The Bank of Thailand should retain the right to implement measures that manoeuvre foreign capital inflows in any negotiation of the Trans-Pacific Strategic Economic Partnership Agreement (TPP), says governor Prasarn Trairatvorakul.
He said the economy has recorded a fairer balance between capital inflows and outflows this year, and along with declining trade gains these have reduced the pressure on the baht's appreciation.
US President Barack Obama is expected to push for Thailand to enter negotiations for the TPP during his visit here.
Mr Prasarn said the government has not consulted with the central bank on the TPP, and the central bank has no information on what issues would be included in a negotiation.
But past negotiations of bilateral trade pacts between the US and Thailand along with other regional economies have shown a free capital account is on the US wish list.
"The US allows its capital to flow freely, but it's important for a small economy such as Thailand to retain that tool to use when necessary," said Mr Prasarn.
He said the economy is expected to record US$5-6 billion in net gains in capital through trade, services and investment this year compared with $1.2 billion last year and $30 billion in 2010.
Capital flows recorded a net of $10 billion in the first half - $2 billion in equities and $8 billion in the bond market.
Declining export growth will result in a balanced current account this year.
Mr Prasarn said the central bank delayed plans to switch its monetary policy target to headline inflation from core inflation in its Finance Ministry proposal this year.
Headline inflation could improve public understanding of its decisions on interest rates, as it includes energy and food prices, yet existing subsidies could mislead the public, he said.
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- Writer: Parista Yuthamanop