Buriram Expats
Buriram Province - General Category => Jobs, economy, banking, business, investment in Buriram => Topic started by: Admin on April 19, 2009, 05:41:17 PM
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Thai Baht likely to weaken, SET to gain
Bangkok Post: 18 Apr 2009
SET to gain; Baht likely to weaken
Bangkok Post SATURDAY April 18, 2009 12:41 PM
The Thai stock market would likely increase next week after the political tension appeared to ease after the long Songkran holiday, according to the Kasikorn Research Centre's latest forecast.
The think tank expected the movements of foreign stock markets would also support the Thai bourse in the following week.
However, the bourse may move up in a narrow range, depending on the investors' confidence in the political situation, adding that the global economic environment remains fragile.
The support level should be between 449 and 442 points, while the resistance level should range from 467 and 474 points.
The centre also predicted that the Thai baht would weaken next week after the currency was downgraded by foreign institutions.
The short-term interest rates would move around 1.25 per cent, causing the value of baht to be approximately 35.30 to 35.60 baht per US dollar.
However, its movement would also depend on the values of other neighbouring currencies and the economic figures to be released by the United States next week.
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Baht exchange rate may stay volatile
Bangkok Post: 14 May 2009
Baht rate may stay volatile for years
Bankers wary despite some recovery signs
The baht is likely to remain volatile for several years while the global economy recovers, according to local bankers. Over recent weeks, the baht has gained against the greenback, partly spurred by inflows into the local stock market. The baht yesterday traded at 34.48/53 to the US dollar, up from 34.54/56 on Tuesday.
Other regional currencies have also gained ground as investors shift away from US treasuries in favour of emerging market assets in anticipation that the worst of the global recession has passed.But Prasarn Trairatvorakul, the president of Kasikornbank, cautioned that closer monitoring of economic trends is needed before a genuine recovery can be announced.
While promising signs of growth have been seen, they are limited to specific areas and business sectors, he said.
Western financial institutions remain weak and further US government stimulus measures are likely, potentially spurring further fluctuations in the dollar and global currencies, he added.
He played down concerns that a stronger baht would significantly hurt Thai exporters, as any impact would be more than offset by a recovery in the global economy.
A higher foreign-exchange risk for businesses would also be compensated for by a pickup in global and domestic demand, he said.
Chartsiri Sophonpanich, the president of Bangkok Bank, agreed that Thai exports would benefit from a recovery in the global economy.
But it is premature to declare an end to the crisis, he said.
In his view, continuous improvement over a longer period is needed before a real recovery can be declared.
For Bangkok Bank, the country's largest bank, one positive sign has been an increase in credit demand among companies.
Mr Chartsiri said that performance in the second quarter should also show an improvement on the previous quarter, thanks to the government's fiscal stimulus measures, although Bangkok Bank is maintaining its forecast of a 2% contraction for 2009.
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Thai baht has a chance to fluctuate
: 23 May 2009
Thai baht closes at 34.32-34.34 against the dollar
source: National News Bureau of Thailand
Thai local currency closed at 34.32-34.34 against the dollar, fluctuating in line with factors from internal and external markets.
Thai baht has a chance to fluctuate and external factors from foreign markets are expected to play a vital role to Thai baht currency value next week. Investors are advised to follow the credit rating investment from Standard & Poor’s, the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data.
Investors were also advised to keep an eye on whether or not the Bank of Thailand (BOT) would intervene in the stronger baht. As for other major foreign currencies, the Japanese Yen traded at 94.14-94.187 against the dollar, slightly weaker from the value at 93.90 against the dollar in the morning, and the Euro traded at 1.3947-1.3951 against the dollar.
Thai baht is expected to trade in the range of 34.25-34.50 against the dollar next week.
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Strong baht, oil price rebound a concern: Thai Finance Minister
Bangkok Post: 5 Jun 2009
Korn: Strong baht a concern
By: www.Bangkokpost.com 5/06/2009 at 08:47 PM
A strengthening baht due to problem-solving measures in the US and the rising price of crude will be new challenges for economic recovery in the near future, according to Finance Minister Korn Chatikavanij.
The US dollar is likely to weaken in the near future as the Federal Reserve continues to inject cash into the economy to resolve credit constraints and offset declining demand in treasury bills from abroad, he said.
Crude oil prices rallied to $70 per barrel due to increased demand. Thailand would be affected as it is a major importer of oil, said Mr Korn.
