BoT: Exchange rate not a tool

BoT: Exchange rate not a tool

US continues 'monitoring' listing

Forex rates are displayed at a currency exchange on Khaosan Road on Nov 28, 2020. Nutthawat Wichieanbut
Forex rates are displayed at a currency exchange on Khaosan Road on Nov 28, 2020. Nutthawat Wichieanbut

Thailand has no intention of using the exchange rate as a tool to gain an unfair trade advantage and competitiveness over trading partners, says the Bank of Thailand.

The central bank's comments follow the release of a US Treasury Department report that placed Thailand on the "monitoring list" of 10 countries labelled potential currency manipulators. The other nine countries on the list are China, Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan and India.

The US Treasury Department issued its report titled "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US" on Dec 16.

According to the report, Thailand is on the monitoring list for having a significant bilateral trade surplus with the US of more than US$20 billion and a material current account surplus of more than 2% of GDP.

But Thailand did not meet the third criteria -- foreign exchange intervention accounting for more than 2% of the country's GDP.

"Thai authorities have conveyed credibly to Treasury that net purchases of foreign exchange over the 12 months through June 2020 were 1.8% of GDP. This figure is equivalent to almost $10 billion," said the report.

"Thailand should continue to ensure that its foreign exchange policy does not resist appreciation of the baht in line with economic fundamentals in the context of large and durable external surpluses."

To be labelled as a currency manipulator, countries must have at least a $20 billion-plus bilateral trade surplus with the US, foreign currency intervention exceeding 2% of GDP and a current account surplus exceeding 2% of GDP, Reuters reported.

The US Treasury Department report names Switzerland and Vietnam as currency manipulators for fulfilling the three criteria listed in the report.

"At this stage the assessment is not expected to have a material impact on Thailand's international trade, nor prospects for foreign direct investment in Thailand," said Chantavarn Sucharitakul, assistant governor for the central bank's communications and corporate relations group.

"Similarly, such an assessment does not impede the ability of the Bank of Thailand to fulfil its mandate on macroeconomic policies to safeguard domestic stability."

The Bank of Thailand has been in close dialogue with the US administration to foster an understanding of Thailand's macroeconomic and financial conditions, said Mrs Chantavarn.

Thailand's central bank has also reiterated its commitment to exchange rate flexibility and has conducted two-way intervention only to ride out the volatility of the exchange rate, she said.

Finance Minister Arkhom Termpittayapaisith said there is no concern over the latest US report as the Bank of Thailand has a duty to manage foreign exchange movement.

"We still don't know whether the US will roll out any measures to counter Thailand as they are monitoring the situation," said Mr Arkhom.

Do you like the content of this article?
COMMENT (16)

20 crew missing after Philippine ship runs aground in typhoon

A search was under way Tuesday for 20 crew members missing in the Philippines after their cargo ship ran aground while seeking shelter from rough waters churned up by a typhoon, the coast guard said.

18:33

Drink-driving checkpoints suspended

Police have again suspended use of checkpoints to test motorists for driving under the influence of alcohol, citing the need to concentrate on stopping the spread of Covid-19.

17:51

Scores test positive for Covid-19 on India flight to Hong Kong

At least 53 passengers on a flight from New Delhi to Hong Kong have tested positive for coronavirus, authorities said Tuesday, as the Chinese financial hub introduced an emergency ban on arrivals from India over a new wave of cases.

17:49