Kittiratt discourages baht intervention

Finance Minister Kittiratt Na-Ranong said on Thursday the Bank of Thailand should avoid intervention that fights against market forces to stem the baht's appreciation even as he pushes for a weaker currency.

  • Published: 24/01/2013 at 06:32 PM
  • Newspaper section: breakingnews

Kittiratt Na-Ranong (Photo by Patipat Janthong)

"We have to accept the fact that the exchange rate will be determined by the market," Mr Kittiratt said in an interview in Bangkok before flying to Davos, Switzerland, to attend the World Economic Forum. "I don't think any unreasonable intervention will work or be right for the situation."

The baht extended losses from a 17-month high this week amid speculation the central bank will intervene to halt gains that hurt overseas sales. December export growth missed analysts' estimates, prompting concern that the currency's appreciation will affect shipments that account for about two-thirds of the economy.

Thailand is among emerging market nations seeking to stem inflows as monetary easing in the United States, Japan and other developed economies spurs demand for higher-yielding assets. Prime Minister Yingluck Shinawatra's government raised the minimum wage throughout the country this month, adding to stimulus measures aimed at increasing purchasing power and reduce reliance on exports for growth.

"In the short term, if I can hope, I would like to see a little bit weaker baht," Mr Kittiratt said. "For exporters, a strong baht really pushes them into pressure. While they are adjusting themselves to higher human resources costs, a weak baht may help them."

Seeking Stability

Lower interest rates would discourage inflows into the country, Mr Kittiratt said, adding that the measure could be a "double-edged sword". Over the long term, the government plans to invest in infrastructure projects to increase imports and reduce pressure on the currency, he said.

"One of the things we'd like to see is stability," Mr Kittiratt said. "The job of the central bank is to work withr certain resources and measures and they have to smoothen things. I disagree with any measures -- whether short term, medium term or long term -- that won’t be natural or sustainable."

A stronger baht will make Thai goods more expensive for overseas buyers relative to its rivals. The baht advanced 2.8% in the past month against the dollar, the most among 25 emerging market currencies tracked by Bloomberg.

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Writer: Bloomberg News
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