Bank of Thailand Governor Veerathai Santiprabhob said there’s no evidence authorities are manipulating the currency to give exports an unfair advantage, responding to the US’s decision to investigate the Southeast Asian nation for possible trade abuse.
“I don’t think anyone has evidence that Thailand has manipulated the currency to gain an unfair competitive advantage,” the governor, 47, said on Thursday on the sidelines of a conference of regional finance ministers and central bank chiefs. “Thailand has not adopted any exchange-rate policies to gain an unfair competitive advantage in trade.”
“At times, we might have to intervene in the foreign-exchange market but that’s largely because of the intense capital inflows that we are on the receiving end of,” Veerathai said. The inflows, fueled by excess global liquidity and Thailand’s sound macro-economic policy environment, “have been coming in in a short period of time that could create adverse consequences,” he said.
About $7.4 billion poured into Thai bonds in the past year, a period during which the baht was one of the best performers among major Asian currencies tracked by Bloomberg, strengthening 1.7 percent against the dollar.
The Bank of Thailand has cut the supply of some debt this month and Veerathai said it can consider further steps.
“Foreign-exchange intervention is definitely a measure that all central banks need to have on the menu list but there are also other policy measures that one can look at, from market-based measures to the likes of capital-flow management measures,” he said.
Thailand had the 11th largest trade surplus with the U.S. of about $19 billion last year. Finance Minister Apisak Tantivorawong on Monday said he hoped for talks about trade ties before any unilateral American steps to deter imports. The military-run government this week also denied that it manipulates the baht to bolster overseas sales.
The stronger currency has curbed inflation and capped economic growth. Consumer prices rose at the slowest pace in four months in March, gaining 0.76 per cent from a year ago and dipping below the target range of 1pc to 4pc. While the central bank predicts growth will accelerate to 3.4pc in 2017, which would be the highest in five years, that’s still below Veerathai’s estimate of potential growth of 4pc to 4.5pc.
Bloomberg: The Washington Post Service
Courtesy : Dawn News