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BoT to ease capital outflow


Spanky99
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From the Bangkok Post:

 

The Bank of Thailand will ease capital outflow controls to reduce the pressure on the strengthening baht, BoT assistant governor Suchada Kirakul said on Monday.

 

Mrs Suchada said the central bank will announce the details this week.

 

"The BoT will not directly intervene in the currency market, but it will be easier for Thai businesses to move investment capital abroad," she said.

 

The assistant governor said the baht had strengthened too quickly, making it difficult for exporters to set their product prices and manage the risk factors.

 

However, the baht's appreciation rate had recently slowed down.

 

Prime Minister Abhisit Vejjajiva expressed confidence that the economic outlook was bright.

 

Mr Abhisit said the four supporting factors for the Thai economy were the Thai people's commitment and determination, the rapid economic recovery, the government's efforts to reduce social gaps and its plan to drive the country's creative economy forward.

 

Thai people were committed and had overcome many challenges in the past, while the economy grew 12 per cent in the first quarter of this year, indicating that the capital market, export, investment and tourism sectors were recovering fast.

 

"The government has been reducing social gaps such as poverty and improving the education system and public utilities.

 

"The government also gives priority to the creative economy to improve the quality of Thai products being sold to foreign markets," the premier said.

 

Commerce Minister Porntiva Nakasai said exports in August rose 23.9 per cent year-on-year and the export value stood at US$16.54 billion.

 

Imports in the previous month increased 41.1 per cent year-on-year and its value was $15.8 billion. Thailand had a trade surplus of $643 million.

 

The export value in the first eight months of this year was $125.08 billion, 32.63 per cent higher year-on-year, while the import value stood at $119 billion, up 47.9 per cent year-on-year. The country recorded a trade surplus of $6.08 billion between Jan-Aug 2010.

 

Mrs Porntiva said her ministry's export growth projection for this year remained at 20 per cent, or $183 billion.

'Veni, Vidi, Velcro' - I came, I saw, I stuck around.

When I'm single I like playing the field. You call it picking up hookers. - Jim Norton

 

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If the Thai economy is doing so great, why would Thais want to move investment capital abroad? Why wouldn't you invest in your own economy if it's doing so well? Some would say their currency would buy more abroad now but, with elections looming next year and an overvalued Baht, I believe those who fear a loss of power in government are making ready to move large sums of cash out of the country and pocket a little extra when they convert the money. We all know the baht has been overvalued for some time now. I found it hard to believe that the Baht gained value during the red shirt revolt. I mean, how can any countries currency make gains while your financial center is smack in the middle of a riot and tourism, which brings 30+ % into the economy is in the toilet? When it's all said and done, the current administration and those running the financial center will be the first to leave the sinking ship. That's MHO.

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I believe those who fear a loss of power in government are making ready to move large sums of cash out of the country and pocket a little extra when they convert the money

 

The Thais would say "you know too much-too much" Just about every falang knows you are right. I think it will drop too -but by how much I couldn't guess

Canada born - but I'm true Brit.

So it'll be off with their knickers & sucking the clit!

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tourism, which brings 30+ % into the economy is in the toilet?

 

Even in the best of times tourism accounts for about 10% of the economy. The Thai economy, and the value of the baht hinge much more on the export market - about 50% of the Thai economy. This is why the currency did not go into the tank during the red shirt problems. Tourism has been suffering for some time, and politically things are a mess, but the export portion of the economy (which is not centered in Bangkok) is still ticking along. First quarter growth this year was double digit, and second quarter growth was also strong (but not as strong as first quarter). Many expect when all is said and done (even with the suffering tourism trade) that year on year growth in GDP will still be between 5-7%.

 

Also while it would seem that if the economy is strong, and growth is expected to continue that folks would not want to move money off-shore. But when restrictions have limited peoples ability to move money off-shore, it is likely that when this limited are eased that some will move money simply because they have been waiting for a chance to do so.

 

That being said there might be some truth to what you are saying - the power to be want to move some money.

 

IMHO the baht will eventually reach a point where it's strength is too much for the export portion to deal with, and then is when it will start to weaken. But, only after it significantly impacts the export market. The move to loosen controls in a hope to weaken the baht, is likely aimed at preventing that point from being reached, and thus allowing the export market to remain strong, and continue to grow.

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