Thailand to Tame the Baht with Bond Witholding Tax

In the latest effort to control the appreciation of its currency, the Thailand government is mulling a 15% witholding tax on the interest payments and capital gains earned by foreign investors on Thai bonds, reports the Wall Street Journal.


The bond market has been the target of capital flowing into Thailand so far this year, notes the Journal, adding that about 75% of 127 billion baht (US$4.24 billion) of funds that entered into the country during the third quarter went to the bond market.


According to the Journal, bond yields have contributed to the strengthening of the Thai baht which has risen by about 10% this year, hurting private businesses and exports. To improve the liquidity of exporters that have been hurt by the baht's rise, state banks will provide soft loans to businesses for hedging purposes as well as separate credit facilities, adds the Journal.





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