Baht sinks to six-year low as cen­tral bank eases out­flow rules

The Pak Banker - - BUSINESS -

BANGKOK: Thai­land's baht sank to a six-year low as a cen­tral bank move to al­low do­mes­tic in­vestors eas­ier ac­cess to over­seas mar­kets sparked con­cern that out­flows will in­crease. The Bank of Thai­land will per­mit wealthy in­di­vid­u­als and com­pa­nies to di­rectly in­vest in for­eign eq­ui­ties, bonds, mu­tual funds and other fi­nan­cial as­sets, Deputy Gover­nor Pong­pen Ruengvi­rayut told re­porters Fri­day. Over­seas in­vest­ments will be lim­ited to $5 mil­lion per year, she said. The baht re­treated 0.5 per­cent to 35.843 a dol­lar as of 1:38 p.m. in Bangkok, eras­ing a gain for the week, ac­cord­ing to data com­piled by Bloomberg. It fell to 35.94 ear­lier, the weak­est since March 2009, and has dropped 8.1 per­cent this year.

"The cen­tral bank is prob­a­bly more com­fort­able let­ting funds flow out through res­i­dents rather than mak­ing it eas­ier for for­eign in­vestors to move cash in and out," said Shige­hisa Shi­roki, as­sis­tant gen­eral man­ager at Mizuho Bank Ltd.'s trea­sury depart­ment in Bangkok. Or­derly declines in the baht look ac­cept­able to the cen­tral bank, he said, adding that the cur­rency could weaken to 36 a dol­lar over the next few months. The Bank of Thai­land made two un­ex­pected cuts to its bench­mark in­ter­est rate this year to weaken the baht and help ex­porters. In April, it eased re­stric­tions on out­flows by rais­ing lim­its for Thais' for­eign-cur­rency de­posits and for over­seas prop­erty in­vest­ments.

In­ter­na­tional in­vestors with­drew a net $1.22 bil­lion from do­mes­tic eq­ui­ties this month, poised for the big­gest monthly out­flows since 2013, ac­cord­ing to stock ex­change data. They also sold a net $451 mil­lion of lo­cal bonds. A re­cent ex­plo­sion in Bangkok's cen­tral shop­ping dis­trict may cut tourist ar­rivals by 300,000 this year and trim eco­nomic growth by 0.05 per­cent­age point, Ekniti Ni­tithanpra­pas, a se­nior fi­nance min­istry of­fi­cial, said at a press brief­ing Fri­day. The min­istry main­tained its eco­nomic growth forecast for 2015 at 3 per­cent. Ten-year sov­er­eign bonds dropped in the first weekly de­cline since July, with the yield ris­ing 15 ba­sis points to 2.81 per­cent, data com­piled by Bloomberg show. The three-year yield climbed six ba­sis points from Aug. 21 to 1.64 per­cent.

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