BOT further relaxes currency control measures
The Bank of Thailand Monday officially announced relaxation on the draconian 30-percent withholding requirement for corporate foreign borrowing with fully hedging.
According to the central bank's circular, eligible foreign borrowings that would be exempted from the reserve requirement include general foreign borrowing, intercompany loans, and foreign capital derived from debt instrument issuing. These loans must be fully hedged by foreign exchange swap or cross currency swap.The borrowings with maturity more than one year, must do the fully hedging for at least one year. After the first year, borrowers can manage foreign exchange risk according to their will. In addition, foreign borrowing for exports in terms of packing credit with maturity less than 180 days that local financial institutions have done with local corporate customers and that borrowers promise to repay debts once they get paid from exports will also be exempted from the measure. In addition, the transactions that would be exempted from the 30percent reserve is payment for non-performing loans or guarantee for individual in Thailand with liability document indicating of the payment. Moreover, the central bank also added the exemption of the withholding measure for warrants, transferable subscription right, and depository receipts, in addition to stocks traded in the Stock Exchange of Thailand and the Market for Alternative Investment. The Nation
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