Thailand's finance minister surprised markets yesterday by announcing that new capital controls would remain in effect, insisting that the measures have helped exporters and steadied the baht.
"Based on our analysis, the 30 percent reserve requirement has helped the export sector to survive and the baht is now at about 36 to one [US] dollar, which is good," Finance Minister Pridiyathorn Devakula told reporters.
Reserve requirements imposed in the middle of last month effectively lock up for a year 30 percent of any fund inflows coming into Thailand for financial investment.
Analysts had widely expected the government to ease the rules, and the announcement sent share prices sliding, with the Stock Exchange of Thailand composite index down 1 percent after the morning session.
The capital control rules had sparked a stock market crash last month, prompting authorities to allow an exemption for investments in shares. Other types of investments remain under the new rules.
The rules were designed to control the baht's rapid rise and Pridiyathorn insisted that they were helping Thai exporters by stabilizing the currency at around 36 to one US dollar.
The export sector accounts for some 60 percent of Thailand's economic output.
"The sector that really attracts direct investments is exports. Of the two types of investment, to invest in setting up a company in Thailand or to invest in the Thai stock market, we have to prefer the first type of investment," Pridiyathorn said.
He spoke after a study by the Japanese Chamber of Commerce found that the 1,200 Japanese businesses operating in Thailand were concerned that the rules would raise the cost of doing business here.
"I have met with Japanese investors who reassured me that they are not leaving and will maintain their investments here," he said.
But Sukhbir Khanijoh, senior market analyst at Kasikorn Securities, warned the capital control rules were damaging investor confidence in Thailand.
"While the minister insisted that the measure has given a boost to exports, the economic damage is much higher in terms of confidence and massive losses in the stock market," he said.
"Pridiyathorn said the rules would bring about benefits over the longer term to the Thai economy. Today, there are no new investments and we might have to wait for about a year for the measure to generate positive outcomes," he said.
The controls have helped steady the baht's rise, but has not weakened the Thai currency as much as the market had expected, said Wiriya Lappromrattana, head of research at Kiatnakin Securities.
"The baht has been trading within a narrow range and not strengthened further since the rule was announced," Wiriya said.
"The currency has become more stable, trading between 35 to 36 to the dollar," she said, adding that the market had expected the baht to slide to 36.50.
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
RSS