Live on Bloomberg TV

00:00Look at the Thai board down 6 percent in the last three months among the worst performers in Asia. Are you concerned I mean given the fact that it was a Thai baht that dragged all the currencies back in 1997. Now it's a very different situation from 1997. There's no doubt that there's been a lot of exchange rate volatility. If you look at the year to date numbers it hasn't been that bad. We've gone down about 3 percent. So it's roughly in the middle of a pack of currencies in Asia. But again in terms of the worry and concern. It's it's not a situation like in 1997 where the corporate balance sheets are very weak. We had a lot of external debt and not enough reserves now or external buffers are very strong. So our concerns and in terms of like depreciation the currency the impact on the local economy in terms of financial stability are concerns about capital flight are much less than before. It's a very different it's not just about the strong dollar. It's also about the weak one which definitely historically brings down all Iams like we're seeing in the last twelve months or so. So what could you do. What might you do to ensure that the board remains stable. As you mentioned most of the stuff that's been driving the movement of the board hasn't been local factors but it's been driven largely by what's going on with the dollar and the yuan which is beyond our control. We don't have a whole lot of control over that. What we can do and what we're trying to do is to make sure that the volatility especially the day to day volatility is not too large. We don't try to set a level of the BOP because we have a floating exchange rate regime but we don't like to see excessive rules that tools she might tap. What. Sure. In particular the tools that any kind of central bank uses which is like some effects intervention in the markets particularly when the intraday movements are too large. The reason that we're concerned about the excessive volatility is again a lot of our exporters don't hedge. So too much volatility that tends to it tends to affect them. But we don't we don't try to manage it so that there's any particular level just to try to do their fair value. A gauge of what's fair value is matters. I mean there's you know there's no I think clear set measure for what is a fair value. It depends upon what market forces are like. And we allow the board to tend to move in line with those market forces. Inflation a huge concern for every country right now. And Thailand has raised its inflation target to as much as 5.2 percent. How worried are you and how much might that escalate in the coming. Hasn't it just be clear we have a flexible inflation targeting regime. That target hasn't changed. It's still 1 to 3 percent. Our forecast for inflation is 5 have increased are the official latest forecasts we've put out. It's increasing from say one point two percent last year. This year we expect something on the order about four point nine. There's probably some upside risk in that forecast. But we do expect it to come back within our range next year. I don't. One point seven. Inflation is no doubt trending higher and it is we higher than our inflation rates throughout the year. But I'd like to point out that that the inflation in Thailand as with many countries in Asia is quite different from what we see in the advanced economies. It's mostly cost push inflation. It's relatively concentrated in energy and food. We don't see the kind of demand side inflationary pressures in terms of an overheating economy. And that's largely to do with that in Asia in Thailand as well we're in a different part of the economic cycle than they are in the advance. But inflation if inflation persists if inflation trends higher the consumer will get hit. How could you mitigate that. I think inflation right. Yeah. The anchoring is very important in Asia. What we do see is that the energy inflation has been a bit more muted than in than in the advanced economies. Part of that is the government has undertaken fiscal measures targeted towards trying to mitigate and mute the prices of the increases in gas prices or whatnot. That's had an effect on the banking side. The central banking side. The key for us is really we have a medium term and inflation framework. So the key for us the critical thing for us is not to see kind of second round effects happening not to see too much broadening of the things that are increasing in prices. And very importantly as I mentioned to make sure that the medium term inflation expectations remain anchored right now to look at based upon the latest surveys are still relatively anchored close to the top end of our inflation targeting range. But we're not sanguine. We've got to keep a very close eye on whether that's the second round effects are starting to occur. There are a lot of moving parts right now. There are moves to for example increase the minimum wage in Thailand or in discussion towards the end of the year. But as you mentioned depreciating that tends to feed into higher headline inflation. And so we we need to keep a close eye on all those things. There is a lot of hope right now that the Fed will be able to navigate a soft landing particularly the market. I mean it's quite worrying. Seven weeks of decline. What is that suggesting you think from your perspective as a governor. What does that reflecting in terms of the state of the economy. I think in terms of the US I mean I think the Fed has a very difficult challenge. I think their term is they're trying to navigate and get a soft ish landing. Again that's not that's not particularly easy. I do think that a lot of my own personal view is that a lot of the mood of the doom and gloom that we see is driven more by what the market has been doing. But I think as a famous economist Paul Samuelson in the market has predicted nine of the past five recessions. So it might be an overreaction to what's going on. That said I do want to say that the policy challenge in the advanced economies like the US is very different from the policy challenge in Asia because we're a different part of the economic cycle in the US. It's trying to get a soft or soft ish landing for us is trying to ensure that the takeoff and the recovery continues and remains smooth. And your view has Powell has taking the right steps. Far be it for me to comment. What'd You Miss?. Come on Governor you're comfortable with how Powell has handled. I think they have a very difficult job and I think they know they've done a good job is going to be expected.

No schedule data available.

Thailand Central Bank Downplays Inflation Pressures

Bank of Thailand Governor Sethaput Suthiwartnarueput discusses the outlook for the economy, inflation and the baht in an interview with Bloomberg's Haslinda Amin at the World Economic Forum’s annual meeting in Davos, Switzerland. "We don’t see the kind of demand-side inflationary pressures in terms of an overheating economy,” Suthiwartnarueput said. (Source: Bloomberg)

Bloomberg Technology
The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Hosted by Emily Chang.
More episodes and clips