Currency and Interest Rate Outlook
K
KASIKORNTHAI
ธนาคารกสิกรไทย
开泰银行 KASIKORNBANK
Thailand's external balances remain relatively strong compared to peers
High international reserve / Imports (Import Coverage)
Low foreign holding ratio in Thai government bonds
Months of Imports
1208642
3070
26.0%
25%
22.9%
12.3
12.1
10.8
11.1
20%
9.5
9.0
8.7
14.6%
15%
10%
3 months5%
0%
lil.
14.0%
Indonesia South Korea Malaysia
2.3%
Philippines
Thailand
India Indonesia Philippines Korea Malaysia Thailand Singapore
Source: CEIC, KResearch (data as of March 2021)
High international reserve ratio / External debts
140%
120%
94%
96%
126%
100%
100%
77%
80%
60%
41%
40%
31%
23%
20%
0%
India Indonesia Philippines Korea Malaysia Thailand Singapore
Note: Retrieved from Asia Bond Online, based on latest available datal
Source: Asian Development Bank
0.8%
Vietnam
■Thailand's economy and financial markets are able to
withstand impacts from fluctuations in global liquidity due to:
■High import coverage (international reserves/monthly
imports) compared with the IMF's three month import
coverage guideline
■More than 100% of external debt covered by
international reserves
■Low portion of foreign holdings in Thai government
bonds compared with other countries
Source: CEIC, KResearch (data as of March 2021), Retrieved on July 2021
บริการทุกระดับประทับใจ
K
KASIKORNTHAI
ธนาคารกสิกรไทย
开泰银行 KASIKORNBANK
Monetary and fiscal expansion raises financial stability concerns
In consistent with the Fed, the BOT cut interest rate to
support the economy amid COVID-19 outbreak
Thailand has enough FX reserves
to meet all internal and external obligations
Percent
3.0
2.5
20
2.0
1.5
Federal Funds Target Rate - Upper
Bound
Federal Funds Target Rate - Lower
Bound
BOT Policy Rate
1.0
0.5
0.0
Jan 15
Apr 15
Jul 15
Oct 15
Jan 16
Apr 161
Jul 16
Oct 16
Jan 17
Apr 17
Jul 17
Oct 17
Jan 1871
Apr 18
Jul 18
Oct 18
Jan 19
Apr 19
Jul 19
Oct 19
Jan 20
Apr 20
חו קח
■Due to a deteriorating economy, the Fed decided to cut its policy
rate by 1.50% in 2020 to 0.00-0.25%
■Monetary easing leads to a massive exodus of capital from
emerging markets and worsens exchange rate depreciation.
However, Thailand's external stability will likely be maintained
■The Thai banking system excess liquidity fell slightly. The CAR
was good (20.1% as of 4Q20) and NPL ratio was still manageable
(3.1% as of 4Q20), with net profits of Bt146.2bn in 2020
3 months of imports
$ Billion
300
$ Billion
■FX Reserves
300
Reserves backing banknotes
■ST external debt
■Net Forward Position
250
250
200
200
280.2
56.3
150
150
$312.9 Billion
$193.41 Billion
100
100
65.0
50
50
72.2
32.7
0
0
Source: BOT, KResearch.
Last Update: July 22, 2021
Excess liquid assets in Thai commercial banks slightly rose
Million Baht
5,000,000
%LCR
194
200
183
185
185
190
4,000,000
177
178
174
180
3,000,000
170
2,000,000
160
2016
2017
2018
2019
2020
Liquid Assets.
1Q21 May-21
LCR (%)
Note: BOT has imposed the Liquidity Coverage Ratio (LCR) Framework which replaces the maintenance 6% reserve
requirement. Regarding the LCR framework, all banks shall maintain high-quality liquid assets not less than net expected
cash outflow over the next 30 days. The LCR was implemented on January 1, 2016, with the minimum requirement set at
60%, rising in equal annual steps of 10 percentage points to reach 100% on January 1, 2020
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