BANGKOK, May 8 – The Bank of Thailand (BoT) has proposed four measures to deal with the rising baht which were disclosed to the cabinet on Tuesday.
Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong announced the measures to the cabinet, starting with a prohibition of foreign investor purchases of central bank bonds or an imposed timeframe to possess bonds to prevent short-term speculation. The BoT has never enforced the measure in the past.
The second option is to ban foreign investors from buying Thai government or state enterprise bonds at 3-6 months’ maturity to prevent speculation.
The third measure is to impose a fee on foreign investors profiting from investing in bonds. The Finance Ministry is required to amend the law to pave the way for the proposed measure.
The fourth measure compels foreign investors to hedge the exchange rate without receiving returns and risk. The central bank said the measure has never been used by any country.
The BOT also proposed setting aside reserves, a measure which was once implemented and disastrously battered the stock index.
Mr Kittiratt said the central bank’s additional proposal was harsh but unclear.
The BoT proposed several measures but failed to mention reducing the policy interest rate which the Finance Ministry defines as important, he said.
Commerce Minister Boonsong Teriyapirom told the cabinet that Thailand’s exports have been severely hit as the baht moved at around Bt28-29 against the dollar.
Thailand may consequently fail to achieve this year’s targeted export growth at 8-9 per cent, he said
