Breaking News

Citigroup Profit Falls 96% on Costs to End Mortgage-Bond Probe
Tweet TWEET

Virabongsa Says Thailand an ‘Attractive Place for Hot Money’

Virabongsa Ramangkura, chairman of the Bank of Thailand, comments on efforts to stem capital inflows. He spoke at a seminar in Bangkok late yesterday.

The Bank of Thailand will keep its benchmark interest rate at 2.75 percent today, according to 17 of 20 economists surveyed by Bloomberg. Three predict a quarter of a percentage point reduction. The decision is due at 2:30 p.m. local time.

Thailand is an “attractive place for hot money because our regulations are not that tight like China,” Virabongsa said.

“I am concerned, but not panic-stricken yet. There have been huge amounts of inflows to stocks, bonds and property. The situation may be similar to 1994-1995. Land prices in some areas, like by the sea, have risen more than 10-fold.”

“Our economic growth at 4 percent to 5 percent is not enough to cope with such an increase. When money flows in, many people, especially investors in stocks and properties, are happy. I just hope that we have learned our lesson during the crisis and that laws and bank rules have been improved.”

“Money is like water. It will flow from low- to high-yield places. No matter what regulations or barriers you have, it will always find a way. I can’t think what measures we should use to slow it down. Using a Tobin tax is not easy. Any direct controls like reserve requirements or non-market measures have strong side-effects. If prices of property and financial assets increase enough, investors will suffer a lot when they fall. So no government will be willing to use such drastic measures.”

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.