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Thailand says currency control measures could remain in place for months

Thailand says currency control measures could remain in place for months

Currency control measures that rattled the stock market in Thailand could remain in place for up to six months, the central bank governor said Tuesday.
Bank of Thailand Gov. Tarisa Watanagse told The Associated Press that last week's measures _ which restrict foreign capital inflows into the bond and commercial paper markets _ must remain in place for at least three to six months to ensure they actually curb the baht's appreciation.
"Once the baht is moving in line with regional currencies, the measures will become unnecessary," Tarisa said.
Thai shares plunged nearly 15 percent Dec. 19 after the central bank announced regulations restricting foreign capital inflows in an effort to curb the baht's appreciation.
Authorities quickly lifted the controls on foreign stock investment but retained those on bonds and other debt instruments, prompting the benchmark index to bounce back 11 percent last Wednesday. The market has changed little since then.
On Tuesday, Thai stocks edged higher in thin trading because of the holidays. The Stock Exchange of Thailand's benchmark SET index rose 0.6 percent to 688.72 with bank and energy blue chips leading the way.
The U.S. dollar has strengthened since hitting a nine-year low of 35.09 baht last Monday. It was trading at 36.39 baht late Tuesday, little changed from 36.43 baht on Monday.
Analysts said they were not surprised the measures would be in place for some time, saying the announcement is unlikely to have a major impact on the market.
"Removing these measures too quickly is not a good thing for either the central bank or the market," Tisco Securities analyst Isara Ordeedolchest said. "There has been a fair amount of speculative activities and if Thailand sends a signal that we are serious about stemming speculative flows, it will be positive in the long term."
Some analysts, however, said they were concerned the central bank wasn't excluding loans between firms in Thailand and their offshore parent companies as well as loans for investments in property funds from the controls.
"For those companies who have clear investment plans, it will unnecessarily increase the cost of their borrowing," said Poramet Tongbua, the head of research at Tisco Securities.
Tarisa countered that controls were important for the property market and foreign loans because these were areas where currency speculation was a big problem.
"We have parent companies and units that transferred 3 billion baht one day, 2 billion baht on another and 4 billion baht on the next before the measure was in place," Tarisa said.
Meanwhile, Tarisa said the controls so far have been effective at "slowing down the volatility of the baht and will be beneficial to the export sector, which is an economic driver."
"I think the panic in the stock market is over," she said.


Updated : 2021-04-21 07:59 GMT+08:00