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 Investment
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21 Dec 06 11:03
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Exporters back Bank of Thailand move to impose reserve requirement
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TNA
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BANGKOK, Dec 21 - The Bank of Thailand's decision to impose a reserve requirement on short-term capital inflows deserves support, since it would have a positive effect in the long run while the stock market
itself will be affected in the short run, according to top executives in the export sector.
Dej Pattanasetpong, President of the Federation of Thai Industries' Garment Club, said he supported the state measures to stem the baht speculation.
He said he saw it appropriate for the central bank to relax the rule by exempting foreign currencies brought into the country for investing in the Stock Market of Thailand from having the 30 per cent of total investment levied as a long-term reserve.
However, Mr. Dej is still concerned that loopholes might be found for hedge funds to use to attack the baht through the bourse. So, the central bank should come up with additional measures to stem it.
The impact of the central bank measure on the stock market is considered to be far beyond any expectation, he conceded, but said the bank's approach to cope with the baht volatility in on the right track-- if quite slowly--since the private sector called for it to keep a close watch on the stronger baht only three months ago.
Thai Cloth Traders' Association president Tavorn Tantisirivith said the measure would have a positive impact in the long run. The baht had already weakened to a certain extent as a result of the measure being imposed.
Speculation on the baht would ease, he believes, and suggests the Bank of Thailand closely monitor and supervise the currency volatility for at least four months to ensure it would not affect the export sector.
Permanent Secretary for Industry Chakkramont Pasukvanich said he believed the export would remain favourable next year should the baht stay at 36 to the US dollar for a while.
Still, it also depended on global economic conditions. Should the Chinese yuan strengthened as many expected, he was confident the Thai export sector could compete overseas. (TNA)
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