Bank of Thailand eases norms to infuse foreign investment in Thailand
The Bank of Thailand (BOT) said on Wednesday it would let large Thai companies with minimum assets of 5 billion baht ($147 million) invest directly in foreign securities without going through mutual or private funds.
The central bank’s decision to relax controls on foreign investment slightly was aimed at helping ease upward pressures on the baht, which has gained about 4 percent against the dollar since May.
But the announcement had little immediate effect on the exchange rate, and any investments under the new regulations will take time. The baht was steady at 34.00/04 per dollar on Monday.
In addition, the central bank gave exporters and importers approval to make derivative deals to hedge against currency exchange risks with commercial banks for product and service payment. The Bank of Thailand is confident the relaxation of the rule would help contain the strengthening of the baht and keep the capital inflow and outflow in balance.
The bank has previously allowed foreign investment to be done only through financial funds regulated by the Securities and Exchange Commission (SEC) or other authorities. Foreign securities that large Thai firms can now invest in include derivatives used for hedging against currency, interest rate, bond yield, commodity price or market index risks
Since early this year, the baht has appreciated by 2.4 per cent while the US dollar has weakened by 4 per cent. The Indonesian rupiah rose by 9.8 per cent and South Korean won by 3.5 per cent.