The Thai economy is strong enough to withstand any possible impact of the eurozone crisis, permanent secretary for finance Areepong Bhucha-oom said on Wednesday.
Areepong said this after a meeting of economic ministers and relevant state agencies chaired by Finance minister Kittiratt Na-ranong.
The meeting discussed the euro debt crisis and possible negative consequences to Thailand. The meeting agreed that it is not necessary to carry out additional measures at this time, he said.
However, state economic agencies were directed to keep a close watch out for possible impacts of the crisis and to prepare for any situation, he added.
The permanent secretary said the meeting also discussed the case of Cyprus. which is the fifth country to have asked financial assistance from the European Union, after Portugal, Ireland, Greece and Spain.
The meeting believed that the financial crisis in Cyprus would not have much impact on the European economy as it is only a small country, he added.
The meeting had confidence that the cut in the credit ratings of 15 major banks worldwide by Moody’s Investors Service would not hurt Thai commercial banks. There were very few connections between Thai and European commercial banks, Areepong said.
The meeting also heard that the automobile and electronics industries have been operating at full capacity since April, as evidenced by the increase in exports of cars and electronic products in April and May, he said.
Only garment manufacturers that export to Europe still have some problems, particularly the labour intensive companies.
Commerce minister Boonsong Teriyapirom would soon invite them to a meeting to discuss solutions to their problems, he added.
Meanwhile, the baht fell toward a three-week low on Wednesday on speculation that dollar demand by importers will exceed local-currency purchases by exporters, as there was little change in government bonds.
The country, had a trade deficit of $1.7 billion in May as an 18 per cent increase in inbound shipments outstripped export growth of 7.68 per cent, government data showed this week. The Bloomberg-JPMorgan Asia Dollar Index was steady before European leaders begin a two-day meeting in Brussels tomorrow to discuss ways to tackle the region’s debt crisis.
“The deficit in the trade balance may continue for a while as imports of machinery related to last year’s floods have been climbing,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc in Tokyo. “The baht tends to see downward pressure from this aspect. Risk sentiment is quite neutral as investors are waiting for the results of the European Union summit.”
The baht retreated 0.2 per cent to 31.88 per dollar as of 3:12pm in Bangkok, according to data compiled by Bloomberg. The currency touched 31.96 on June 25, the weakest level since May 31. It has dropped 3.2 per cent this quarter and one per cent in 2012. The baht’s one-month implied volatility, a measure of exchange-rate swings used to price options, held at 4.52 per cent.
The yield on the 3.25 per cent bonds due June 2017 was little changed at 3.33 per cent, according to data compiled by Bloomberg.