ASEAN KEY DESTINATIONS
Baht will continue fluctuating
Foreign capital outflows from Thailand have eased recently, although foreign investors recorded net sales during the past two weeks, Atchana Waiquamdee, the deputy governor for Monetary Stability with the Bank of Thailand.
"Some capital shifted out. But some investors moved funds to the bond market or deposited them in non-resident baht accounts. I think investors found excuses for profit-taking," Atchana Waiquamdee, said.
The recent baht depreciation was partly driven by gold importers responding to prices dipping to $1,300 from $1,400 per ounce at the end of last year, she said.
"There is increasing dollar demand from importers amid the weakening baht," Dr. Atchana said. The baht has been seesawing in light of uncertainties in the United States and European economies. Foreign investors have increased their hedging ratio because of foreign-exchange volatility.
"The dollar index has dropped 40 percent. If we regard the US dollar as a blue-chip stock, investors might bottom-fish it in the hope that it will rebound. The baht might weaken again," she said.
Factors affecting foreign exchange are expectations of movements in major currencies, economic trends in advanced and developing economies, and Asian economies increasing policy interest rates.
The central bank, meanwhile, is preparing a master plan to promote freer outward portfolio investment to meet the Asean Economic Community framework from 2015.
"In point of law, we may not seem very open. But in fact, we rarely refuse permission if there is a request. Inadequate hedging is an obstacle to the promotion of freer capital accounts as investors perceive higher costs from the weakening baht resulting from the outflows," Dr. Atchana said.
The central bank aims to promote individual direct investment abroad as right now only listed firms are interested in outward investment.
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