Thais to be allowed to invest more abroad

BANGKOK: Thailand´s central bank said on Monday it would relax foreign exchange rules, including taking steps to allow more Thais to invest in securities abroad, in a move that analysts said could help contain an uncomfortably strong baht currency.

The central bank will allow investors with assets of at least 50 million baht ($1.47 million) to directly invest in securities abroad of up to $1 million per year, effective by the end of 2017, it said in a statement.

Commercial banks will also be allowed to lend baht to non-residents for investment in Thailand and the Greater Mekong sub-region, effective this month, it said. "The moves are aimed at enhancing ease of doing business and will not affect the central bank´s responsibility to maintain financial stability," Bank of Thailand Veerathai Santiprabhob told a news conference.

Analysts said the measures would help counter some of the baht´s strength, and help exports needed to generate faster economic growth. The baht, however, hit a near 23-month high of 33.94 per dollar after the measures were announced, as investors had been expecting stronger steps.

The baht has appreciated by more than 5 percent against the dollar this year, making it the best performing currency in Southeast Asia. "Despite the baht´s strength, it´s still moving in line with regional currencies and with economic fundamentals.

Its volatility remains low - in mid range of the region. The central bank is monitoring it closely," assistant governor Vachira Arromdee said reporters.

Though interest rates are at a record low of 1.5 percent, Thailand is running a hefty current account surplus and foreign exchange reserves have risen by $12 billion this year to stand at $184 billion.

A $29 billion balance on the Bank of Thailand’s forward book, however, hints at heavy intervention in the currency market to keep the baht from appreciating even further.