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Baht remains strong after removal of capital controls


March 4, 2008

Baht remains strong after removal of capital controls

The Thai baht continued to stay at around 31.50 to the US dollar in the Monday’s morning trading session after the Bank of Thailand’s decision to lift the 30 percent reserve requirement took effect, Thai News Agency reported, quoting money dealers.

However, it is expected the baht would further appreciate because of foreign capital inflow and a dumping of the US dollar by exporters, who are afraid the baht would continue to strengthen. Under the circumstance, the baht had an opportunity to appreciate further and break through the level of 31 to the dollar.

A currency analyst projected more money would flow into the Stock Exchange of Thailand following the central bank’s move to end the capital control.

However, it remained to be seen whether the SET index would rise since the Dow Jones Industrial Average plunged on Friday’s night and other regional markets plummeted in pursuit of the US stock market in the morning trading session.

Meanwhile, Deputy Prime Minister and Commerce Minister Surapong Suebwonglee on Monday voiced confidence the baht would become stable within one week following the lifting of the capital control.

Commenting on the baht movement at around 31.50 to the dollar in the morning trading session, he said the central bank must closely supervise the currency to ensure it is stronger than other currencies in the region.

He believed investors and players in the money market would understand the situation soon and the currency volatility would ease within one week

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