http://www.abcmoney.co.uk/news/24200710821.htm
Thai central bank says it may ease capital controls if baht steadies
Published on : Wed, 24 Jan 2007 09:11
By : Agencies
URL : http://www.abcmoney.co.uk/news/24200710821.htm
BANGKOK (XFN-ASIA) - The central bank said that it may consider
relaxing capital control rules if authorities are convinced that the baht could
hold steady against the dollar.
'We are ready to do anything that will not make our (currency)
fluctuate so much. We are especially ready to do something for money coming in
for real investments and not just for hidden speculation,' central bank
governor Tarisa Watanagase told Agence France-Presse.
'The bank does not want to impose this measure for a long time and
it is ready to ease the measure if the baht's stability would not be affected,'
she said.
The remarks came one day after Finance Minister Pridiyathorn
Devakula surprised markets by saying that the capital controls would remain in
effect, despite widespread expectations that they would be relaxed.
Reserve requirements imposed in mid-December effectively lock up
for a year 30 pct of any fund inflows coming into Thailand for financial
investment.
The imposition of the controls sparked a stock market crash in
December, prompting authorities to allow an exemption for investment in shares.
Other type of investments remain subject to the new rules.
The rules were designed to control the baht's rapid rise, which
hurts Thailand's critical export sector by making Thai goods more expensive
overseas.
The export sector accounts for some 60 pct of Thailand's economic
output.
Suchart Sakkankosone, who heads the central bank's exchange control
department, said the central bank was considering a range of ways to adjust the
controls.
He said that rules might be eased for Thai subsidiaries of
international companies, as well as on borrowing to invest in expanding a
business.
'Any relaxation of the measures is expected to come out soon. The
central bank is considering all the details,' Suchart said.
Since the controls were imposed, the baht has held at around 36 to
one US dollar but there also has been some volatility.
