Forex Blog: Currency Trading News & Analysis.

December 29th 2006

Yuan appreciation would benefit Baht, says Thailand

Last week, the Central Bank of Thailand implemented a series of draconian capital controls, designed to prevent foreign speculators from pouring funds into Thai capital markets and contributing to the appreciation of the Baht, which has been furious this year. Realizing this would ultimately be an inadequate means of grounding the Baht, Thailand has since added that an appreciation in the Chinese Yuan would take some of the upward pressure off of the Baht. Because the Yuan is effectively pegged to the USD, countries that run trade surpluses with the US and also have flexible exchange rate regimes (such as Thailand) must shoulder the brunt of the USD decline. The Wall Street Journal reports:

The Bank of Thailand [has since] removed capital controls on foreign investments specifically destined for the stock market. Controls on other investments remained in place.

Read More: A Rising Yuan Would Aid Baht, Thai Minister Says

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Posted by Adam Kritzer | in Central Banks, Chinese Yuan (RMB) | No Comments »

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