Thai PM Agrees on Measures to Weaken Baht

The Thai prime minister on Friday agreed on new measures aimed at curbing the baht's rise, while the central bank governor insisted the country would not return to a fixed exchange rate system.

"My government has a clear stance that we want to stablise the currency," army-installed Prime Minister Surayud Chulanont said after meeting with top finance officials.

Surayud endorsed a package of measures laid out by his economic team, including Finance Minister Chalongphob Sussangkarn and Bank of Thailand governor Tarisa Watanagase.

Industry Minister Kosit Panpiemras said the cabinet was expected to formally approve the measures on Tuesday in hopes of weakening the baht.

Under the new rules, Thai firms will be allowed to keep foreign currency revenues for a longer period while also being encouraged to use dollars to pay down their debts.

Ordinary Thais would also be allowed to open US dollar-denominated bank accounts with deposits worth up to 100,000 dollars, Kosit said.

"The currency situation is improving as the baht is softening," Chalongphob insisted.

The baht was quoted at 33.62-66 to the dollar in afternoon trade Friday, down from Thursday's close of 33.50-51.

The decision to finally float the baht sparked the Asian financial crisis, sinking economies around the region.

A rising baht has alarmed the government as it puts pressure on exports, the key driver of the economy. The strong baht makes Thai goods less competitive abroad and cuts the value of repatriated profits.

Source: AFP

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