Two-month foreign capital inflow, up to Feb 14, levels off at $2.7 billion

A total of US$2.7 billion (Bt80 billion) of foreign capital flooded into the country this year up to February 14, mostly into the bond market, the Bank of Thailand said yesterday.

"Almost no capital has flowed in after February 14, and there were some outflows in some periods. The two-month figure is expected to be about $2.7 billion," said Mathee Supapongse, senior director of the Macroeconomic and Monetary Policy Department.

Net inflows reached $3.9 billion in the first two months of last year.

In January, net inflows were $1.54 billion. Most of that went to Thai bonds, particularly central-bank bonds of less than one year. Foreign net purchases of central-bank bonds were $1.94 billion and of government bonds were $261 million.

Some $400 million to $500 million worth of foreign capital streamed into Thai equities.

Depository institutions witnessed the highest outflow of $1.69 billion as commercial banks' foreign branches made short-term repayments.

Despite less capital coming in, the baht has appreciated more this year than last year, ?? same 2 months or full year?? possibly driven by investor confidence.

The economy could expand on private consumption and private investment with growing tourism and recovering exports. However, manufacturing is slowing down slightly, Mathee noted.

"January's Private Consumption Index rose 2 per cent from the previous month following all spending. Value-added-tax collections expanded, and that was in line with rising imports of consumer products and high expenses for vehicles," he said.

January's Private Investment Index inched up 0.6 per cent from the prior month, driven by investment in machinery and tools for improved efficiency and expanded production capacity, and satisfactory investment for construction.

Exports gradually gathered steam after the global economy became more stable. January's exports totalled $17.9 billion. Imports amounted to $20.75 billion. Imports excluding gold were $18.04 billion.

January welcomed 2.3 million foreign tourists, mainly from China, Japan and South Korea.

Credit expanded 15 per cent. Consumer credit rose 16.6 per cent while business credit increased 12.8 per cent.

The central bank continues to monitor household credit closely, but has found no signs of an increase in late payments, Mathee said.