ASEAN KEY DESTINATIONS
Baht increase to decline
Pressure on the Thai baht’s appreciation should ease from last year in line with a declining trade surplus and rising outbound foreign direct investment, according to local officials.
After accelerating in last year's fourth quarter, export sales have slowed this year, causing the baht to weaken.
Meanwhile, outbound foreign direct investment amounted to 870 million baht in the first two months of this year, with lending for their expansion totaling 2.65 billion baht. For all of 2010, outward direct investment was 1.3 billion (US$42.9 million) with lending for expansion totaling 7.2 billion baht.
The central bank has also found foreign bond investors are buying more hedging contracts. Net foreign selling has been recorded so far this year by the Stock Exchange of Thailand, while the bond market has recorded net foreign buying.
The central bank expects the net gains from trade and service revenue to stand at US$10-13 billion this year, down from $15 billion last year.
The central bank's priority in foreign exchange management is to ensure that baht volatility is acceptable to businesses.
The central bank expects core inflation will rise above the 3 percent upper range of the target toward year-end, in line with the rising oil price and salary increases.
It currently forecasts headline consumer prices will increase by 2.5 percent to 4.5 percent this year.
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