BOT STEPS INTO FOREX MARKET TO CALM BAHT

       The skyrocketing gold price has pushed the Bank of Thailand (BOT) into stepping into the foreign-exchange market to calm the baht, which has been floating up on increasing capital inflows.
       Higher gold prices, which hit a new high of US$1,058 (Bt35,265) per ounce yesterday, have led to heavy selling of bullion by exporters, boosting the current-account surplus and driving the baht beyond its fundamentals.
       The baht rose 0.5 per cent to 33.30 per dollar as of 5pm, according to data compiled by Bloomberg. It earlier touched 33.23, the strongest level since June 2008.
       Suchada Kirakul, assistant central bank governor, said the continual intervention by the central bank was aimed at stabilising the baht, which has surged past its fundamental value given the sluggish economy.
       One key factor that caused baht to appreciate was the weakening of the dollar after US private sector confidence fell with unemployment higher than expected.
       Domestically, the serlling current-account surplus as well as net capital inflows of Bt60 billion so far this yearcompared to a meagre Bt16 billion for last year - were contributing to the baht's strengthening, she said.
       Capital has also been flowing back after local asset-management firms saw their foreign investment funds invested in Australia reach their due dates, she said.
       Most importantly, the huge exports of gold recently on global gold prices jumping to historic highs has caused higher demand for baht, as exporters want to exchange their sales proceeds denominated in US dollars into the local currency.
       Locally, gold bar prices were quoted at Bt16,450 per 15 grams for buying and Bt16,550 for selling.
       The central bank said the baht's moving up against the dollar was not out of line with its regional counterparts so far this year. It has gained about 4 per cent, which ranked it in the middle compared to regional currencies.
       For example, Australia's dollar has shot up by 20 per cent from early this year as it has enjoyed a robust economy and property boom.
       In September, employment there jumped by more than 40,000 jobs from the previous month, better than the projection by economists of a decline of 10,000 jobs.
       The Australian central bank had to hike its policy rate by 25 basis points to 3.25 per cent.
       The economies of Indonesia and the Philippines have also been much improved with capital inflows growing. Indonesia also depends less on oil than Thailand.
       The US dollar is continuing to trend down after the unemployment rate there rose more than expected, which undermined confidence in the unit.
       Although one of the US Federal Reserve governors mentioned a hike in the policy rate, the central bank believes that it will not be the case soon.
       For Thailand's policy rate, the central bank still needs to shore up the economy, whose recovery is still fragile, she said.
       On October 21, the central bank's Monetary Policy Committee will meet to consider a policy-rate adjustment. On May 20, the committee decided to keep the one-day repurchase rate unchanged at 1.25 per cent.

       Local gold bar prices were Bt16,450 per 15 grams for buying and Bt16,550 for selling.