ASEAN KEY DESTINATIONS
Private sector urged to alter dollar-denominated contracts
Speaking at a seminar on “Reduction of Financial Institutions’ Risks by Counting on Securitisation and Home Morgaging,” he said the government’s move to issue measures to rein in the baht fluctuation on July 24 was aimed to improve the environment of the money market.
Although it might be unable to make the baht weaken swiftly, it should encourage entrepreneurs to hold more foreign currencies. He said the reduction of the currency exchange volatility depended on management of agencies concerned.
The baht must be managed appropriately to prevent it from appreciating more than currencies of neighbouring countries so that exporters could adjust themselves. Undeniably, he said, Thailand still had to count on exports to drive the economy.
Mr. Chalongphob conceded the Bank of Thailand had incurred losses of 170 billion baht for its intervention in the baht movement in the past. However, the move was needed to ensure the country’s economy is not in trouble.
He said many countries had linked international reserves to the green. So, when the dollar weakened, most had suffered similar losses from the intervention in the currency movement.
While the greenback is expected to continue weakening, he suggested, the private sector should change sale and purchase contracts made in the dollar terms to those in other currencies.
For instance, should they export products to the European Union, they should make the contract in the euro denomination to protect themselves from the dollar volatility. TNA