The Bank of Thailand has stepped up its efforts to curb short-term speculative inflows by lowering the cap on the outstanding balance of a non-resident account from 300 million baht per person to 200 million baht, effective from July 22.
"For non-resident baht account (NRBA) and non-resident baht account for securities (NRBS) with outstanding balances at the end of the day higher than 200 million baht per non-resident, financial institutions are required to notify the corresponding non-resident account holder to comply with these changes by reducing the outstanding balance within the effective date," said Vachira Arromdee, assistant governor for financial market operations.
NRBA holders that are non-financial corporates with underlying trade and investment in Thailand and have opened accounts directly with Thai financial institutions may submit a request to the central bank for a waiver from the outstanding balance limit, to be considered on a case-by-case basis.
The Bank of Thailand is also tightening the reporting requirements for non-residents’ holdings of debt securities issued in Thailand. The names of end beneficiaries shall be reported for all non-residents’ holdings of Thai debt securities.
The measure, effective from this month, will help enhance the central bank’s surveillance of non-residents’ investment activity, Ms Vachira said.
"The BoT will continue to closely monitor the baht’s movements, as well as non-resident behaviour, and stand ready to use additional measures if undesirable speculative behaviour persists," she said.
The baht is Asia’s best-performing currency, up 5-6% against the US dollar this year.
The private sector has demanded the central bank rein in the baht after the local currency recently hit a six-year high.
The baht slipped by 20 basis points to 30.91 per dollar after the announcement, and traded at 30.87 at 12.10pm.
The stock market dropped about 0.5% at the midday break, but is up by 11% this year.
Dealers said the measures would have a short-term impact on inflows, which they expected to slow down. Some traders suggested the central bank should cut its policy rate.
The central bank has left its benchmark interest rate unchanged at 1.75% since December's hike. The rate is 50 basis points above the record low.
"What the central bank should do is to cut its policy interest rate," said a dealer at Krung Thai Bank.
Central bank governor Veerathai Santiprabhob said on Monday there was no need for a quick adjustment of monetary policy.
Friday's measures came after the regulator this month cut its short-term bond supplies to slow fund inflows, which had pushed up the baht to its highest in six years this month.