The specter of Baht attack raised

A member of the MPC (MPC) has expressed concern over the country's fiscal policy, which could set the stage for an attack on the baht, the financial sector remains confident about its ability to cope with fluctuations in the market.
Although the United States is hamstrung by the failure to address the looming debt-ceiling issue, the Bank of Thailand expects capital to flow into the country in the short term, but potentially flow back out in the near future if the U.S. Federal Reserve ends quantitative easing.
Members Narongchai Akrasanee said Thailand needs to proceed with caution with the rise in its fiscal burden, which could be used by foreign investors for currency speculation given the volatility in the money and capital markets, which has resulted from the U.S. debt ceiling issue. He talked about the sideline of a seminar on "Investing in the New Global imbalances" yesterday, the Ministry of MFC Asset Management.
He expects U.S. lawmakers to negotiate a solution to the current crisis, but even if the debt ceiling is raised, which will not necessarily be a panacea.
Foreign investors and experts are not watching Thai government investment spending, especially rice-pledging scheme, whether this will affect the nation's fiscal future, said Narongchai, who is also Chairman of MFC Asset Management.
He said some groups of foreign investors would have indulged in speculation on the currency rice-pledging scheme during the last three or four months.
The proposed sovereign wealth fund, or new opportunities Fund, he said that it had not been discussed with amport Kittiampon, the new chairman of the board Bot.
The government can use foreign nation to issue bonds to the public and share price and central banks in foreign exchange, he said. However, the BOT is not allowed to buy bonds.
Speaking at the conference, BOT director Roong Mallikamas said such imbalances have started to affect the money more. This was partly because of attempts to solve economic problems in countries such as the United States by increasing the global money supply through monetary easing.
"Money-market volatility increased with more money. The baht has also been affected, as shown by the decreased from 28.5 to the dollar to 32 to the dollar in the short term," she said.
It was also possible for capital to move back in Thailand after the Fed decided to reduce monetary stimulus and the improvement of China's economy, she said. However, the U.S. debt-ceiling deadline October 17 needs to be watched.
In the next year, foreign capital may flow out of the area, which eventually the Fed will probably decrease, since the monetary stimulus, she said, adding that Thailand give sound economic fundamentals, the capital could come back into the country.
Major impact
However, if the U.S. can not agree to raise or extend the debt ceiling and default occurs, it will be a major impact on the global economy, Roong said, but added that it was only a small chance of this.
Kirin Bhaopichitr, senior economist at the World Bank's Bangkok office, agreed that there was little chance the U.S. government default, but if it did occur, it would be a colossal negative impact on the global economy, and Thailand.
However, "if the U.S. government is to raise the debt ceiling, it does not mean that the problem will end. Provide America's growing fiscal burden, the debt will go up if the country has no restructuring and the same problem will occur again," Kirill said.
It expects the world economy to continue to achieve, but come-market growth gradually slows down. Direction largest economies' capital costs have fallen over the world, and emerging markets have used this to stimulate their economy through investment and consumption.