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INTERVIEW-Thai c.bank chief sees no rate rise this year

Published: 04 Nov 2009 21:25:14 PST

BANGKOK, Nov 5 - The Bank of Thailand does not expect official interest rates to rise this year because there are still risks to the economic recovery, and it has no plans to buy gold from the IMF, the governor said on Thursday.

The current policy interest rate, at a record low of 1.25 percent, is supportive and not hindering the recovery while inflation is not a concern, even if consumer price inflation turned positive in October, Tarisa Watanagase told Reuters.

"In the near term, inflation is not such a problem that we need to rush into raising rates ... It's safe to say we won't raise rates this year as the global economy is unlikely to see big changes in the next two months," she told Reuters in an interview.

The central bank reviews policy on Dec. 2 after keeping rates steady since April following four cuts totalling 2.5 percentage points between December and April to revive the economy.

The Thai economy, Southeast Asia's second largest, grew 2.3 percent in the second quarter from the first, emerging from its first recession in 11 years.

Tarisa said the Bank of Thailand did not intend to buy gold from the International Monetary Fund (IMF), which sold 200 tonnes to the Reserve Bank of India this week.

"We have no plans to buy gold ... We don't have a lot but we have enough," she said, adding that gold offered low long-term returns.

The Bank of Thailand holds fewer dollar assets in its foreign reserves than the international average, she said, as it has diversified reserves over time. Thai foreign reserves stood at $135.6 billion as of Oct. 23, of which only $2.87 billion was in gold.

Tarisa said the baht <THB=> was still competitive for trade and the central bank was not worried by its recent strength, since it was in line with regional peers.

The central bank does not target levels for the baht but would only intervene to smooth out fluctuations, Tarisa said.

The baht was at 33.40 per dollar on Thursday. It has climbed about 4 percent this year. ($1=33.4 Baht)