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Currency Appreciation
July 17, 2007

Govt mulls industrial sector reform 
Thai government announced  it would discuss industrial restructuring policy in light of the strong baht on July 19, as part of a series of measures to help operators battle the impact of currency appreciation.

In addition, Finance Minister Chalongphob Sussangkarn and Bank of Thailand Governor Tarisa Watanagase have been mandated to meet every Friday specifically to evaluate and respond rapidly to the currency movement, the Cabinet agreed on July 17.

Deputy Prime Minister and Industry Minister Kosit Panpiamras said a package of measures developed by all stakeholders to address the strong baht will be forwarded to the Cabinet on July 23.

Given the impact of the baht appreciation regarding employment as well as industrial operations, the Cabinet will also involve the Labour Minister in the economic committee.

Mr. Kosit said the government is not complacent and it is trying its best to find effective measures to deal with the currency crisis. He indicated that the interest rate may be further reduced but there is not much leeway left on the rate front.

Asked to respond to former finance minister Veerabongse Ramangura's proposal for one per cent rate cut to remedy the currency crisis, Finance Minister Chalongphob said though a further rate cut might be a sound idea, it's not a panacea.

Domestic interest rates nearly hit rock bottom, contradicting the global trend where rates are rising, said Dr. Chalongphob, adding that the central bank must take into account the overall picture of the economy when it comes to rate consideration.

Dr. Chalongphob insisted that the Bank of Thailand has enough instruments at its disposal to cope, but it just needs some fine-tuning to enable rapid response. The bottom line is that the government must assure that devastation on the 1997 scale would not recur, he said. TNA

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