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Finance
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2007-01-07 21:45:37-05
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Thailand has no immediate plan to lift remaining capital controls
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Bangkok, Jan 8: Tarisa Watanagase, governor of the Bank of Thailand has said that the government has no plans to scrap the tough currency controls announced Dec. 19 to curb speculation on the baht, but the central bank is prepared to make some slight adjustments. "The reserve policy will not be changed. It's not that we will scrap it in three or six months as people said because we don't want hot money. But we may make some adjustments," Reuters quoted Tarisa as saying. Thai shares plunged nearly 15 percent Dec. 19 after the central bank announced regulations restricting foreign capital inflows to stem the baht's surge, which was hurting exporters. Authorities quickly lifted the controls on foreign stock investments but retained those on bonds and other debt instruments, prompting the benchmark stock index to bounce back 11 percent the next day. The controls require banks to lock up 30 percent of new foreign-currency deposits intended to buy bonds and to impose penalties on those held for less than a year. The bank governor has said the rules are expected to stay in place at least three to six months. The central bank will continue to monitor the controls, under which investors must hand over 30 percent of nontrade-related inflows to an interest- free account for a year with early withdrawal resulting in a stiff penalty, Tarisa said. But despite an abrupt exclusion of equity investments from the measure after the Thai stock market plunged nearly 15 percent in a day, the bank has no timeframe for lifting the controls, she said. "It's not that when the baht is stable, we'll scrap the measure. We don't want the currency to be volatile and we want fund inflows to stay more than one year," she said. The baht was steady at 35.94 to the dollar in trading Monday. A day before the controls were imposed, the baht traded at 35.06 to the dollar, its strongest position in nine and a half years. Capital outflows had been limited so far, judging from the stable baht, Tarisa said.
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