(To hear it better, raise up speaker volume)

The second video clip is Mr Rodrigo de Rato, managing director of IMF, answering to a query for his view on that many have suggested a deep cut of interest in Thailand in a bid to solve current volatility in currency market caused by capital inflow.

 Excerpt from Q&A session which is not in the Videos

Q : Your comment on Bank of Thailand’s capital control made late last year.

A : Thai authorities have difficulty in policy implementation last year. They felt that the policies like intervention, rate cut, and financial liberalization are not effective. And there was a need for capital control. The capital control will be more and more short-live in giving benefit. Once implemented, there was drawback particular on market confidence and development. But I believe that this would be a temporary measure. I think it has been welcomed as there were some relaxation and I’ve heard that finally this measure would finally be lifted out.

Q : Did you give any advice for Thai authorities in management the volatility caused by foreign capital flows?

A : I’ve addressed it this morning. The capital flows is the worldwide issue. It reflects liquidity in the market and also the attractiveness of emerging markets. This also caused an impact of currency appreciation. But this is not danger. It keeps inflation in checked. There is alternative by reducing the openness of capital flow. But this is short-live one and it leads to slow growth.

Q : Thailand is implementing managed float system, but there are advices from academics suggesting the country to use fixed rate system or targeted rate. What do you think?

A : When you want to shift from flexible system and enter a more rigid one. It might look attractive initially. But we’re in a changing world. The world that keeps changing. With rigidity, you might not be able to adapt to the world as much as you should. Besides, competitiveness of a country is not only the value of foreign exchange. It also includes economic reform, flexibility in foreign exchange, and to boost efficiency in financial sector. Getting out of the flexibility will bring about complication. In the world with high energy cost, strong and stable currency will prevent a country from suffering of oil prices.

Q : Do you think that the foreign exchange volatility will lead to the crisis?

A: No country, not Thailand nor any Southeast Asian countries, that has problem that lead to the crisis. But we know that volatility is the problem. Now macro economy in the region is strong. You have foreign exchange flexibility. No inflation problem. Asian economy is strong and much different from the time of crisis in the past

Q: Thai central bank was heavily criticized of their intervention in currency market and they record huge loss in the balance sheet. What do you think?

A: The balance sheet doesn’t show the inefficiency of the central bank. The central bank needs to be transparent to the parliament and public. But I don’t believe that the efficiency of the central bank would be measured by the balance sheet. But the capacity to oversee inflation is the main benchmark to measure efficiency of the central bank. No country in the world could survive in current volatility of world economic environment with only one measure, but there must be economic reform, structural reform, monetary policy, strong private investment, liberalization in financial system, and competitiveness of financial institutions. And then intervention in the currency market may be needed.