Thailand is “keeping an eye” on speculative capital inflows as increasing foreign purchases of the country’s bonds lead to currency gains, said Finance Minister Korn Chatikavanij.
Volatility caused by “excessive” speculation from foreign investors can be “problematic” for Thailand’s economy, Chatikavanij said in an interview on Bloomberg Television today. He also commented on China’s economic adjustment.
On Thailand’s currency, speculation:
“We have not really exercised any capital control so far. Given that we have an economy that has a strong current account surplus, high growth rates, low inflation rates, our currency is naturally going to appreciate and there is no problem with that. We all need to adjust to the reality on the ground.
“What is problematic, from time to time, is the volatility caused by excessive short-term speculation. So far, there has been quite a substantial increase in foreign ownership of local government bonds. We are keeping an eye on that to see whether that distorts short-term markets, which could have a negative impact on our real economy.”
On the monetary policy of developed nations:
“I expect Western economies will also want to see continued weakness of their currencies in order for them to be able to export their way out of the current economic malaise. That is normal. Time for orderly adjustment is always required.
“We are concerned about inflows, but the reality is that this will continue for some time.”
“The country is moving in the right direction.
“The Chinese authorities are concentrating on domestic adjustment. We’ve already seen domestic consumption in China growing by almost 20 percent this year so far against last year. Adjustment is taking place.
“We have to give China time. We also have to accept the fact that the strength of the Chinese economy overall has been a huge benefit to the world economy during the past year.”