"The Fed needs to keep injecting cash for a while. One positive from this action is that demand will be sustained. But it is unavoidable that it will lead to upward pressure on prices, and increased manufacturing will also affect oil prices,'' he said.
The government's 1.4-trillion-baht investment plan, mainly for small and medium-scale projects, should stimulate the economy for the medium term. Screened projects for investment are the ones ready for use, he said.
"We will use domestic liquidity to import raw materials. This will reduce pressure on the baht. The government's position is clear: when the private sector is not ready and there is plenty of liquidity, it will spend,'' said Mr Korn.
"Public debt will rise to 60% of gross domestic product over the next two years, which we think is acceptable.''
Speaking at an economic seminar, he said the government plans to embark on Southern Seaboard development to create a seaport and transport link between the eastern and western coast, as well as building a dual-track train network stretching from North to South and West to East, as long-term economic restructuring measures.
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Hi Bums
Sod's Law as soon as the £ - baht rate starts to improve (mostly due to $ depreciation) the UK gov't decides to go into self destruct mode and scupper our chances.
Brit's just can't win at the moment!
TBWG sawadi
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Hi Bums
Sod's Law as soon as the £ - baht rate starts to improve (mostly due to $ depreciation) the UK gov't decides to go into self destruct mode and scupper our chances.
Brit's just can't win at the moment!
TBWG sawadi
Something similar happens every time the£ starts to gain a little in value.....Weds could get 55.46,Friday down to 53.87 for cash..........
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Your complaining, try the aussie dollar at 27 baht, I know which currency I'd rather have. If my dollar worth was in pounds, I could retire today.
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Your complaining, try the aussie dollar at 27 baht, I know which currency I'd rather have. If my dollar worth was in pounds, I could retire today.
Tha Aussie Dollar hasn't lost nearly as much value as the GBP v THB
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Bank of Thailand to manage Baht value
Bangkok Post: 19 Jun 2009
source: www.BangkokPost.com
BoT to manage the baht, says FTI
Breakingnews By: BangkokPost.com Published: 19/06/2009 at 03:46 PM
The Bank of Thailand (BoT) has promised to prevent the Thai currency being too strong against the country’s export competitors, Santi Vilassakdanont, chairman of the Federation of Thai Industries (FTI), said on Friday afternoon.
He was speaking after a meeting with central bank officials called to discuss the economic situation and exchange points of view on monetary policy.
The private sector had earlier complained the BoT had failed to curb the value of the baht to a suitable level. In recent months the currency was stronger than its competitors by about 1 per cent, reducing the competitiveness of the export sector.
“The central bank has promised to ensure the baht value will not be too strongâ€, Mr Santi said.
The FTI had also asked the BoT provide assistance to small and medium manufacturers facing problems of liquidity shortage because banks were very cautious about making loans to the SMEs.
The central bank had said it would coordinate with state-owned banks to ease conditions on loan approvals, he said.
The BoT insisted that the financial sector now has a large liquidity surplus and banks were therefore capable of providing more loans, the FTI chairman said. The only problem was that SMEs seeking loans did not have the required collateral.
The central bank also recommended the private sector to come up with risk management measures on the foreign exchange rate.
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Hi Bums
Wot's the price of a liter of Diesel and B5 Diesel at the moment?
TBWG sawadi
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Kasikorn: Thai baht getting stronger
Bangkok Post: 6 Jul 2009
www.BangkokPost.com
KRC: Baht getting stronger
The Thai baht was the second most appreciated currency in Asia in the first half of 2009, the Kasikorn Research Centre reported on Monday.
The leading think-tank said the baht's value had strengthened against the US dollar by 2.3 per cent, while Indonesia's rupiah had appreciated by 6.4 per cent.
The recovering economy in China and other Asian countries, including Thailand, may cause the baht to follow other regional currencies and strengthen further.
A likely rebound in inflation is also possible at the end of this year, the KRC said.
The Thai currency could appreciate to 33.75 baht per US dollar, and may hit 33.00 baht in the fourth quarter, according to the forecast.
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Hi Bums
Wot's the price of a liter of Diesel and B5 Diesel at the moment?
TBWG sawadi
I've just paid 23.66 for B5,I think diesel was 26.41..........
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Maybe this is the place to say we have added a link for DAILY CURRENCY EXCHANGE RATES link on the home-page.
