Thailand rules out fixing exchange rate to slow baht's rise

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BANGKOK, July 16 (AFP): Thailand today ruled out returning to a fixed exchange rate to stop the baht's rise against the dollar but said the government was trying to stabilise the currency.
"The current, flexible managed-float system is able to manage the risks. Many countries are using the same approach. The fixed basket system is out of date," Finance Minister Chalongphob Sussangkarn told reporters.
Thailand maintained a fixed exchange rate until 1997, when the currency came under speculative attack and the central bank exhausted its foreign reserves trying to defend it.
The decision to finally float the baht sparked the Asian financial crisis, sinking economies around the region.
Army-installed Prime Minister Surayud Chulanont said the government was trying to keep the baht from gaining too quickly after the currency appreciated seven per cent since the begining of this year, following a 12 per cent gain in 2006.
"The government has been trying to stabilise the baht's movement by making sure that the currency is not appreciating too fast and too high," he told reporters.
"The government must look at both the positive and negative impacts of the baht's movement," he said.
The baht rose further Monday to 33.25 baht against the dollar by mid- day, up from Friday's close of 33.31-34, dealers said. The baht was even stronger offshore, trading at 30.05-15.
Apisak Tantivorawong, president of the Thai Bankers' Association, urged the government to take urgent measures to deal with the baht's rise by encouraging capital outflows.
"The government should allow the private sector to use dollars for debt payment, while speeding up debt payments by state enterprises to encourage faster capital outflows," he told reporters.