Bangkok--20 Dec--Standard & Poor's Ratings
Standard & Poor's Ratings Services said today that the Kingdom of Thailand's (foreign currency BBB+/Stable/A-2; local currency A/Stable/A-1) implementation of a reserve requirement on short-term capital inflows is not expected to have an immediate impact on the sovereign credit ratings. This is based on our belief that sovereign debt servicing activities are unaffected by the new reserve requirement rules. Moreover, the measures do not apply retroactively, and therefore do not affect investors who have already committed to investments in Thailand.
Standard & Poor's expects the financial market volatility following the introduction of these rules to subside in the near future. The disruption to economic activity in Thailand is also likely to be minimal. Nevertheless, the measures will deter future inflows of foreign investment and raise the cost of financing in Thailand. Furthermore, the growth of domestic investment spending could be adversely affected. This negative impact on the economy may become more significant if planned increases in government infrastructure spending result in the reappearance of current account deficits, which would increase the reliance on foreign financing.
Media Contact:
David Wargin, New York (212) 438-1579
[email protected]
Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
Ping Chew, Singapore (65) 6239-6345