Illustrative image (Photo: https://www.thephoenixcapitalgroup.com/) Bangkok (VNA) – The value of deposits under the Deposit Protection Agency (DPA) of Thailand fell by 1.32% year-on-year, the first decline in a decade, attributed to a fragile economy and war in the Middle East.
According to DPA President Songpol Chevapanyaroj, as of Aug 31, 2023, deposits amounted to 16 trillion THB (440 billion USD), down by 212 billion THB from the end of 2022.
The factors for this shift included uneven economic conditions, rising costs of living, and the search for alternative investments with higher returns than deposits, such as gold, he said.
As of August this year, depositors with amounts not exceeding 50,000 THB held a total 340 billion THB, down by 3.61% compared with a 0.63% contraction at the end of last year. Furthermore, 80% of those depositors have less than 5,000 THB in their account, said the agency.
Meanwhile, depositors with between 50,000 THB and 1 million THB decreased in both the number of depositors (by 33%) and the amount of deposits over the past five years.
Songpol said the factors affecting the economy and deposits include rising inflation and interest rates, the Russia-Ukraine conflict, the escalating Israel-Hamas conflict, the lingering effects of the COVID-19 pandemic, and swelling household debt.
The interest rate gap between the US (more than 5%) and Thailand (2%) has led some depositors to withdraw their baht-denominated deposits and put the money in a foreign deposit account.
However, depositors in foreign currency deposit accounts are not protected by the DPA and must bear exchange rate risk despite receiving higher interest rates./.
