U.S. to probe possible Thai trade abuses

Veerathai Santiprabhob denies Thai trade manipulation

Bank of Thailand Governor Veerathai Santiprabhob said there’s no evidence authorities are manipulating the currency to give exports an unfair advantage, responding to the U.S.’s decision to investigate the Southeast Asian nation for possible trade abuse.

While the central bank intervenes in the foreign-exchange market at times, the baht has strengthened against the dollar this year, proof the monetary authority isn’t trying to keep the currency weak, Veerathai said in an interview with Bloomberg Television’s Haslinda Amin in Cebu in the Philippines.

“I don’t think anyone has evidence that Thailand has manipulated the currency to gain an unfair competitive advantage,” the governor, 47, said on Thursday on the sidelines of a conference of regional finance ministers and central bank chiefs. “Thailand has not adopted any exchange-rate policies to gain an unfair competitive advantage in trade.”

President Donald Trump’s executive order to probe 16 countries that run the largest bilateral trade deficits with the U.S. poses a risk for export-dependent Thailand and complicates the central bank’s currency policy.

The bank has boosted foreign-exchange reserves since the end of last year in the face of surging inflows, helping to cap the baht’s gains.

“At times, we might have to intervene in the foreign-exchange market but that’s largely because of the intense capital inflows that we are on the receiving end of,” Veerathai said.

The inflows, fueled by excess global liquidity and Thailand’s sound macro-economic policy environment, “have been coming in in a short period of time that could create adverse consequences,” he said.

About $7.4 billion poured into Thai bonds in the past year, a period during which the baht was one of the best performers among major Asian currencies tracked by Bloomberg, strengthening 1.6 percent against the dollar.

The Bank of Thailand has cut the supply of some debt this month and Veerathai said it can consider further steps.

Trade Surplus

“Foreign-exchange intervention is definitely a measure that all central banks need to have on the menu list but there are also other policy measures that one can look at, from market-based measures to the likes of capital-flow management measures,” he said.

The baht weakened 0.3 percent to 34.65 per dollar as of 9:45 a.m. on Friday in Bangkok.

Thailand had the 11th largest trade surplus with the U.S. of about $19 billion last year. Finance Minister Apisak Tantivorawong on Monday said he hoped for talks about trade ties before any unilateral American steps to deter imports. The military-run government this week also denied that it manipulates the baht to bolster overseas sales.

The stronger currency has curbed inflation and capped economic growth. Consumer prices rose at the slowest pace in four months in March, gaining 0.76 percent from a year ago and dipping below the target range of 1 percent to 4 percent. While the central bank predicts growth will accelerate to 3.4 percent in 2017, which would be the highest in five years, that’s still below Veerathai’s estimate of potential growth of 4 percent to 4.5 percent.

The Bank of Thailand on March 29 left the benchmark interest rate unchanged for the 15th straight meeting near a record low of 1.5 percent, a rebuff to calls from the International Monetary Fund to cut borrowing costs to spur the economy.

Veerathai said the central bank is mindful of its limited policy space given the benchmark rate is already “very low” and there are global economic uncertainties.

“The MPC decided to keep the rate on hold and that’s the best option for Thailand when you look at the horizon,” he said. “When we have limited policy space available, we have to use the limited policy space available wisely.”


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