Thailand Considering China Currency Swap Agreement

Aug. 31 (Bloomberg) -- Thailand is studying a possible currency swap agreement with China that would make it easier for exporters to settle some of their trade in the two currencies, Bank of Thailand Deputy Governor Atchana Waiquamdee said.

There is no “formal” discussion with China yet, Atchana said in an interview in Bangkok today. While Thailand has been diversifying from U.S. dollar assets in its reserves in the past few years, the dollar isn’t going to be replaced as the world’s reserve currency, she said.

“We are in the stage of studying it to see if it is beneficial for the both of us,” she said, adding that a swap agreement isn’t intended for liquidity management. “You can’t say that just because you signed it, you are going to see a surge in trade relations.”

China has provided about 650 billion yuan ($95 billion) to countries including Argentina and South Korea since December through currency swaps to encourage the currency’s use in global trade and finance. The dollar’s status as the world’s leading reserve asset has been challenged as China, Russia, India and Brazil called for a more diversified system.

Thai central bank Governor Tarisa Watanagase said in June that while there is a “trend to use yuan,” nations have to consider its “depth, width and the acceptability” before it can become an international currency. The Chinese yuan isn’t fully convertible.

Diversifying Reserves

China has expanded yuan settlement agreements from border zones to its largest financial centers, including Shanghai and Guangzhou, and the program is being rolled out across Malaysia, Indonesia, Brazil and Russia. Its central bank first brought up the concept of a supranational currency to replace the dollar in reserves in March. The nation has the world’s largest reserves at $2.13 trillion.

The U.S. currency’s share of global central banks’ foreign reserves increased to 65 percent in the first three months of this year, from 64 percent in the previous quarter, according to the International Monetary Fund. The dollar’s share has fallen from 72.7 percent in 2001.

Thailand’s foreign-exchange reserves totaled $125.2 billion in the week ended Aug. 21.

“Every central bank has been diversifying for a long time, at least four to five years ago,” the Bank of Thailand’s Atchana said. “Still, you have to accept that the dollar is going to be a reserve currency for quite some time. You don’t have any alternatives.”

Won’t Peg

The yuan traded at 6.8313 per dollar in Shanghai today, having been kept around that level by the central bank since July 2008 after a 21 percent gain in the previous three years. The baht, which gained 2 percent this year, was at 34 as of 3 p.m. in Bangkok, according to Bloomberg data.

The Bank of Thailand won’t try to maintain a pegged currency, even though it will continue to step into the foreign- exchange markets to temper baht volatility, Atchana said.

“As long as the baht doesn’t over or undershoot, we try not to step in,” she said. “We have to believe that the market mechanism works. With a surge of supply of dollars coming through the current account, it may not be possible to keep the exchange rate fixed.”

Investment flows from abroad and a current-account surplus are putting pressure on the currency to appreciate. Overseas investors bought $974 million more Thai stocks than they sold this year. The baht has traded in a range of 33.92 to 34.13 per dollar this month.

The current-account surplus, the broadest measure of trade, rose to about $11.6 billion in the first half of the year from a deficit of $200 million last year, Atchana said.

To contact the reporter on this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net; Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net

News 2009

The government of the time - under Chuan Leekpai - worked with the IMF to reform the battered economy.

But the 1997 experience caused many Thais to regard international finance with deep distrust. Mr Chuan lost the 2001 elections to an opponent who promised to help people with their daily difficulties.



Cranes vie with the capital's tallest building, the Baiyoke 2 tower
Though Thailand's recent governments have been civilian and democratically-elected, the country has seen turbulent times. The military governed, on and off, between 1947 and 1992 - a period characterised by coups, coup attempts and popular protests.

In September 2006, the military once again stepped into politics, carrying out a bloodless coup against Prime Minister Thaksin Shinawatra while he was at the UN General Assembly.

An interim prime minister was appointed a month later.

By the end of 2007, the military junta had drafted a new constitution and held general elections, marking the beginning of the transition back to civilian rule.

Thailand has a minority Muslim population, concentrated in its southern provinces.

A decades-old separatist struggle in the region - which abated in the 1980s - flared again in 2004. The violence has claimed more than 3,000 lives.

Thailand's capital, Bangkok expanded rapidly with the influx of workers during the boom years. It is one of Asia's most vibrant, and heavily-congested, cities.

The large-scale sex industry which flourishes there contributed to the incidence of HIV infection - a major concern for the Thai government.

Thailand has taken the lead in the region in distributing cheaper generic drugs for Aids sufferers and awareness campaigns are credited with reducing the number of new infections.

Thai cuisine is known throughout the world for its use of hot, sweet and sour spices. Sculptures of the Buddha in sitting or reclining positions are also characteristic of Thailand, as is classical dance. More...

The Meals We Eat

Lots of people have written to me and asked me about meals in Thailand. Now it's time for me to make the page up.

In Thailand, we have 3 meals same as other countries. Breakfast, lunch and dinner are the main meals but Thai people like to have snacks between meals. A lot of snacks. We eat our meals with a spoon and fork or sometimes with chopsticks if we have noodles. All food is cut up when it is cooked so we don't need to use a knife!

In my family, we don't really cook meals ourselves. We often eat takeaway food which we bring back to the house. But if we cook ourselves, my dad will be the cook, he cooks better than my mum. We do not always have our meals together because we are not often home. I always go back home late after working at Srinai school on my web site. On those days I usually eat at a roadside noodle stall. If I go back home early, we shall eat dinner together in front of the TV. Most meals we eat are rice topped with meat and vegetables or noodles. Lunch and dinner are about the same but lunch usually has one dish but dinner it is normal to have three or four dishes to share. It is not polite to put all food on your plate in one go. You just take a spoonfull at a time. This is good when we go out to a restaurant. We can try many

Thailand Food and Recipes

The main food in Thailand is rice. Everyone has eaten it since they were born. But we can't really eat rice alone so we have to have something to go with it. There are many dishes of food to go with rice. Most of them are hot and spicy and that is what Thai food is famous for.

Thai people are used to eating rice with their meal. Most Thai people can't have sandwiches for their meal. They call sandwiches a snack. Also, most Thai people do not sit down to eat a proper meal because they usually eat when they are hungry, especially kids and teenagers. If you know some Thai person, you might hear them say "gin khao yung" every time you meet them. It means "have you eaten yet?" or more precise "have you eaten rice yet?". If you come to Thailand and stay with a Thai family then be careful you don't put on too much weight! All of the visitors that have come to stay at our school always go home weighing more!