Mr. B. R. Shenoy, Director of Monetary Research, Reserve Bank of India, was the Fund’s Technical Representative for the Far East from December 1948 to August 1950. He was formerly Professor of Economics in the University of Ceylon and Principal and Professor of Economics in the Arts College, Ahmedabad.
The activities of the Fund require that it study continuously monetary developments in each of its member countries. From time to time, Staff Papers will include surveys, made by members of the Fund staff, of the banking and exchange systems of member countries which have not been covered widely in publications readily available to the public.
The place of yen exchange in the currency reserve was taken partly by the revaluation (May 1946) of the sterling and gold assets, and the rest (596.21 million baht) by government guarantee. With the revaluation of sterling, dollar, and gold assets at the new rates adopted subsequent to the 1949 devaluation of sterling, the volume of the note issue against government guarantee declined to 342.17 million baht.
Bank of Thailand Report, 1947, p. 2.
Certain foods, chemicals, mineral oils, machinery, wood, and cement can be exported only under license issued by the Ministry of Commerce (Export Control Ordinances No. 11 and 13-16). The re-export of imported goods is also subject to export control. The export of gold, platinum, and precious stones is subject to the permission of the Ministry of Finance.
Goods whose importation is controlled include arms and ammunition, opium, dangerous drugs, tobacco and cigarettes (the manufacture of which is a state monopoly), playing cards, spirits (the manufacture of which is a state monopoly), and wireless sets.
With the approval of the International Monetary Fund, the percentage was lowered to 40, from 50, on January 16, 1950.
These are (1) requirements of public health bodies and institutions, (2) the cost of passage and living expenses of Thai students abroad (subject to a schedule of maxima), (3) the expense of correspondence courses, (4) scientific and other instruments required by schools and universities, and (5) the importation of books, papers, and periodicals for public use.
The Bank of Thailand does not deal with the public directly. The latter sells its exchange to and obtains its exchange from the Bank of Thailand through commercial banks. The difference between the Bank of Thailand rates and the authorized banks’ rates represents the commission charged by the authorized banks.
See next section.
In practice, the commercial banks, in the first instance, sell to importers sterling at the commercial banks’ market rate. When the applications are approved by the Bank of Thailand, the applicants are allowed a rebate amounting to the difference between the rate originally charged and the Bank of Thailand’s free market rate at the time the application is approved. To the Bank of Thailand’s selling rate, the commercial banks are permitted to add a commission of 1 per cent (inclusive of an exchange tax of 2,000 baht for every 1 million baht or part thereof) before passing on the exchange to the importers.
The imports for which official exchange is not granted include, for example, soap, paper, and umbrellas. Though the Ministry of Commerce may issue licenses for their importation, the Bank of Thailand may not permit the use of official sterling to finance these imports.
At the Bank’s selling rate for sterling (57 baht to £1), on the basis of the par of exchange (Rs 1 = ls6d) between sterling and rupees, the parity between rupees and baht would be 4.275 baht = Rs 1.
In the latter part of 1947, Thailand came under the Sterling Transferable Accounts System. Payments for imports into Thailand from countries of this group may be made in sterling. Payments may also be made for imports from the American Area Accounts and Bilateral Accounts countries, with the approval of the Bank of England. As of recent months, such sterling may be used in agreed amounts to pay for imports from Belgium and Luxembourg.
See next section.
Sales of rupees account for part of the decline in the rupee assets of the Bank of Thailand in 1949. The major part of the fall resulted from repayment to the Government of India in January 1949 of the rupee credits (more than 50 million baht).