By Simon Roughneen in Bangkok
Tarisa Watanagase has been a steady hand at the Thai central bank even while political tumult has seen four changes of prime minister in Thailand since her term began in 2006.
With her term however set to end on September 30, four strong putative successors have surfaced: Bandid Nijathaworn, a deputy governor of the Bank of Thailand; Prasarn Trairatvorakul, president of Kasikornbank; Thirachai Phuvanatnaranubala, secretary-general of the Securities and Exchange Commission; and Pisit Leeahtam, dean of economics at Chiang Mai University.
Thai Finance Minister Korn Chatikanvanij, who has confirmed the short-listed candidates, is expected to throw his backing behind one at a cabinet meeting tomorrow or next week.
Korn has said that views on foreign exchange policy will be a key factor in his selection. Finance ministry officials in recent months have privately questioned why the central bank has allowed the baht to appreciate at the cost of export competitiveness; bank officials maintain that the baht has moved in line with regional currencies.
“The Thai baht has been strong for reasons related to domestic fundamentals – particularly our trade and current account surpluses,” Korn told the FT last week. “The fact that the renminbi is likely to strengthen against other currencies should benefit Thailand as an exporting nation.”
Thai exports in May rose 42.1% from a year earlier. South-east Asia’s second-largest economy grew 12 per cent in the first three months of 2010 from a year before, the fastest pace in 15 years, as exports, investment and consumption recovered, despite political unrest and reduced tourist numbers.
As in many countries, interest rates have been a recurrent source of tensions between the government and the central bank, and the next governor will likely come under pressure too. “I am confident that all the candidates can be independent of government, but that does not mean that the relationship with the ministry of finance will be smooth,” said Twatchai Yongkittikul, secretary-general of the Thai Bankers Association
There is speculation Tarisa may push through an interest rate rise at the bank’s policy meeting on July 14. She said two weeks ago that Thailand has less need for “abnormally low” interest rates – now 1.25 per cent – because the nation’s economy has improved, supported by rising exports and local spending.
Economists differ and some hold that the recovery is still in its early stages. If this view gains currency over the next few days, the decision on a rate increase may await the next governor
The Federation of Thai Industries has weighed into the race, saying that is important that the next governor be politically neutral and an expert on global and macro finance.Show