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Thai firms urged to avoid excessive forex exposure amid continued US uncertainty
Publication Date : 21-09-2013
The Bank of Thailand has warned investors and business operators to avoid too much foreignexchange exposure and to be cautious with money markets, which could move with higher volatility as US economic figures are released.
"Money markets are sensitive to US economic data, which will be announced periodically," said Chantavarn Sucharitakul, BOT assistant governor for the Financial Market
Operations Group. "Such figures do not relate to Thailand but could have an impact."
She suggested that investors, operators and others should not expose themselves too much forex risk.
US Federal Reserve chairman Ben Bernanke stressed on Wednesday that the pace of bond buying, which the Federal Open Market Committee (FOMC) kept unchanged at US$85 billion (2.63 trillion baht) a month, would depend on US economic data. He said the US central bank had no predetermined schedule for tapering off this socalled quantitativeeasing (QE) programme, according to Bloomberg.
Somprawin Manprasert, deputy dean of Chulalongkorn University's faculty of economics, said the FOMC's decision to refrain from tapering off monetary stimulus would likely raise business confidence in the US economy, which had started to see improved figures.
Chantavarn said the Fed made it clear that it would eventually end QE, but she declined to comment on how it would carry out asset purchases for the rest of the year.
Market volatility could be expected after the FOMC's meeting in December when there could be thin turnover before the long holiday period, she said.
Supavud Saicheua, managing director for research at Phatra Securities, said it could become more difficult to anticipate the Fed's decisions on its monetary stimulus, and that could add volatility in the money and stock markets.
He expects the Fed to taper its monthly bond purchases in the middle of next year, which would likely affect the global economy including Thailand.
Next year, Thailand is expected to see its gross domestic product expand 4.5 per cent on higher export growth of 5.7 per cent from a global economic recovery, Supavud said. Thai GDP growth is estimated at 3.8 per cent for 2013 with export growth forecast at 2 per cent.
Somprawin projects Thai GDP growth at 4.5 per cent next year, up from 4.0 per cent this year.
Thailand's current economic slowdown was expected given the discontinuity of the government's economic stimulus, Somprawin said. Previously, fiscal stimulus like the first car scheme was only shortterm.
He said the $85 billion infrastructure project could not stimulate the economy in the short term, given its budgetdisbursement process.
In response to concerns over a likely rise in public debts as a result of the infrastructure investment, Supavud said that if GDP expands at no less than 5 per cent per annum, the public debt level might not be high and could actually decline. However, if GDP slumps below 3 per cent, the public debt level will go up, he said.