Fresh warning issued on bitcoin investments

Economy January 05, 2018 01:00

By   THE NATION

3,638 Viewed

DIGITAL currencies such as bitcoin would inevitably make their presence felt in Thailand, highlighting the importance of measures to manage the impact of this global phenomenon, said the Minister attached to the Prime Minister's Office, Kobsak Pootrakool.



He reiterated the recent warnings from the authorities that investors should steer clear of the most prominent cryptocurrency, bitcoin, especially with its sharp price fluctuations.

Bitcoin skyrocketed in 2017, soaring in value by more than 19 times over the year. This has prompted caution among policymakers in some countries, including Singapore's central bank, South Korea's Financial Supervisory Service and Japan’s finance minister.

“It's Thailand’s good luck that bitcoin’s more widespread use here has been delayed, as its price has dropped.

“We may not be able to avoid this thing in the future as it's a global trend. The technology behind bitcoin is very essential,” Kobsak said, referring to blockchain, a technology that is being used in several industries.

According to Thomson Reuters, blockchain first emerged as the software system underpinning bitcoin. Also known as distributed ledger technology (DLT), it is a shared record of information that is maintained and updated by a network of computers rather than a central authority.

Some of the most promising potential blockchain uses in development include financial instrument and trade identification, data delivery, payment systems, land registration, contract law and identity verification, it said.

The government is considering using this technology to develop the baht as e-money for low-income earners, as spending with e-money can be tracked and inspected.

 “The baht as e-money will be tracked the multiplier effect of the government's injection,” Kobsak said. “This will transform Thai fiscal process into fiscal process 4.0 or, probably 5.0,” he said, referring to the government’s Thailand 4.0 policy.

The baht rose to its highest in three years and three months, at 32.22 per US dollar, at the start of trade in 2018, with net foreign purchases on the Thai bourse and Thai bond market, according to Kasikorn Research Centre (KResearch).

 Thailand's strong economic fundamentals, particularly its current account, and the country’s economic recovery remain the key positives for the baht this year, the research house said, expecting the country to face a surplus of over US$40 billion in its current account in 2018.

Meanwhile, the Thai currency could be volatile amid the uncertainties in the US, ranging from the Federal Reserve's decisions on expected rises in the US benchmark interest rate and its members' stance on monetary policy to the US economy to the impact on inflation from tax reform, KResearch said.

Global crude oil prices above US$60 a barrel, since late 2017, could support US inflation and inflation expectations, which would make the schedule of US rate rises more certain and reduce pressure on the US dollar.

 Other political developments in the United States and other regions, including the Middle East and North Korea, could also affect the Thai currency movements.

The research house warned that companies that need to make overseas payments should select tools to hedge against risks for income and cost management amid the likely baht volatility this year.