He was commenting on the decision on Thursday by the US Federal Reserve to launch a third quantitative easing, or QE3. In its boldest stimulus attempt to date, the Fed announced unlimited bond buying tied directly to reducing unemployment, and said interest rates would remain at record lows until at least mid-2015.The Fed's purchases -- $40 billion baht a month according to Chairman Ben Bernanke -- will expand the supply of dollars and a lot of that money will flow into emerging markets including Thailand, where investors can obtain better returns than in the US.
The Stock Exchange of Thailand jumped 1.5% in response to the Fed news, with turnover of 57.1 billion baht, double the daily average of recent months. The baht rose to 30.73/76 to the US dollar, a level not seen since May.Mr Kittiratt, also a deputy prime minister, said the Fed's decision reflected underlying concerns about the fragile state of the US economy, which is partly the result of the public debt crisis in the European Union.Given the prospect of global investors pumping dollars into Asia, countries in Asia should discuss how best to handle the rising inflows of money in the system, he said."It's the duty of Asia to think about this and handle the issue in a way that can minimise the impact," he said.
"We have to think about our role in sustaining the global economy when Western countries encounter problems."The worry is that a lot of "hot money" will circulate in Asia, leaving markets as quickly as it entered, as investors chase quick profits. Such activity on a large scale was a major contributor to the 1997 Asian financial crisis, which began in Thailand.Mr Kittiratt said Thailand had policies controlled by the Bank of Thailand and the Finance Ministry to cope with volatility. They include policies on interest rates, currency exchange rates and taxes, as well as supplementary measures such as support to encourage more Thais to invest abroad.Prof Teerana Bhongmakapat, dean of economics at Chulalongkorn University, said the new liquidity injected by the Fed could head into commodities, particularly gold, silver and oil.He also cautioned investors not to over-react to the Fed's characterisation of its latest programme as "open-ended".He said the Thai government and the central bank should allow the baht to appreciate if there are foreign capital inflows rather than buying dollars or cutting interest rates to keep the baht weak."It is a matter of whether the government thinks long- or short-term," he said."The central bank has perhaps accumulated too many dollars in its foreign reserves because of foreign exchange intervention in the past several years. It hasn't much room to continue doing so."Mr Kittiratt, meanwhile, continued to catch flak for his attempts to backpedal on his "white lie" comments about export growth.Democrat Party leader Abhisit Vejjajiva said he was disappointed that Mr Kittiratt was not speaking honestly."If the government can't meet the 15% export growth target, nobody would criticise it, but he [Mr Kittiratt] must explain why it cannot be achieved," Mr Abhisit said on Friday."When making 'white lies' you have to be extremely careful because if things don't happen as claimed you'll have no credibility and there will be confusion," said the opposition leader.Last month, Mr Kittiratt said the finance minister may lie to the public if necessary to establish confidence. He was referring to his pledge earlier this year that exports would grow by 15% in 2012.However, most officials and economists have believed for many months that exports would grow much more slowly because shipments to the financially troubled European markets are down dramatically.Consensus forecasts for export growth for the year now range between 4.5% and 7%. Only Commerce Minister Boonsong Teriyapirom continues to insist that 15% growth is possible, though he doesn't say how.