Latest news with #Roong
Business Times
6 days ago
- Business
- Business Times
Thailand seeks ways to curb gold price impact on currency
[BANGKOK] Thailand's central bank and the finance ministry are discussing ways to address currency moves that are not aligned with fundamental factors, including the impact of gold prices, according to a deputy governor. Gold prices are among the non-fundamental factors affecting the baht's movement and authorities are looking at ways to reduce the correlation between the two, Bank of Thailand (BOT) deputy governor Roong Mallikamas said. She declined to say what steps were being planned or how soon they will be announced. 'The baht should act as a shock absorber and not a shock amplifier,' Roong, a contender for the new BOT governor, said on Tuesday (Jul 15). 'So, definitely things that are non-fundamental should be addressed.' The Thai baht typically gets a boost when Thais sell gold, which is highly valued as an investment, as the US dollar proceeds get converted into the local currency. The baht surged about 11 per cent over the past year, turning it into one of Asia's best-performing currencies, while gold climbed to a record in April. Gold link The baht has a much closer link to gold than other emerging Asian currencies, with the two prices having a correlation coefficient of about 0.53 over the past 90 days. A coefficient of 1 would mean they are moving in lockstep. A strong baht is adding to risks to the Thai economy, which is already facing the threat of a punitive 36 per cent US tariff on its exports. The rally has led some ministers and business groups to urge the central bank to weaken the currency to support exports and tourism, the nation's key growth drivers. The BOT has said it does not target any particular level or direction for the baht and its gain over the past year is in line with regional peers. Roong said the baht's outperformance over the dollar index and its high correlation to gold is something the central bank has noticed and trying to address. 'We don't try to stop people from being interested in gold, but we want them to do it in such a way that it doesn't affect the volatility of the baht or make the baht have higher correlation' with gold, Roong said. BLOOMBERG
Bangkok Post
7 days ago
- Business
- Bangkok Post
Impact of gold prices on baht monitored
The Bank of Thailand and the Ministry of Finance are discussing ways to address currency moves that are not aligned with fundamental factors, including the impact of gold prices, according to a deputy governor. Gold prices are among the non-fundamental factors affecting the baht's movement and authorities are looking at ways to reduce the correlation between the two, Roong Mallikamas said in an interview. She declined to say what steps were being planned or how soon they will be announced. 'The baht should act as a shock absorber and not a shock amplifier,' Ms Roong, one of two contenders for the governor's position, said on Tuesday. 'So, definitely things that are non-fundamental should be addressed.' The Thai baht typically gets a boost when Thais sell gold, which is highly valued as an investment, as the dollar proceeds get converted into the local currency. The baht surged about 11% over the past year, making it one of Asia's best performing currencies, while gold climbed to a record in April. The baht has a much closer link to gold than other emerging Asian currencies do, with the two prices having a correlation coefficient of about 0.53 over the past 90 days. A coefficient of 1 would mean they are moving in lockstep. A strong baht is adding to risks to the Thai economy, which is already facing the threat of a punitive 36% US tariff on its exports. The rally has led some ministers and business groups to urge the central bank to weaken the currency to support exports and tourism, the nation's key growth drivers. The Bank of Thailand has said it doesn't target any particular level or direction for the baht and its gain over the past year is in line with regional peers. Ms Roong said the baht's outperformance over the dollar index and its high correlation to gold is something the central bank has noticed and trying to address. 'We don't try to stop people from being interested in gold, but we want them to do it in such a way that it doesn't affect the volatility of the baht or make the baht have higher correlation' with gold, she said.
Bangkok Post
7 days ago
- Business
- Bangkok Post
Central bank contender touts need to work with government
A contender to be Bank of Thailand's (BoT) next governor said she would be "a little more aggressive" in articulating the path for interest rates, calling for closer coordination of monetary and fiscal policies. "As we have very limited resources, every bullet that we use would have to be more effective," BoT Deputy Governor Roong Mallikamas said in an interview in Bangkok on Tuesday. "That probably could be done only if we were in collaboration and our policies are directed in the same direction in a cohesive manner and better coordinated." Ms Roong made her comments the same day cabinet had been expected to endorse veteran banker Vitai Ratanakorn to lead the central bank. But a final decision has been delayed for at least a week, raising the prospect that Harvard-educated Roong could still get the top job. A career central banker, 56-year-old Roong is widely seen as representing continuity from current governor Sethaput Suthiwartnarueput, who has resisted government pressure over interest rates. Mr Vitai, in contrast, has publicly called for lower borrowing costs. The surprise delay in naming a new governor adds to uncertainty caused by the recent suspension of Prime Minister Paetongtarn Shinawatra, the daughter of former leader Thaksin Shinawatra. Thaksin, whose family has won nearly every election since the turn of the century, has long pushed for looser monetary policy while clashing with royalist generals, judges and bureaucrats. On top of that, Thailand is trying to stave off higher US tariffs that would damage its export-reliant economy and revive sluggish growth. The benchmark SET Index is among the world's worst-performing stock markets so far this year. Under Mr Sethaput, the central bank resisted government pressure for rate cuts and a higher inflation target to spur growth in an economy that has lagged the growth seen among peers in Southeast Asia. Ms Roong said that if she is appointed BoT governor, she would engage with diverse stakeholders from the government, financial and the private sector right from the start. "A lot of times we wait until things kind of develop to the stage where it has become a confrontation," Ms Roong said. "By hearing them early, they hear us early, telling them early, we made the chances of resolving and seeing more eye to eye and working with more space and more lead time." Ms Roong said she backs the BoT's current accommodative policy stance, which has seen 75 basis points of rate cuts since October, and noted that uncertainty about the rate outlook may prevent banks from lowering borrowing costs, reducing the overall effectiveness of interest rate cuts. "During this time of uncertainty, monetary policy needs to be supportive and serve as an anchor of stability," Ms Roong, who oversees financial system stability at the central bank, said in the interview. 'There are just too many uncertainties already and we should not add more. I would probably be a little more aggressive in articulating' the rate path, she said. Total loans have contracted for three quarters in a row, while household debt remains high. But the monetary policy committee led by Mr Sethaput has underscored the need to preserve its limited policy space to deal with future shocks, though most economists expect a further 50 to 75 basis points in rate cuts this year. The front-runner for governor, 54-year-old Vitai, is an advocate of lower rates and coordinated fiscal and monetary policy to help revive the faltering economy. As president of the Government Savings Bank (GSB), which has spearheaded state efforts to provide financial relief to debt-burdened households and individuals, he is perceived as being close to the finance ministry, raising questions about the independence of the central bank. Ms Roong has worked for nearly three decades at the BoT, helping shape monetary policy, financial regulation and fintech oversight. She also had a stint at state-run Krung Thai Bank Public Company Limited. "I have addressed challenges at the macro level and the micro level, being quite familiar with the central bank tools and purview and scope of our work, which is actually very wide, very large," she said. "So I'm just offering my experience."
