Thailand: ‘Further strict’ THB curbs coming – Finance Minister

  • Recent measures from the Bank of Thailand that aim to restrain the surging THB will likely be followed by “further strict” steps, but policy makers are unlikely to impose outright capital controls, Finance Minister Arkhom Termpittayapaisith said.
  • Currency strength has re-emerged as a key issue for the government after the THB reached a 10-month high against the USD in Nov 20, raising concerns about the impact on exports. Thailand’s economy is expected to contract the most in more than two decades in 2020 with tourism in limbo amid the pandemic.
  • Urged by exporters and policy makers to stem the THB rally, the central bank announced plans to relax capital outflow rules and more closely scrutinise investment into bonds. So far the measures have failed to cool the currency. The THB was 0.1% lower at 30.285 to USD by 1 Dec 8.50am, paring gains in 4Q20 to 4.6%.
  • Mr Arkhom said the government aimed to keep the THB exchange rate stable so exporters can manage their revenues, but wouldn’t specify a preferred level for the currency. He also ruled out stringent limits on the amount of funds that can enter the country.
  • “We wouldn’t see that,” he said of capital controls. Asked if there was any conceivable situation in which Thailand would pursue such a policy, he said, “we haven’t discussed that yet.”
  • Thailand may struggle to temper THB gains as foreign inflows into the nation’s stocks will continue even if the central bank curbs supply of short-term bonds, according to Jitipol Puksamatanan, head of market strategy at SCB Securities in Bangkok.

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