Thai Central Bank Unveils Measures To Limit Currency Volatility

Thailand’s central bank on Friday unveiled measures to mitigate pressures on the Thai baht and to address structural issues in the foreign exchange market.

The outcome of the US presidential election and the progress on the Covid-19 vaccine development lifted confidence and prompted renewed inflow of funds into the emerging market economies.

The rapid appreciation of the currency is likely to affect the fragile economic recovery of Thailand, Vachira Arromdee, assistant governor for financial markets operations group, said.

To address the risk associated with currency volatility, the Bank of Thailand permitted residents to freely deposit funds in Foreign Currency Deposit accounts and allow free fund transfers between them. This would help exporters to effectively manage liquidity and forex risk.

Further, the bank relaxed regulations regarding investment in foreign securities, including lifting investment thresholds and expanding eligible financial products for portfolio diversification.

Further, investors were required to complete a registration process before investing in debt securities, which will upgrade the bond surveillance system. This will help to enable the implementation of targeted measures in a timely manner, the bank said.

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