The Bank of Thailand has defended itself from Trump’s accusation of currency manipulation. The central bank’s governor, Veerathai Santiprabhob said in an announcement that there is no evidence implicating any of its officials of currency manipulation to illegally boost exports.
Veerathai released the response after the US decided to carry out an investigation on Southeast Asian nations for potential trade abuse.
According to sources, it’s a common act of central banks to get involved in foreign-exchange matters in times of need such as inflationary environment and geopolitical crises. In an interview with Haslinda Amin of Bloomberg Television, Veerathai dismissed Trump’s allegations.
He said, “I don’t think anyone has evidence that Thailand has manipulated the currency to gain an unfair competitive advantage. Thailand has not adopted any exchange-rate policies to gain an unfair competitive advantage in trade.”
Veerathai defended Thailand saying that the central bank’s foreign-exchange interventions were mostly caused by capital inflows which “have been coming in in a short period of time that could create adverse consequences.” He continued, “At times, we might have to intervene in the foreign-exchange market but that’s largely because of the intense capital inflows that we are on the receiving end of.”
US President Donald Trump has recently released an executive order that will probe 16 countries which have the biggest bilateral trade deficits with the world’s largest economy. Thailand is one of the countries on the receiving end of the order and is expected to be hit greatly because of the country’s dependency on exports. Currently, BoT is buffing up foreign-exchange reserves since the end of 2016 after inflows sharply increased. This move capped the baht’s advances.
Veerathai added that foreign-exchange intervention is normal. He explained, “Foreign-exchange intervention is definitely a measure that all central banks need to have on the menu list but there are also other policy measures that one can look at, from market-based measures to the likes of capital-flow management measures.”
Thailand have one of the largest trading surplus with the US. It is at 11th place.