Cheers. happy2
http://www.buriramexpats.com/
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Strong Thai baht still in the pipeline
The Nation: 6 Oct 2009
Treasury Outlook
By Nattawut Sachabudhawong
Siam Commercial Bank
Strong Baht Still in the Pipeline
Several weeks ago the baht finally broke through the critical level of 34.00 per dollar for the first time in months, but quickly fell back to 33.5 within two weeks. There are two main reasons for this movement.
First, as mentioned many times in previous issues, the baht has been too static against the dollar and some other curฌrencies. A less volatile currency benefits both exporters and importers, but being too static is not always good. Eventually the currency needs rebalancing, but that may hurt some exporters.
Second, the country is still recording huge money inflows via the current account balance, even though the economy itself is still struggling to get back on track.
Looking ahead, a much more challenging path for everyone with foreign exchange exposure in this market lies ahead. During the past month, many analysts became more bullish on emerging markets, including Asian countries. Some argued that while there were some encouraging signs of recovery in the developed countries, the real economic action was actually taking place elsewhere.
Emerging countries are set to dominate global economy activity in the years ahead as many developed countries are held back by their enormous debt. This situation is also influencing the currency market as it sets the course of capital flight in the world's financial markets.
We have been witnessing capital inflow into our region, including our country, for many months, which is one reason for the bullishness in emerging countries among investors.
The other reason is interest rate differentials, which will be a key driver next year. Recent FX normalisation reflects interest rate differentials as well as economic fundamentals. A zero rate monetary policy in the US is becoming an increasingly dominant driver of currencies, especially Asian currencies. With the Fed now expected to remain on hold throughout next year and even until 2011, there will be more capital outflow from dollar assets, and this will probably benefit all emerging curฌrencies, including those in Asia.
Asian currencies will likely become stronger than the current level, especially when Asian central banks start to raise rates independently from the Fed next year.
This situation also holds true for Thailand. We expect that by the end of next year the Bank of Thailand will raise its key interest rate by at least 50 basis points, and the economy will be back on track at pre-crisis levels.
With limited capital outflows, capฌital inflows (causing a current account surplus) will continue to put upward pressure on the baht. The baht is still under pressure against the dollar and is expected to appreciate further through 2010.
Nattawut Sachabudhawong is a senior financial economist in the treasury division of Siam Commercial Bank.
www.nationmultimedia.com/2009/10/06/business/business_30113825.php
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Bank of Thailand curbs strong baht
Bangkok Post: 8 Oct 2009
www.bangkokpost.com/breakingnews/156469/bot-curbs-baht-appreciation
BoT curbs baht's appreciation
The central bank had intervened in money market to curb the baht's appreciation, Suchada Kirakul, assistant governor at the Bank of Thailand (BoT), said on Thursday.
Mrs Suchada said the value of the baht was too strong when compared to the country’s economic fundamentals. She warned money traders to refrain from profit speculation from the baht's value as the BoT will keep a close watch on the currency's fluctuation.
The baht's strengthening was derived from continuing foreign direct investment inflow to the Stock Exchange of Thailand, the country’s substantial current account surplus and the weak US dollar.
In addition, gold traders had exported a large amount of gold as its price hit a record high on the world market. They had changed the received payment in US dollars into baht, increasing demand for the Thai currency, Mrs Suchada said.
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BoT: Baht moves in line with region
: 13 Oct 2009
http://enews.mcot.net/view.php?id=12262
Baht moves in same direction as regional currencies, says BoT
BANGKOK, Oct 13 (TNA) – Bank of Thailand (BoT) Governor Tarisa Watanagase on Monday revealed the baht had now moved in the same direction with other regional currencies, but remained volatile.
Recently, she said, the baht had strengthened against the US dollar but not in a daily basis. The central bank had intervened to contain the volatility.
The strengthening of the baht stemmed from a depreciation of the US dollar, weakening of imports and exports, and higher gold prices.
The movement showed that a projection of the baht movement is not easy. So, persons involved with the currency movement should hedge against it.
“So far, around Bt60 billion has flowed into the Stock Exchange of Thailand. Still, there is no speculation on the currency movement.
“The foreign direct investment (FDI) for this year is close to that of last year. It has not decreased along with the global economic slowdown,†she said.
