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Rapidly stronger baht worries Thai central bank governor, finance minister
Bank of Thailand (BoT) Governor Prasarn Trairatvorakul expressed concern
last week at the rapidly appreciating Thai currency during the past two days
but refused to commit regarding whether an intervention in the currency
markets is underway.
He said the stronger Thai baht compared to the US dollar is a consequence of
short-term foreign investment in Thai bonds and the stock market through
financial institutions - a signal of profit-taking by foreign investors.
The BoT governor warned foreign exchange investors to be extra cautious,
giving assurances that the central bank is armed with measures to stem the
baht appreciation which will be implemented when necessary.
The Thai currency is not that strong at the moment, he said. He refused to
disclose if the bank will intervene, but said that Thai currency should move
in tandem with the fundamentals and market mechanisms unless it has a
negative impact on the country.
“There is cost in every intervention. We are closely monitoring the
situation. It gains strength quite rapidly in the last two days,” he said.
“We have the mechanism but I’m not saying that we won’t use it. We will if
it’s good for the Thai currency.”
He indicated that the Thai baht’s movement, though significantly strong, is
in the same direction as Asian and regional currencies, adding that it is
natural that a currency is alternately strong and weak.
“The strengthening of Thai baht was less than regional currencies last year
but it is much stronger (compared to regional currencies) since early this
year. It reflects investors’ indifference to foreign risk factors,” he said.
Calling on the private sector to be prepared for possible fluctuations
arising from changing risk factors, Prasarn said BoT officials regularly
meet with the Federation of Thai Industries and Thai Chamber of Commerce
given Thai exporters’ unequal capabilities in adjusting to the situation.
The BoT governor said the stronger Thai baht has been a boon to heavy
machinery imports for infrastructure development while foreign investments
have increased with a value of US$20 billion in direct investment and US$8-9
billion through investment portfolios.
Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong admitted that the
rapid strengthening of the baht, at the daily rate of Bt.20, is not a
positive sign and does not reflect the genuine economic situation.
He called on state agencies responsible for the country’s economy to ensure
that the Thai currency does not gain strength to an extent of impacting
Thailand’s export sector. (MCOT)
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Thailand declares war on piracy, intellectual property violation
Thailand will set up a special center to crack down on intellectual property
infringement with tough government action against violators, according to
Deputy Commerce Minister Nattawut Saikua.
The minister said the Policy Committee of the National Intellectual Property
Bureau has moved to set up the Operations Center for the Suppression of
Intellectual Property (IP) Infringement to deal strictly with the
long-standing issue. Nattawut himself will head the center.
Several IP-related laws, such as legislation concerning copyright, patent,
trademarks, food and drug regulation, and consumer protection will be
applied to take legal action against IP violators, Nattawut said.
The center will also monitor money trails, tax payment records and money
laundering activities of piracy suspects, he said, adding that the
authorities are keeping a close watch on the movement of a major producer of
IP-infringed products, his warehouse and distribution channels in Bangkok
and upcountry.
An arrest of the violator is imminent, he said.
Nattawut said the IP meeting on Thursday also agreed to intensify an effort
to have Thailand removed from the Priority Watch List (PWL) in a report
prepared annually by the Office of the United States Trade Representative
under Section 301 as amended to the Trade Act.
Thailand is accelerating action to prevent IP infringement such as amending
the copyright law to protect IP on the Internet and customs law to empower
authorities to confiscate pirated merchandise.
The measures should materialize in time for the next PWL evaluation in
April, the minister said, adding that proprietors of commercial complexes
where pirated products are sold will be invited by the authorities to be
briefed on the government’s anti-piracy policy. (MCOT)
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Thai central bank revises 2013 growth forecast to 4.9%
The Bank of Thailand (BoT) has revised its growth forecast for this year
upward by 0.3 percent to 4.9 percent, giving credit to rising exports,
private consumption and investment, said Paiboon Kittisrikangwan, BoT
Assistant Governor.
The bank said in its monetary policy report that Thailand’s growth
projection was revised upward for last year and this year is still driven
mainly by private consumption and investment.
Last year’s growth forecast was revised up to 5.9 percent from the earlier
projected at 5.7 percent.
This year’s growth forecast was revised up to 4.9 percent from 4.6 percent
while next year’s GDP is forecast to grow 4.8 percent.
Paiboon said the global economic risks in the worse-case scenario have
declined, given the lower probability of Greece’s exit from the euro area
and the recent progresses on fiscal concerns in the US.
Exports still suffer from the global slowdown, but seem to have bottomed out
and show incipient signs of recovery. Exports this year are projected to
grow nine percent from 3.6 percent last year and 9.7 percent growth is
forecast for next year.
State and private investment are positive factors for economic growth.
Private and state investment is likely to expand 12.1 percent and 17.1
percent respectively. However, the government must invest within the
timeframe to avoid any adverse effect on the latest growth forecast, he
said.
This latest forecast, however, has yet to include a Bt2.2 trillion
investment in basic infrastructure as it is still unclear and needs time for
implementation.
A risk factor for the Thai economy which needs to be monitored is the
fluctuation of fund flows, which may influence the currency exchange rate.
The rapid appreciation of the Thai baht may be short-lived but it benefits
the imports of heavy machinery.
Other risk factors are acceleration of credit and household debt and results
of the second round of minimum wage rises, which is initially assessed to
not impact inflation, but small enterprises could go out of business.
The central bank maintains this year’s inflation forecast at 2.8 percent for
headline inflation and 1.7 for core inflation. (MCOT)
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