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Banks urged to consider economic conditions for interest hike

BOT continuing to intervene in baht movement

SET index likely to reach 770 by year end

Banks urged to consider economic conditions for interest hike

Commercial banks should not compete to increase interest rates because it will eventually affect their costs, warns the Bank of Thailand (BOT).
Speaking after a meeting between BOT’s officials and members of the Thai Bankers’ Association (TBA), Khunying Jada Wattanasiritham, who is the TBA’s chairwoman, said the central bank views interest rates have nearly peaked now.
To adapt to the situation, the local commercial banks should ponder raising the interest rates by taking into account the country’s economic conditions, she said.
Kasikorn Bank’s president, Prasarn Trairattanaworakul, said the BOT wants commercial banks to consider economic conditions and liquidity excess before making a decision on interest rates.
The liquidity in the Thai banking system remains rather high now, he conceded, adding that K Bank would give importance to economic and business conditions for its deliberation on the interest rate hike.
Pinit Dejakup, Bank of Ayudhya president, said competition for deposits have intensified among commercial banks, although liquidity in the banking system remains high.
He viewed the deposit rate hike as part of the bank’s efforts to increase market share, while funding costs edge up.
He said the central bank does not want commercial banks to compete for interest rate hikes because the country’s economy has experienced a slowdown and people spend less when they are concerned about the economic situation.
He conceded lending rates have now almost peaked, as have inflation rates. However, much depends on whether local and global fuel prices will continue to decline.
Bangkok Bank’s president, Chartsiri Sophonpanich, said the bank’s decision about an interest rate hike relies on market conditions. At present, liquidity in the Thai banking system is rather high. Because of this, the bank would not yet increase interest rates, he said. (TNA)

BOT continuing to intervene in baht movement

Bank of Thailand (BOT)’s governor, M.R. Pridiyathorn Devakula, on Wednesday conceded that the central bank had intervened in the baht movement to prevent it from becoming too strong and undermining the country’s export competitiveness.
He revealed that the central bank had continued to supervise closely the Thai currency to ensure it would not appreciate so sharply that competitiveness in the export and business sector is affected.
He insisted that the central bank attempts to keep the Thai baht stable as possible.
“The baht would not have become as stable as it is today unless we supervised it closely. It moves rather steadily in a narrow range of 37.37-37.40 per US dollar…” he said.
The BOT chief said the Thai baht had appreciated because foreign capital continues to flow into the capital and secondary markets in large amounts.
However, the BOT has closely monitored capital inflow and is aware of the amount, but cannot reveal it for now.
Meanwhile, Finance Minister Thanong Bidaya said the baht had strengthened in the same direction with other regional currencies.
He believes the central bank would be able to supervise the baht movement to ensure it would not affect local entrepreneurs. (TNA)

SET index likely to reach 770 by year end

The Stock Exchange of Thailand index is likely to rally to 770 points by the end of this year since interest rates and inflation rates have already become saturated and political uncertainties have eased, according to a leading stock analyst.
Kongkiart Opaswongkarn, chief executive officer of Asia Plus Securities Public Company Limited, said that interest rates have begun to stabilize, while inflation rates have dropped since June.
The political situation has improved, although there are doubts whether the next general election will take place on October 15.
However, he believes the election would be held sometime this year.
Also, he said, foreign capital has continued to flow into the Thai stock market because negative factors have eased and the price/earning ratio of the bourse remains lower than other markets in the region.
Currently, the p/e ratio of the Thai bourse stands at around 10 times, versus 25 times in the past.
However, the Thai stock market has still experienced risks from higher fuel prices, which will affect productivity in the industrial sector.
Dr. Kongkiart said profits earned by listed companies would increase only 2.95 percent this year and further grow 6.7 percent next year since the companies had adjusted themselves to the changing environment.
In the first 7 months of this year, he said, foreign investors made a maximum investment in buying shares of Siam Commercial Bank with a total value of 10 billion baht.
Millennium Steel came second, as Tata Co. of India and PTT Public Company Limited spent 4.69 billion baht and 4.61 billion buying its shares.
As for shares dumped by foreign investors to the maximum, Advanced Info Services was at the top with the sale turnover of almost 30 billion baht, followed by Kasikorn Bank (15 billion), and Glow Energy (12 billion). (TNA)

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