Pridiyathorn voices support to BOT's stance

Former Bank of Thailand governor MR Pridiyathorn Devakula on Tuesday admitted that the central bank has been a bit slow in intervening the foreign exchange market, but the situation is now under control.

In a briefing to reporters today, he said new measures should be enforced soon to tame capital inflows, particularly investment to the bond market.

Against the government's conviction that a policy rate cut would help slow down inflows, he said this may not help much as flows from developed economies will continue.

He apparently backed up Bank of Thailand's stance. BOT Governor Prasarn Trairatvorakul has insisted that the policy rate would not help but would rather spur domestic consumption, and hence financial stability.

Prime Minister Yingluck Shinawatra on Tuesday refused to comment on Prasarn's performance.

In her interview to reporters after the Cabinet meeting, she said the government, through deputy prime minister and finance minister Kittiratt Na-Ranong, is working with all agencies to tackle problems associated with the baht appreciation.

She noted that the government would try its best to convince the Bank of Thailand in following the government's instructions. She admitted that the central bank has full independence and conflicting opinions could only be addressed through conversation.

Asked if the government is pleased with Prasarn's performance, the prime minister refused to comment. She said that the government cannot interfere with the BOT's operations but added that both the government and the central bank need to address their differences.

The central bank governor has so far been considered stubborn to give in to the government's pressure for a cut in the policy rate. Kittiratt has been adamant that the policy rate must be cut steeply to tame capital inflows, which has resulted in a sharp spike in the Thai baht against major currencies.

Thai baht today weakens to 29.57 per dollar as of 8.09 am. Though it gains 0.19 per cent from Friday, it is 0.76 per cent down from the end-March level.

At 29.83 per 100 yen, the currency's gain against Japanese yen is also narrowed, to 0.98 per cent from the end of March.

In this month, it has also weakened by 0.79 per cent against the euro, to 38.66, though gaining 0.55 per cent from Friday.

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Article source: http://www.thethailandlinks.com/2013/05/07/pridiyathorn-voices-support-to-bots-stance/