Sign up | Log in



Capital controls to be lifted by March 3


March 1, 2008

Capital controls to be lifted by March 3

Thailand’s central bank said it decided to lift the capital controls as economic situation and the balance in capital inflows and outflows began to improve, said Bank of Thailand governor Tarisa Watanagase Friday at a press conference.

The currency controls, imposed by the previous military regime, will be lifted,  effective March 3, sharply shifting economic policy. The capital controls were intended to curb the Thai baht's rise against the dollar. She said the economy, which grew by a stronger-than-expected 5.7 percent in the fourth quarter, had clearly improved while export growth remained strong despite the steady strengthening of the baht.

The bank's latest economic report on Friday showed that despite concerns about a weakening US economy, exports to Thailand's top trading partner rose 15.9 percent year-on-year to 1.6 billion dollars in January.

Shipments to Japan grew 11.02 percent to 1.5 billion dollars, while EU-bound exports also expanded 23.8 percent to 1.9 billion dollars, the bank said.

Tarisa said the bank would take new measures to rein in the baht, mainly by making it easier for Thai companies to invest overseas while tightening rules aimed at limiting currency speculation.

The policy reversal was announced just one day after Thaksin staged a dramatic homecoming, ending nearly one and a half years of self-imposed exile.

Tarisa denied that she was acting under pressure from the new elected government led by Thaksin's allies, and said she was adapting policy to an improved economic outlook.

The announcement was made moments after the stock market closed. The Stock Exchange of Thailand closed 0.43 percent higher, mainly on gains in energy stocks as buying was limited in anticipation of the bank's decision.

Tarisa predicted the end of the capital controls would improve the mood in the market, even though equities were exempted from the reserve rules.

"Lifting of the 30 percent rule will be a favourable psychological factor for the stock market, but will not directly benefit the exchange because this measure does not affect money to be invested in the stock market," Tarisa said.

The capital controls required 30 percent of all incoming investments to be held by financial institutions for up to one year.

But the controls spooked foreign investors, who saw the regulations as a steep tax on equity investments, and caused the biggest one-day drop in the Thai stock market in late 2006, involving losses worth 23 billion dollars.

Many exemptions were later made to the currency rules, but the general 30-percent requirement had remained in place until now.

Meanwhile, there have been speculations over removal of the central bank governor, which, Thai Finance Minister Surapong Suebwonglee, said were just rumours. He said he had no plans to sack the governor.

The speculations came in the wake of sudden transfer and removals of several chiefs of government agencies which include Police General Sereepisut Taemeeyaves, the country’s national police chief, Sunai Manomai-udom, head of the Department of Special Investigation (DSI), Siriwat Tiptaradol, head of the Food and Drug Administration, and Pramote Ratthavinij chief of Public Relations Department (PRD).

More on Thailand


Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand