BANGKOK (XFN-ASIA) - New finance minister Chalongphob Sussangkarn said the government will maintain the existing currency rules, which require 30 pct of all incoming investment to be held by financial institutions for up to one year.

The market had been speculating that the government would soon lift the measures, imposed by the army-backed government in December to curb the Thai baht’s rise.

Many exemptions have since been made to the controls but the general policy remains at least in theory.

The appointment of Chalongphob as the new finance minister earlier this week raised hopes that the government would end the stringent rules as the former World Bank economist had previously come out against them.

But Chalongphob said the capital rules are needed to control the Thai unit, which has risen nearly 12 pct against the dollar over the past year.

“Regarding the 30-pct reserve rules, I personally think that Thailand still needs measures to manage capital flows in and out of the country,” he told reporters.

“At the moment, appropriate measures (to replace the capital rules) have not been found and any policy changes must be made appropriately and gradually to minimize impacts on the stock market,” he said.

The Thai baht, which yesterday hit a new nine-year high of 35.10 against the dollar on hopes for an end to the measures, fell to 35.30-36 following Chalongphob’s remarks before picking up again to the 35.20 levels.

The central bank chief, Tarisa Watanagase, said in a newspaper interview yesterday that she was waiting for the “right time” to completely lift the currency controls.

Chalongphob also said that investor confidence had declined sharply since last year’s coup, which ousted premier Thaksin Shinawatra, and he vowed to restore sagging sentiment.

“As the global economy remains volatile, the government’s economic policies should help boost investor confidence, not lessen it further,” the new minister said.

Chalongphob did not discuss the military government’s approval of limiting foreign investors to holding no more than 49 pct of the shares or voting rights in Thai companies, another issue that has raised investor concerns.

But he insisted Thailand would maintain good relationships with foreign businesses.

afp/net

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