Thai central bank relaxes currency rules to help businesses

BANGKOK: The Bank of Thailand said it’s easing some foreign-exchange rules to reduce compliance costs for the private sector. The baht strengthened as speculation the monetary authority might unveil major steps to curb the currency’s appreciation proved unfounded.

The central bank in a statement yesterday laid out a time-line for regulatory changes that seek to improve clarity and eliminate redundancy. The steps will save businesses more than 1 billion baht annually (RM125mil), and some changes will come into effect as early as this month, governor Veerathai Santiprabhob said in a briefing in Bangkok. The measures are unrelated to reducing foreign-exchange risks, he later told reporters.

The key points are:

> Stock brokerages will be allowed to buy and sell foreign exchange for locals and non-residents;

> Commercial banks can give baht loans to non-resident companies investing in Thailand without needing central bank approval;

> Commercial banks can give baht loans to companies registered in the Greater Mekong subregion for infrastructure and industrial investment projects that also benefit Thailand;

> Money changers will be allowed to sell foreign currency banknotes to offshore banks and money changers;

> Easier rules and documentation requirements for outward remittances of $50,000 or above for eligible purposes;

> Retail investors with assets of over 50 million baht but below 100 million baht will be able to invest directly in overseas securities up to a gross flow of US$1mil annually; and

> Greater flexibility is planned for foreign-exchange risk management.

The central bank has signalled concern about the strength of the baht, and Veerathai yesterday reiterated the stance that the monetary authority is monitoring the situation and ready to act when necessary. He has previously rebuffed claims that export-reliant Thailand manipulates the exchange rate to gain an advantage in trade.

The baht appreciated 0.1% to 34.008 per US dollar as of 4:08 pm in Bangkok, after rising as much as 0.3% following the start of the central bank’s briefing on easing rules. “Given recent concerns by the Bank of Thailand about the strong baht, people in the market were expecting it to do something to control inflows,” said Anchali Singh, an analyst at Kasikornbank Pcl in Bangkok. – Bloomberg

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