The baht sank to a six-year low Friday as a central bank
move to allow domestic investors easier access to overseas
markets sparked
concern that outflows will increase.
The Bank of Thailand will permit to qualified investors with
more than 100 million baht of liquidity to directly invest in
foreign equities, bonds, mutual funds and other financial
assets, deputy governor Pongpen Ruengvirayudh told
reporters Friday.
Overseas investments will be limited to US$5 million
per year, she said.
The baht retreated 0.5% to 35.843 a dollar as of 1.38pm,
erasing a gain for the week, according to data compiled by
Bloomberg. It fell to 35.94 earlier, the weakest since March
2009, and has dropped 8.1% this year.
Ms Pongpen said the relaxation on outflow rules aimed to help
Thais distribute their investment risks and directly contact
financial institutions overseas to improve the cost and
efficiency of investing.
In 2017, the BoT will relax the regulations further by allowing
general retail investors to buy all types of securities.
Ms Pongpen said she was confident the move will not impact
the country's foreign reserve nor exchange-rate movements
as investors usually hedge rates to prevent risk.
Orderly decline
"The central bank is probably more comfortable letting funds
flow out through residents rather than making it easier for
foreign investors to move cash in and out," said Shigehisa
Shiroki, assistant general manager at Mizuho Bank Ltd's
treasury department in Bangkok. Orderly declines in the
baht look acceptable to the central bank, he said, adding
that the currency could weaken to 36 a dollar over the
next few months.
The Bank of Thailand made two unexpected cuts to its
benchmark interest rate this year to weaken the baht and
help exporters. In April, it eased restrictions on outflows
by raising limits for Thais' foreign-currency deposits and
for overseas property investments.
International investors withdrew a net $1.2 billion from
domestic equities this month, poised for the biggest monthly
outflows since 2013, according to stock exchange data.
They also sold a net $451 million of local bonds.
A recent explosion in Bangkok's central shopping district
may cut tourist arrivals by 300,000 this year and trim economic
growth by 0.05 percentage point, Ekniti Nitithanprapas,
a senior Finance Ministry official, said at a press briefing Friday.
The ministry maintained its economic growth forecast
for 2015 at 3%.
Ten-year sovereign bonds dropped in the first weekly decline
since July, with the yield rising 15 basis points to 2.81%,
data compiled by Bloomberg show. The three-year yield
climbed six basis points from Aug 21 to 1.64%.
Writer : Bloomberg news
News, Business,Finance,Bangkok Post, 28 August 2015
The relaxation on outflow rules aimed to help Thais distribute
their investment risks and directly contact financial institutions
overseas to improve the cost and efficiency of investing.
The baht currency weaken will help exporters expand their
market value and competitive with the world market.
That is the good point of it.
Meanwhile ,I hope that all importers can adjust their policy
and and their plan so that they will not effect too much
from the weaken of the baht value.
Sincerely Yours.
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