Regarding the loan demand by the SME business, she said, the central bank attempted to oversee lending to SMEs and wanted financial institutions to supervise the liquidity of SMEs. (TNA)
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Thai Baht's strength is not what it seems
The Nation: 15 Oct 2009
EDITORIAL By The Nation
Baht's strength is not what it seems
The Bank of Thailand needs to revamp its foreign exchange management strategy, or it could be in for a big shock
The Bank of Thailand is now facing a dilemma over how to manage the surging baht. It has been intervening frantically in the foreign exchange market to keep the baht from rising too fast and too soon. It is afraid that a strong baht will hurt exports. But the BOT is swimming against the tide of capital inflow and the current account surplus. Since the beginning of this year, the baht has risen 4.2 per cent to around Bt33.22 to the US dollar. If the trend continues, the baht could easily hit Bt32 to the dollar before the end of the year.
Actually, the baht is not getting stronger. It is the US dollar that is plunging on a downward adjustment. We only have to take a look at gold prices, which are reaching new record highs. Now, gold is trading at around $1,069 (Bt35,760) per ounce.
Investors are also leaving the financial markets and currencies and embracing hard assets instead. Confidence in the US economy and financial system is waning fast. For the US has not tackled the insolvency of its financial system. It has also continued to run a high deficit. Most important, the Federal Reserve will keep printing the dollar to meet debt obligations. Printing money will debase the value of the dollar. It will also threaten to create hyper-inflation in the future.
As of October 2, Thailand's international reserves (net forward position included) stood at $146.9 billion, an increase of 25 per cent ($28.9bn) from the beginning of 2009. The tide of capital inflow became noticeably significant from May, when international reserves surged by $19.3 billion or an average of $4.8 billion per month through to August. The trend did not slow in September. International reserves shot up $7 billion due largely to the BOT intervention via purchasing US dollarS.
By purchasing the dollar, the BOT pumps the baht into the system. Fearing that the baht might flood the financial system, it has to issue bonds to absorb the baht out. Between May and August, the BOT issued bonds totalling Bt24 billion ($700 million) or 3.6 per cent of US dollars purchased ($19.3bn). We would highlight that in September alone, the BOT issued bonds worth Bt135.8 billion ($4 billion) or 57.1 per cent of US dollars purchased ($7 billion). At the end of September, the outstanding BOT bonds stood at a high of Bt1.58 trillion versus Bt1.44 trillion in August.
There will be more capital inflow because investors around the world are shifting their funds to Asia, where growth prospects are brighter. This has created sleepless nights for BOT Governor Tarisa Watanagase. She said the authorities would closely monitor capital movements and denied that they would resort to measures to stem the inflow.
But since the BOT has been actively intervening to buy up the dollar, it is standing to lose money because the baht keeps on rising. When the total dollar reserves are booked in baht accounts, the BOT will post a big accounting loss. If the BOT loses money, it will create a loss of confidence. The BOT needs a revamp of its foreign exchange operation as the dollar value from its reserves keep on declining. If it does not manage the transition well, it will put the country's macro-economic stability at great risk.
www.nationmultimedia.com/2009/10/15/opinion/opinion_30114456.php
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Bank of Thailand curbs strong baht
Bangkok Post: 8 Oct 2009
www.bangkokpost.com/breakingnews/156469/bot-curbs-baht-appreciation
BoT curbs baht's appreciation
The central bank had intervened in money market to curb the baht's appreciation, Suchada Kirakul, assistant governor at the Bank of Thailand (BoT), said on Thursday.
Mrs Suchada said the value of the baht was too strong when compared to the country’s economic fundamentals. She warned money traders to refrain from profit speculation from the baht's value as the BoT will keep a close watch on the currency's fluctuation.
The baht's strengthening was derived from continuing foreign direct investment inflow to the Stock Exchange of Thailand, the country’s substantial current account surplus and the weak US dollar.
In addition, gold traders had exported a large amount of gold as its price hit a record high on the world market. They had changed the received payment in US dollars into baht, increasing demand for the Thai currency, Mrs Suchada said.
Well thanks a bunch!
Having just transferred a shed load of Sterling to avoid the ATM charge!
How not to do it!! confused1
TBWG sawadi
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Well thanks a bunch!
Having just transferred a shed load of Sterling to avoid the ATM charge!
How not to do it!! confused1
TBWG sawadi
David
Can you not use the ATM's that still do not charge 150b???
DtD
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Baht trades close to regional currencies
: 20 Nov 2009
Baht continues close to other regional currencies, says BoT
BANGKOK, Nov 20 (TNA) – The value of the Thai baht continues to move close to the currencies of other countries in the region, according to the Bank of Thailand (BoT).
