Thai capital control would have no sudden impact : S & P
Thailand's imposition of capital controls to curb its currency appreciation won't have an immediate impact on the country's credit ratings, but the new measures will have long-term economic costs, a senior credit analyst at Standard and Poor's Ratings Services told Down Jones Tuesday.
The measures will slow foreign capital inflows, which could reverse the country's current account surplus and hurt the economy, said Kim Eng Tan, the primary analyst for Thailand at S&P. "It has been very effective in stopping speculative inflows," said Tan, based on the market's performance Tuesday. "Definitely, it will work, but it carries long-term costs which have to be balanced with short-term benefits." The Bank of Thailand said that from Tuesday, all banks would be required to hold in reserve for one year 30% of capital inflows that aren't trade- or services-related or repatriation of Thai residents' investments abroad. Down Jones reported there won't be any immediate impact on the country's credit ratings because the country is adopting the measures from a position of strength, Tan said. That could change if the country incurs a current account deficit, he said. S&P in October removed Thailand from credit watch and affirmed its BBB+/A-2 foreign currency and A/A-1 local currency sovereign credit ratings. The outlook is stable. The Nation
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