The Bank of Thailand yesterday bared two more measures to help businesses manage their exchange risks, while looking at what many other countries have done this year to rein in their currencies.
"We are watching and studying our existing measures and other countries' measures," said Wongwatoo Potirat, senior director for financial markets and reserve management.
She declined to comment on the timing of any further steps to tame the baht.
On top of the five measures introduced in September to ease pressure on the baht, the central bank will now allow exporters to transfer foreign currency deposits to Thai counterparties for payment of goods or services. The foreign exchange transaction threshold rquiring central bank approval has also been sharply lifted from $20,000 to $50,000.
Additional measures must be considered carefully by looking at all aspects, she said, adding that there are both winners and losers from the baht's appreciation.
There was a trend among governments globally to consider new restrictions on fund inflows, she said.
The authority has said existing measures are adequate to prevent the baht from swinging wildly, resisting calls from some exporters and trade groups for more aggressive action. The baht retreated from a 13-year high yesterday on concern the central bank will intervene to curb gains. It weakened to 30.22 per US dollar in line with regional currencies.
The Commerce and Finance ministries will meet soon on additional assistance for companies, particularly SMEs, which have been walloped by the soaring baht.
Some companies and utilities like Charoen Pokphand Group, the Electricity Generating Authority of Thailand and PTT Plc enjoy an advantage from cheaper imported materials while exporters are suffering from more expensive prices for their products.
Governments from Brazil to South Korea are taking greater pains to control their currencies, as investors have ploughed a record $49.4 billion into emerging-market stock funds this year and $39.5 billion into bond funds, EPFR Global data show.
"We may see more of that," Wongwatoo said. The baht is not the strongest in Asia, she said. Malaysia's ringgit has gained 11 per cent against the dollar so far this year, against 10 per cent for the baht.
Brazil has increased the tax on fund inflows for investment in financial instruments, she said. In Asia, Taiwan was rumoured to be monitoring financial positions of commercial banks extending foreign-currency loans. South Korea was said to be inspecting commercial banks' positions in derivatives.
Earlier this year, several Asian countries introduced financial measures to contain currency fluctuation. South Korea fixes its commercial banks' derivatives transaction amount and limits foreign-currency loans for locals, which are allowed for overseas use only.
Indonesia requires domestic and foreign investors investing in government bonds issued by Indonesia's central bank to hold them for a minimum of one month.
Taiwan does not permit foreign investors to deposit local currencies with commercial banks in the country in order to prevent them from seeking higher interest returns.
Regulators in Seoul will start an audit of lenders handling foreign-currency derivatives on October 19 to calm volatility caused by capital flows, the Korean finance ministry said yesterday. Brazil doubled a tax it charges foreigners on investments in fixed-income securities to 4 per cent on Monday.
The yen fell the most in three weeks after the Bank of Japan cut benchmark interest rates and pledged 5 trillion yen to buy bonds and other assets, having sold $25 billion worth of its own currency last month in the first intervention since 2004.
Policymakers are trying to limit inflows after the Korean won climbed 8 per cent in the past three months to the strongest since May and Brazil's real gained 4.7 per cent to a two-year high.
"The question remains to what extent can countries with floating exchange rates and open capital accounts prevent real appreciation in a world of massive capital flows," Bloomberg quoted Kevin Gallagher, a professor at Boston University who has written reports on the issue for the United Nations, as saying. "The evidence shows that it can be done, at least in the short term."
Table: Measures adopted globally
A number of countries have launched measures to stem the rise of their currencies:
Thailand
On top of the five measures announced last month, Bank of Thailand announced further easing of foreign-exchange regulations:
-Allowing exporters to transfer foreign currency deposits to Thai counterparts for the payment of goods or services;
-Lifting the foreign-exchange transactions threshold needing Bank of Thailand approval from $20,000 to $50,000.
South Korea -Starting an audit of lenders handling foreign-currency derivatives;
-Imposing a limit on banks' foreign currency loans, making them strictly for overseas use only.
Indonesia
-Local and foreign investors buying central bank bonds must maintain the investment for at least a month.
Taiwan
- Banning foreign investors from depositing local currency at local banks to prevent them from making profits from the interest rate differential.
Malaysia
-Allowing importers and exporters to complete transactions in ringgit, compelling them to hedge against foreign exchange risks;
-Lifting the ceiling on local companies' lending/borrowing from parent companies or subsidiaries overseas.
China
- Authorising exporters to park partial revenue overseas.
Japan-Intervening in currency markets in September for the first time in six years;
-Lowering policy rate from 0.1 per cent to zero to help safeguard the fragile recovery and control the appreciation of the yen.
Brazil
-Doubling taxes on foreign bond purchases from 2 per cent to 4 per cent. Stock investments and direct foreign investments will be exempt from the increase.
Source: Bank of Thailand, The Nation