Sethaput to be next Bank of Thailand governor

Multiple sources confirmed on Wednesday that Sethaput Suthiwart-Narueput will be the next Bank of Thailand governor, replacing current governor Veerathai Santiprabhob who is due to retire at the end of September.

The sources inside the cabinet and parliament said that Sethaput was the most qualified candidate for the position.

“Of the front runners, he is the most qualified,” said a former member of the Prayut cabinet.

Sethaput currently serves as the director of Osotspa Co. Ltd, PTTEP and on the Monetary Policy Committee of the BOT.

The Yale and Swarthmore gradudate has also served as the senior vice president at the Stock Exchange of Thailand, in various capacities at the Siam Commercial Bank, and was a senior economist at the World Bank in Washington DC.

Sethaput will face numerous challenges in his first few months as governor including a strong baht, a weak economy and a devastating recession as a consequence of the coronavirus lockdown.

Clearer communication needed

Tim Leelahaphan, a Thailand economist at Standard Chartered Bank, told Thai Enquirer that the announcement of the BOT’s new governor is only half of the picture as the new Minister of Finance has yet to be appointed. 

“Given the current situation, both monetary and fiscal policy must work together and cooperate,” he said.

He added that Sethaput’s experiences in the private, public and international sectors prove that he is a “well-rounded” individual. 

Tim said there is little room for the central bank to reduce the policy interest rate any further so the fiscal policy is now playing a bigger role in the stimulation of the economy.

The benchmark lending rate is also down to a historic low of 0.5 per cent with experts expecting only one more cut in 2020.

The government stimulus measures to counter the outbreak now amounts to 1.9 trillion baht.

For continuity, Tim expects little to change, if any, since Sethaput is the current member of the central bank’s Monetary Policy Committee. He will also continue to be in the committee but as the governor instead.

With the current economic crisis, however, there might be a need for “more than just continuity,” he added.

What the market wants to know from the new BOT governor are:

  1. Is negative policy interest rate possible?
  2. Will there be any quantitative easing policy?
  3. Will there be any yield curve control?
  4. How will the BOT deal with the appreciations of baht and gold?

“These are the questions that we have been hearing for the past two to three years but we have yet to receive any clear communication from the BOT but we do understand that these are new topics which require time to study,” he said. 

“But as for the QE and yield curve control and what they will do with Thai baht and gold, we might need clearer communication from the new governor,” he added. 

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