Thai central bank to relax FX rules further to curb baht rise

BANGKOK: Thailand's central bank said on Tuesday it plans to further relax rules on foreign exchange after easing regulations for non-resident firms, facilitating outflows of funds to contain the strong baht amid a fresh wave of coronavirus infections.

The Bank of Thailand (BOT) will review and gradually announce changes to regulations, including for property purchases overseas, director Pawinee Jitmongkolsa-mer said.

"We want to see more Thai investment abroad," she told a briefing.

The BOT has eased rules steadily to curb the baht, which has gained nearly 11% versus the dollar since April, last announcing a series of measures in November.

Earlier on Tuesday, the BOT said it had allowed non-resident companies greater flexibility to conduct baht transactions with domestic financial institutions under the non-resident qualified company scheme.

Participating non-financial firms which trade and directly invest in Thailand are allowed to manage currency risks related to the baht without having to provide proof of underlying for each transaction, the BOT said in a statement.

They can also manage baht liquidity without being subject to the end-of-day outstanding limit of 200 million baht ($6.68 million) imposed on non-resident baht accounts, it said.

"The measures are aimed at maintaining baht stability in the longer term," senior BOT director Chayawadee Chai-Anant said, adding that the Thai currency's had been largely driven by external factors.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said new coronavirus outbreak restrictions would also hurt domestic demand and imports, adding further support for the current account surplus and the baht's strength.

He predicted the baht would appreciate to 29.00-29.25 per dollar at year-end from about 29.94 on Tuesday.

The BOT has repeatedly expressed concerns about the baht's gains and said would consider measures to tackle it. But analysts say market intervention may be difficult as Thailand is now on a US Treasury watch list of countries suspected of taking measures to weaken their currencies against the dollar.