example, at around 4, 000 baht per month. while thai commercial banks charged interest on personal loans at the rate between 12 - 24 % p. a., foreign banks charged between 12 to 46 % per annum, and foreign - owned non - bank companies charged an even higher rate of 12 - 58 % per annum. charges by non - bank companies sometimes seem misleading as they split the monthly interest charge into two parts : one part called interest rate, and the remaining part called fee. but their fee calculations are done in the same way as interest rate charges. for example, one non - bank company charges an interest of 0. 99 % per month plus a service fee of 3. 98 % per month. many borrowers, who do not fully understand this financial technique, misunderstand that they have to pay a one - time fee of 3. 99 % and an interest rate of 0. 99 % each month, which seems quite reasonable. in reality, however, such a company charges an effective rate of up to 58 % per annum. only when they begin their debt payment, would they realize that out of a total loan of 10, 000 baht, and a monthly installment of 600 baht every month, they would need up to eight years to repay the aggregate amount of debt! ladies and gentlemen, the bank of thailand has also sought for the expansion of our regulatory framework to oversee the personal loan business. the ministry of finance has issued a notification giving authority to the bank of thailand on july 2005 to set the ceiling on interest rates at 28 % per annum. every enterprise now needs to register for a license and bring its ceiling rate down to no more than 28 % per annum. likewise, the bank of thailand has urged these licensed operators to clearly and transparently disclose the computation of their interest rate calculation in order to prevent confusion among consumers. currently, we are monitoring closely the situation of consumer loans. if any further problems arise, the bank of thailand will not hesitate to take appropriate action. ladies and gentlemen, the proliferation of credit card and personal loan businesses have provided greater opportunity for people to spend more on necessary items before they start to save. this way of life would do no harm if individuals exercised self - control on their spending and were able to evaluate their capability to meet the expense of each installment. however, the effect of this easier means of payment is more likely to stimulate people to buy at the wrong time. not surprisingly, the “ save now, pay later

policy can take care of exchange rate as long as there is no conflict with inflation. and, we have no target level for the thai baht in mind. foreign exchange market is intervened when there is too much volatility in the market. the objective is to smooth the country ’ s adjustment during the transitional period. looking forward, the baht movement would depend largely on external developments which i have already discussed. moreover, there are also internal drivers : large surplus in current and capital accounts. the thai stock market remains one of the most popular destinations in emerging markets for foreign investors, given its relatively low p / e ratio. during the first 7 months of this year, foreign investors became net buy about 4 billion us dollar. such inflows together with foreign direct investments have also added pressure on the currency. ladies and gentlemen, i would like to turn to the third and final part of my talk today, which is thailand ’ s approach in coping with the risks and challenges posed by globalization. indeed, the challenges of globalization are constantly changing. to meet these challenges from without, it is critical that the thai economy build strength from within : by continuously improving the flexibility and efficiency of its firms, the resiliency of its households, and the competitiveness of its business environment. but beyond getting the fundamentals right and strengthening them, the thai economy needs a strategic policy package that builds a system that allows for constant self - correction – one that also let the economy regain its strength quickly after a severe negative shock. that system should be underpinned by a strong link to the world economy, which will encourage innovation and efficiency. specifically, i should underscore that this approach requires policy markers to focus on achieving three key objectives, namely managing volatilities especially those emanating from volatile global capital movements ; building resiliency in both real and financial sectors ; and fostering long - term productivity improvement. looking ahead, the pressing and practical challenges we face in the near term are three - fold and indeed they are also inter - related. they are “ hot money ” inflows and large inflows in general, pressure for rapid domestic currency appreciation, and finally, the potential loss of monetary autonomy in the sense of independent interest rate policy. being part of the fast growing asia, thailand and its neighbors have become attractive destinations for international investors – although the more powerful underlying reason may ironically be a medium - term flight from us dollar assets since 2002. with large capital inflow