with regular reports.

Songtum Pinto, BOT director for the Monetary Policy Office, explained that this year's export-growth estimation of 9 per cent was based on several factors, including the average exchange rate. The appreciating baht during the past couple of weeks did not have any effect on the estimates.

The BOT will soon have a discussion with the FTI after its chairman sought a meeting on Wednesday.

Prasarn said that in principle, three major concerns - import content, export and local distribution of products, and gross profit - should be taken into consideration when dealing with foreign-exchange issues.

"Currently, the prime minister is considering relief measures for the affected groups. The impacts are different for them. One idea all agreed with is that those who invest abroad will benefit, especially those who have to purchase capital products or machines from abroad," Prasarn said.