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AP Profile: more challenges in store for Thailand's first female central bank chief

AP Profile: more challenges in store for Thailand's first female central bank chief

Tarisa Watanagase's first big decision in her new job may have sent shivers down the spines of international investors, but Thailand's first female central bank chief is hanging tough as she tries to rein in speculators and salvage her credibility as a leading monetary policy maker.
The veteran, no-nonsense banker is countering criticism of her moves to restrict foreign investors, which sent the Thai stock market plunging nearly 15 percent Dec. 19 and sparked anxieties about a replay of the 1997 Asian financial crisis.
Despite the stock losses, there have been no calls for her resignation probably because she has received full public support from military-installed Prime Minister Surayud Chulanont as well as powerful exporters.
"One has to do what one has to do. As a governor, you can't please everyone," Tarisa told The Associated Press. "A governor that is popular in every sector of the market is probably not a very good one. It means they are trying to please everyone indiscriminately."
The sudden and drastic curb on capital inflows, rattling regional bourses in the process, was implemented to stem speculation on the Thai baht, which had hit a nine-year high of 35.09 baht per U.S. dollar on Dec. 18, a day before the controls were implemented, hurting the country's exporters.
Since then the baht has weakened slightly to 35.90 per dollar as of Friday night.
Faced with the market's drop, authorities quickly lifted controls on foreign stock investments but retained those on bonds and other debt instruments, prompting criticisms of policy inconsistency even though the benchmark stock index bounced back 11 percent on Dec. 20. Since then, the market has remained relatively flat.
"There is no doubt that her credibility and the central bank's reputation are at stake after what happened," said Thitinan Pongsudhirak, a political scientist at Bangkok's Chulalongkorn University.
"It is not enough to be smart in this position. The Bank of Thailand has the largest numbers of Ph.D.s in the country but they need someone seasoned, someone who can follow the game," said Thitinan. "She doesn't have the clout that can influence the financial markets with subtle gestures."
But Tarisa, the first female governor in the bank's 64-year-history, has her defenders.
"We are very happy that she took the position. She will make a good governor with her integrity and vast experience in central banking," said Assistant Governor Krirk Vanikkul when Tarisa was appointed Nov. 8 to replace Pridiyathorn Devakula, who was named finance minister by the country's military leaders.
Tarisa had been well-regarded in the financial community for her decisiveness and her professionalism before what many described as an unexpected misstep last week.
While some at the central bank are intimidated by her brusque, unsmiling style, others say such manners are consistent with being a good central banker who must send out clear and unequivocal messages to the financial markets.
Tarisa, who holds a doctorate in economics from Washington University and a masters degree in economics from Japan's Keio University, began her career at the Bank of Thailand in 1975 and garnered praise for reforming financial institutions after the 1997 crisis. She was promoted to assistant governor a year later.
In a banking system still dominated at the top by males, the central bank, known to be a meritocracy, is staffed with many women at senior levels, including six out of 12 members on the board of directors.
Tarisa is known as a hard worker, using her limited free time for yoga and painting classes.
Married with one daughter, Tarisa is also described as down-to-earth and is often spotted at the bank's canteen during lunch ordering simple vegetarian cuisine.
"Even with her masculine toughness, she is actually very approachable and she has a vulnerable side. You see her buying stuff from kids on the street. She has to act tough for her job," said a central bank official who asked not to be named since she was not authorized to speak with the press.
The iron lady is certainly taking a tough stance in the face of her critics.
"Of course, we took the costs into account. It was a well thought-out move. We didn't wake up one day and go crazy," she said of the Dec. 19 decision, adding that for a small, open economy like Thailand's, rapid liberalization could have negative impacts.
Prior to the clampdown on speculative capital inflows, the excessive strength in the baht wasn't justified by the country's economic fundamentals, Tarisa said.
"We had to implement it because the previous measure to discourage short-term inflows was not effective," said Tarisa, referring to earlier direct interventions by the central bank to buy U.S. dollars to weaken the baht.
She also said the remaining capital controls _ on debt investments _ could be in place for up to six months.
"Once the baht is moving in line with regional currencies, the measures will become unnecessary," she said. Of major Asian currencies, the baht has strengthened the most against the dollar over 2006.
But Tarisa admitted that if she could do it over again she would take market sentiment into greater account.
"We knew (the share market) would fall but didn't expect the fall will be this heavy. Since international investors aren't the biggest players, we didn't expect it to hurt liquidity in the market so much, triggering such heavy selling pressure," she said. "It was not so much about logic, just a panic reaction."
In the weeks ahead she will probably have to continue to try to wrestle with the currency, which has weakened only a bit since the measures were implemented. And although she appears to have full support of the government, some analysts also question whether she will be able to ward off pressure from exporters who want an even weaker baht.
"It will take awhile to see if the anti-speculation measure is effective. If it isn't, it will hurt her reputation and the effectiveness of the central bank's future policies under her leadership even more," said Sompob Manarangsan, a professor of economics at Chulalongkorn University.