July 29, 2020 / 5:41 AM / 8 days ago

Thai PM's advisor Sethaput named central bank chief, faces economy in crisis

BANGKOK (Reuters) - Thailand picked on Wednesday an economic advisor to the prime minister and a former World Bank economist to be its next central bank governor, in a move seen by analysts as unlikely to herald any major shake-up of monetary policy.

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo/File Photo

The cabinet approved the appointment of Sethaput Suthiwart-Narueput as governor of the Bank of Thailand (BOT) for five years from Oct. 1.

Sethaput, 55, will succeed Veerathai Santiprabhob, who did not seek a second term for personal reasons.

The new chief will face the tough task of steering Southeast Asia’s second-largest economy through the coronavirus pandemic, and with near-zero interest rates and high household debt.

Sethaput had been widely tipped to get the job. He has sat on the BOT’s Monetary Policy Committee since 2014 and holds a doctorate in economics from Yale University.

Charnon Boonnuch, an economist at Nomura in Singapore, saw “limited monetary policy implications” from the appointment of Sethaput, given he has been an MPC member for years.

Sethaput’s role as an economic advisor to Prime Minister Prayuth Chan-ocha should also not raise concerns about central bank independence, given his credible track record during his roles in both the public and private sectors, he said.

Pote Harinasuta, Chief Executive Officer at One Asset Management, who used to work with Sethaput, described him as “taciturn and capable”.

“If he decides to do anything, it will be based on a variety of information at that time,” he said.

(GRAPHIC - Thailand's economy has lagged regional peers for years: here)

Analysts also expect him to work smoothly with the man tipped to be the next finance minister.

Banking executive Predee Daochai is widely expected to be the next finance minister in Prayut’s new cabinet which he has said would be completed by mid-August.

Prayuth told reporters Sethaput had been selected because of his qualifications, performance, attitude, vision, and since he had achieved the best scores and was from a younger generation.

“That’s from the selection committee,” he said. “It’s not me to decide anybody”.

The appointment needs cabinet and royal approval.

The BOT has cut its policy rate THCBIR=ECI three times this years to a record low of 0.50%, and is predicting the economy will contract by a record 8.1% this year after the coronavirus outbreak has decimated tourism and slowed domestic activity.

A persistently strong baht THB=TH is also a worry as it has been hurting export competitiveness.

The BOT has been careful to emphasise it can only smooth out excessive currency moves amid reports that Thailand risks being added to the U.S. watchlist for currency manipulation.

Additional reporting by Satawasin Staporncharnchai; Editing by Ed Davies and Martin Petty

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