Thai banks to vet export customers
Ann/ The Nation
As the baht rose to a new 10-year high of 33.18 against the US dollar yesterday (July 11), closing at 33.32-33.35, the Bank of Thailand urged financial institutions to check whether customers actually have export orders with which to exercise their forward transactions.The precaution was taken to prevent over-hedging, which has been pushing up the value of baht. The BOT said banks must ensure that their export customers' forward transactions are in line with the regulations. Exporters who want to conduct forward transactions are required to show evidence to prove that they will definitely have foreign-exchange income to transact with their counterparts on due dates. The central bank's e-mail to financial institutions came after many exporters rushed this week to sell out their dollar due to fears that the baht will continue to surge. This behaviour has put immense pressure on the currency, causing it to appreciate relentlessly beyond the Kingdom's economic fundamentals.
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