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Escalating political rallies affect Thailand’s sovereign position, says BoT

Escalating political rallies affect Thailand’s sovereign position, says BoT

Bank of Thailand (BoT) Governor Tarisa Watanagase says the ongoing political rallies by the Red Shirt protesters are putting Thailand’s sovereign position at risk of being downgraded. The downgrading would fuel costs of offshore borrowing and shake investor confidence in Thailand, she advised last week.

“We must take into account all factors in assessing the impacts on the economy by assuming how the rallies will end,” she said, “and whether what happens now differs from the assumptions.

“How the economy will be affected depends on confidence. Investor confidence is most worrying now,” Tarisa said.

The BoT chief said the political crisis had begun to impact the Thai economy, but how adversely it will affect depends on whether the rallies end sooner or later.

At the same time, she said, the central bank must consider the latest figures on exports, production, agriculture, and industry before assessing impacts.

“There are many more days before the Monetary Policy Committee meets on April 21. The committee will consider all factors cautiously in assessing the gross domestic product growth,” she said.

Tarisa said the ongoing political standoff had not yet affected the Thai capital market in terms of its functioning. The BoT will attempt to oversee the liquidity in the system to ensure it is sufficient, she said, adding that the currency exchange rate still moved in tandem with internal and external market factors. (TNA)