ASEAN KEY DESTINATIONS
Baht rules eased further
The central bank also relaxed the minimum requirement for the submission of a foreign exchange transaction form to $50,000 from $20,000. Both measures will take effect on October 12.
The moves were aimed at curbing inflows of short-term foreign capital amid growing jitters in the global market about the rapid appreciation of the baht, said a senior official.
The baht was trading late yesterday in Bangkok at 30.12/17 to a dollar, compared with 30.16/21 on Monday. It has appreciated 9 percent against the dollar since the beginning of the year.
Wongwatoo Potirat, senior director for the central bank's Financial Markets and Reserve Management Department, said the baht continued to strengthen yesterday amid active selling by exporters, while other currencies weakened slightly against the dollar.
Other emerging economies are also struggling to deal with the appreciation of their currencies triggered by heavy capital inflows in recent months.
The Brazilian central bank yesterday doubled the tax on short-term capital inflows to its debt market to 4 percent. The move followed Brazilian Finance Minister Guido Mantega's comments of an escalation of "currency war" as the United States has kept the dollar weak and China refused to allow much movement in its currency..
The baht's volatility has been in the region's medium range, with 3-4 percent movement measured per day.
Ariya Tiranaprakit, executive vice-president of the Thai Bond Market Association, said the market recorded 97 billion baht in net buying in the first nine months of this year, or 5 billion a day on average, compared to 2.7 billion baht in the same period last year.
While the US interest rate is zero to 0.25 percent, the Thai policy interest rate currently stands at 1.75 percent, Malaysia 2.75 percent and Indonesia 6.5 percent. The interest rate spreads have attracted investors to arbitrage. But some speculate on the strengthening baht as a byproduct," said Mrs. Ariya.
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