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The Dollar Frays
The dollar seems to be fraying most around the edges. While major players like China and Japan continue to hold enormous dollar reserves, smaller, more peripheral countries continue what has become a quietly measured flight from the greenback. Recently Rachel Ziemba reported that Libya is shifting its reserves and investment away from dollars. Now, reports from Bangkok indicate that the Bank of Thailand is considering reducing the dollar weight in its reserves as well.
Senior bank director Pongpen Ruengvirayudh says the share of the dollar in Thailand’s reserves will be progressively reduced and that of other currencies increased to fit with the structure of Thailand’s trading partners. This reflects the fact that the kingdom’s trade with the U.S. has declined and trade payments in dollar terms have dropped significantly. Ruengvirayudh insists that the move has nothing to do with the recent decline of the dollar’s value versus the euro and other freely traded currencies. Rather, he says it is all about the fundamentals.
Another bank governor, Tarisa
Watanagase, says the central bank has been steadily moving out of dollars for a
while and that the dollar share of its reserves is now below the 60 percent
average level of other central banks.
Thailand has a current account surplus of over 5 percent of GDP and its reserves are about $112 billion.