Published on January 12, 2008
"I prefer to see the baht move in line with regional units. I don't want to see drastic movement of the baht," Chalongphob told reporters.
The baht has risen despite the central bank's intervention since the beginning of the year, he said after meeting Prime Minister Surayud Chulanont and Bank of Thailand Governor Tarisa Watanagase to discuss foreign-exchange issues.
He said the central bank should use currency management techniques that allow the local unit to move in both directions to avert speculation.
Bank of Thailand executives came out in defence of the authority's performance.
Amara Sriphayak, senior director of the Local Economy Department, said the baht was still moving in tandem with regional currencies if the effective exchange rate (NEER) was taken into account.
"The Finance Ministry should not compare the movement of the baht only in comparison to that of the US dollar," she said.
"Chalongphob and the central-bank governor have already discussed ways to supervise and manage the exchange rate."
Thailand had not yet lost its export competitiveness although the baht has appreciated more than 1 per cent since early this year, she said.
The NEER, which indicates changes in the baht compared with the currencies of 22 of Thailand's trading partners, stood at 77.8 in December, up from 76.86 in November.
Assistant governor Suchada Kirakul also said any judgement regarding whether the currency was supervised and managed efficiently should take the NEER into consideration.
The dollar fell to a fresh 10-year low of Bt33.14 earlier this week. It has dropped almost every day since the beginning of the year. It opened yesterday at Bt33.14-Bt33.15 and closed at Bt33.15-Bt33.17.
Dealers suspect the central bank has been active in the market to slow the baht's pace.
A BankThai dealer said the baht moved in a narrow band yesterday as the statement from Chalongphob might affect market sentiment. However, he does not think Chalongphob's comment on the central bank would have any strong impact on the baht.
He believes the unit should gain further against the dollar next week, as the greenback is likely to keep weakening.
A Siam Commercial Bank dealer said the central bank had come under pressure from the current baht trend. The unit is stronger mainly due to exporters' active dollar selling recently and will keep heading up next week, he said.
The central bank said in its weekly report that its foreign reserves as of January 4 were US$89.3 billion (Bt2.96 trillion), rising by almost $2 billion from $87.6 billion a week earlier.
Its net forward position in the foreign-exchange market was $18.6 billion, compared with $19.1 billion on December 28.
The central bank does not provide an explanation for changes in the weekly data.