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June 17, 2013 5:50 pm

The Bank of Thailand (BOT) has expressed confidence that the Thai money market will be able to cope with any capital movements that occur should the US Federal Reserve withdraw its monetary stimulus, while Kasikorn Research Centre forecast that the Fed would keep its bond purchases unchanged due to low US inflationary pressure.

BOT Governor Prasarn Trairatvorakul said Monday that if the Fed cancels its domestic bond purchases and foreign investors pull their money out of Thailand, that would not rattle the local money market or upset the country’s financial stability and liquidity.

The country has various monetary tools at its disposal, a suitable level of foreign reserves and prudent interest-rate policy, while foreign investment in government and BOT bonds amounts to only Bt800 billion (US$26 billion), or 12 per cent of total Thai bonds. The recent foreign selling dropped foreign bond holdings slightly to 11 per cent.

The Nation