Thailand to face limited direct impact from the United Kingdom's exit from the European Union, but would face greater risks from global financial market volatility in the short term and uncertainties from other EU members' possible moves, according to the Bank of Thailand.
In its initial report, the central bank said the Brexit would send limited impacts on Thailand’s trade and financial sector. Only 1.8 per cent of Thailand’s exports go to the UK, while Thai banks’ direct exposure in the UK and Europe-wide financial sector is only 1.31 per cent of total assets.
The central bank noted that the baht depreciation today was line with regional movements. It acknowledged that the capital market would be volatile in the short term, with possible outflows, though a small sum, from the equity and bond markets.
However, in the long run, a change in strategies by private companies and other EU trade partners could cause uncertainties in trade and investment, which could stall global economic recovery.
"The central bank would closely monitor the situation and stand ready to maintain economic and financial stability, if necessary. Private companies are urged to hedge against currency risks as financial volatility would stay for some time," it said.
Thailand to face limited direct impact from the United Kingdom's exit from the European Union, but would face greater risks from global financial market volatility in the short term and uncertainties from other EU members' possible moves, according to the Bank of Thailand.In its initial report, the central bank said the Brexit would send limited impacts on Thailand’s trade and financial sector. Only 1.8 per cent of Thailand’s exports go to the UK, while Thai banks’ direct exposure in the UK and Europe-wide financial sector is only 1.31 per cent of total assets.The central bank noted that the baht depreciation today was line with regional movements. It acknowledged that the capital market would be volatile in the short term, with possible outflows, though a small sum, from the equity and bond markets. However, in the long run, a change in strategies by private companies and other EU trade partners could cause uncertainties in trade and investment, which could stall global economic recovery. "The central bank would closely monitor the situation and stand ready to maintain economic and financial stability, if necessary. Private companies are urged to hedge against currency risks as financial volatility would stay for some time," it said.
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