Thailand announces market steps to ease coronavirus impact

The Bank of Thailand will continue to provide liquidity to the government bond market through bond buying.
The Bank of Thailand will continue to provide liquidity to the government bond market through bond buying.PHOTO: AFP

BANGKOK (REUTERS) - Thailand introduced measures on Sunday (March 22) to ensure sufficient liquidity in the bond market amid the spread of the coronavirus that has infected almost 600 in the country.

The Bank of Thailand (BOT) has set up a facility to provide liquidity for mutual funds through commercial banks, its governor Veerathai Santiprabhob told a joint news conference with the finance ministry and the Securities and Exchange Commission.

The facility will remain open until market conditions return to normal.

The BOT's preliminary estimate of eligible bond mutual funds is approximately 1 trillion baht (S$44.3 billion), he said.

A separate, corporate bond stabilisation fund worth 70 billion to 100 billion baht will be set up to invest in high quality, newly issued bonds by corporates that cannot fully roll over maturing corporate bonds, Mr Veerathai said.

The BOT will continue to provide liquidity to the government bond market through bond buying, he said.

"These measures are expected to provide liquidity and help the normal functioning of the financial market and help build investors' confidence", he said.

"Even though the Thai financial system remains strong, with commercial banks holding healthy levels of capital and liquidity reserves, the liquidity stress and the resulting irregularity in the global financial market have begun to affect the Thai financial market," he said.

The finance ministry will also propose measures to the cabinet on Tuesday to help people affected by the virus, a government official said.

Earlier, the country announced measures for the stock market , including setting up a support fund and revising rules to ease volatility.

JUMPING CASES OF INFECTIONS

Thailand on Sunday reported 188 new cases of infections, taking the total to 599. One person has died.

 
 
 
 

Bangkok will close malls, except supermarkets, in the capital for 22 days, and will extend the closure of schools and bars for another 22 days.

Budget airlines also began suspending service.

Late on Friday, the BOT unexpectedly cut its policy interest rate by 25 basis points to a record low of 0.75 per cent, saying the coronavirus would have a more severe impact than expected.

The BOT is expected to slash its 2020 economic growth forecast from 2.8 per cent, at its next scheduled policy review on March 25.

Some economists predict the economy will contract this year.

Even before the outbreak, Southeast Asia's second-largest economy has been hit by falling exports, weak investment and a drought. Last year's growth was just 2.4 per cent, the lowest in 5 years.