Thailand mulls dropping capital controls

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May 10, 2007, 11:59 GMT

Bangkok - Thailand may lift its controversial capital controls after acknowledging that they have failed to slow the appreciation of the baht currency against the dollar, Bank of Thailand (BoT) governor Tarisa Watanagase said Thursday. Tarisa acknowledged that huge capital inflows into Asia had caused the baht to appreciate 4.3 per cent against the dollar already this year, after appreciating more than 8 per cent against the greenback in 2006. She said the central bank was considering lifting the 30 per cent capital reserve requirement put in place last December, in an effort to stem speculation on the baht, as the measure had not proven effective, reported the Thai News Agency (TNA). On Thursday the baht was trading at 34.56-34.58 against the dollar compared to Wednesday's closing at 34.60-34.64. Economists worry that Thailand's strong currency will eventually impact on the country's exports, making them less competitive. The export sector has become the economy's main engine of growth this year, while investments and consumer spending have both declined. © 2007 dpa - Deutsche Presse-Agentur

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