By Pooky; 4/20/2013
Thailand’s Finance Minister, Kittirat Na Ranong, told a seminar that he wants to replace the Thai Central Bank governor, Prasarn Triratworakul, but in clarifying the statement, latter, said he could still work with Prasarn. “It is only a thought of mine but in reality, the Central Bank is an independent unit that I cannot get involved,” said Kittirat. The point of contention between Kittirat and Prasarn is the hardening of the baht, now close to 28 baht to the dollar, almost a 10% up. Kittirat says reducing the interest rate would soften the baht. Kittrat, is concerned about the hardening baht impact on exports, while Prasarn is concerned that lower interest rates would fuel inflation. Already the Central Bank is playing up inflation, with talks of bubble in the real estate and capital market. Kittirat says, while the Central Bank is independent, it cannot escape the responsibility of the hardening baht impact on the economy. For the first time, recently, Prasarn said the baht has hardened beyond its fundamental. Both Prasarn and Kittirat appear to be toeing the same line on not using harsh measures to stem the baht hardening, such as capital control and other such measures. A few days ago, the Industry Ministry economics research department, issue a statement that Thailand’s industrial GDP is being hit hard by the hardening baht (Source).