The United States Department of the Treasury and the Bank of Thailand have announced their commitment to ongoing cooperation on macroeconomic and foreign exchange issues. Both institutions confirmed their adherence to the International Monetary Fund (IMF) Articles of Agreement, which include avoiding manipulation of exchange rates or the international monetary system for balance of payments adjustment or to gain a competitive advantage.
The agreement includes several points. First, both parties stated that any macroprudential or capital flow measures will not be used to target exchange rates for competitive purposes. They also agreed that government investment vehicles, such as pension funds, will not be used by either institution to influence exchange rates competitively.
In situations where intervention in foreign exchange markets is considered, both organizations agreed this should only occur to address excessive volatility and disorderly movements in exchange rates. The statement noted that this tool would be equally appropriate whether addressing sharp depreciation or appreciation.
Transparency was highlighted as an important aspect of their agreement. Both the U.S. Department of the Treasury and the Bank of Thailand committed to publicly disclosing any foreign exchange intervention operations at least semiannually with a quarterly lag. Additionally, they will publish data on foreign exchange reserves and forward positions each month according to the IMF’s Data Template on International Reserves and Foreign Currency Liquidity.
“The United States Department of the Treasury and the Bank of Thailand reconfirmed they have undertaken under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”
