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DARANA CHUDASRI
Interest rates are definitely on the upswing, according to Pakorn Malakul Na Ayudhya, the chairman of the Stock Exchange of Thailand.
Mr Pakorn, a former deputy governor of the Bank of Thailand, said the central bank's Monetary Policy Committee was likely to ''gradually'' raise its one-day repurchase rate in light of rising oil prices and inflation.
''The MPC's inflation-targeting model aims to keep core inflation between zero and 3.5%. Core inflation reached 2.8% in May while headline inflation hit 7.6%. I would expect the MPC to consider raising rates soon,'' Mr Pakorn said.
Most analysts agree that the MPC will likely move to raise its one-day policy rate at its next meeting on July 16 by at least a quarter-point. The policy rate has remained at 3.25% since mid-2007.
The Fiscal Policy Office this week raised its own estimate for the one-day policy rate to reach 4.25% by the end of the year from a previous forecast of 3% in March.
Mr Pakorn said despite rising interest rates, economic growth this year was likely to outpace the 4.8% growth reported for 2007 thanks to stronger exports and agricultural prices.
He said the Thai stock market, which has fallen by over 8% since the beginning of the year, was expected to post a rebound in the second half.
''But considering the declines in the Vietnamese and Chinese markets, Thailand's market has fared quite well, which reflects the fact that our fundamentals remain strong,'' Mr Pakorn said.
Vietnamese stocks have dropped by 58% from the beginning of the year, while the Shanghai market is down 44%.
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