ASEAN KEY DESTINATIONS
Thailand inflow may top B100bn
The Stock Exchange of Thailand index, which closed Friday at 924.57 points, has gained more than 25 percent for the year to date thanks to net foreign buying of more than 17 billion baht, much coming in the past several weeks.
The baht, meanwhile, has hit levels not seen since the 1997 economic crisis, and fell under 31 to the US dollar last week due to the weakness of the greenback and fund inflows spurred by new investment and a steady trade surplus.
A senior economist said the baht and other Asian currencies were likely to continue rising against the dollar due to inflows to Asia.
But she said the Bank of Thailand, under pressure from exporters to intervene in the currency markets, should not look to impose harsh measures.
Fund inflows are to be expected considering that Asian economies will continue to outperform other regions for the near future. High deposit rates and fundamentally solid public and private sector balance sheets will also help draw capital flows to the region.
The economist said the central bank may consider its tightening cycle for monetary policy, as further rate hikes may only draw further capital flows due to a widening interest rate gap with the West.
Tax measures such as cutting import tariffs on machinery would help exporters ramp up new investment at lower cost while easing pressure on the baht through fund outflows.
"Malaysia has already stopped its policy to raise rates, and Korea is considering doing the same. If exporters are too affected from the appreciating baht, it would affect GDP growth in the second half," the economist said at an investment conference last week.
Thailand's economy grew 9.1 percent year-on-year in the second quarter and 10.6% for the first half overall, as export growth of 41.8 percent in the second quarter offset the negative impact from the political riots in April and May.
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