Chatu Mongol Sonakul, chairman of the Bank of Thailand (BoT) board of governors, said the central bank is now attempting to keep the baht in appropriate alignment with the currencies of Thailand’s trade rivals.
However, no matter how the central bank tries to closely oversee the baht’s movement, it could not prevent it from strengthening because Thailand has adopted the managed float system.
“What the central bank can do is prevent the baht from appreciating sharply. The currency movement will finally rest with the demand and supply and the market confidence at that time,†said the former central bank governor.
However, he added, operators could diversify risks and find attractive returns while the baht appreciates by turning to make investment overseas.
At present, the central bank allows Thai investors to more conveniently place their funds overseas.
At the same time, he advised that small companies adjust to the altered market conditions by continuing to hedge against currency exchange risks. (TNA)
http://enews.mcot.net/view.php?id=12878
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Thai exchange rate a growing concern
Bangkok Post: 3 Dec 2009
Exchange rate a growing concern
Inflows to Asia adding to pressure
Thailand could face increasing pressure in 2010 to shift exchange-rate policies in order to maintain competitiveness in the global market, says Kirida Bhaopichitr, senior economist for the World Bank in Bangkok.
Capital flows have been returning to emerging markets such as Thailand since the middle of the year, she said at a seminar held by the Iron and Steel Institute yesterday.
Fund flows have come into not only government bond markets to help finance public stimulus spending, but have also come in the form of foreign direct investments and equity flows.
The result of added capital flows into the Asian economies is added pressure for currencies in the region to appreciate.
At the same time, the US dollar is facing pressure owing to structural weaknesses in the US economy, and has fallen sharply against both the euro and the Japanese yen.
Asian economies have been intervening steadily in their currency markets to slow the pace of currency appreciation and prop up their export sectors.
"With large capital inflows and a weakening US dollar, emerging market currencies are on an appreciating trend," Dr Kirida said.
The baht has gained 4.8% against the US dollar this year, compared with 3.65% for the Singapore dollar, 8.3% for the Korean won and 16.3% for the Indonesian rupiah. The Bank of Thailand has maintained that it will intervene in the markets only to smooth out volatility rather than seek to shift fundamental market trends.
Most analysts expect the baht to continue to appreciate over the next several months, considering the trend for a weaker dollar and Thailand's own current account surplus, which hit an eight-month high at $2.17 billion in October. Foreign reserves have risen to $136.9 billion as of late November, compared with $111 billion at the end of 2008.
In any case, Dr Kirida said that pushing a strategy for currency depreciation would involve its own costs. While potentially helping the export sector, a weaker baht would also mean higher costs for imports, including oil, capital equipment and raw materials.
The World Bank currently projects Thai economic growth for 2010 of 3.5%, although this depends in large part on the outlook for the global economy.
Dr Kirida said even as the global recovery is tenuous, oil prices are projected to rise to average $75 per barrel next year, compared with $65 this year.
While oil prices remain far from the $130 level seen in 2008, the increase in energy costs will have a knock-on effect on other commodities, including food.
Pongnakorn Pochakorn, an economist with the Fiscal Policy Office, said the Finance Ministry maintained a base projection of 3.3% growth next year, with estimates from 2.5% to 4.1%.
The effectiveness of the Thai Khem Kaeng infrastructure investment programme will have a significant impact on growth trends in 2010, he said, with the base growth estimate based on a disbursal rate of 70% of the budget set under the spending programme.
"This is a relatively conservative target. If spending under the Thai Khem Kaeng programme increases beyond 70%, there is a chance that economic growth could rise over 3.3% next year," Mr Pongnakorn said.
In any case, he said that 3.3% growth in 2010, while a considerable turnaround from the contraction of 3% projected this year, remains well under potential GDP growth for Thailand of 5.5% per year.
Writer: Wichit Chantanusornsiri
www.bangkokpost.com/business/economics/28518/exchange-rate-a-growing-concern
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Baht's strength poised to continue
Bangkok Post: 5 Dec 2009
BY INVITATION
Baht's strength poised to continue, likely leading to intervention
Nearly every day in recent weeks brought news the baht strengthened to multi-month highs against the greenback, putting the Thai policymakers in a bind. The baht has risen almost 10% during the past nine months from roughly 36.2 per dollar to a range of 33.1 to 33.2 and is set to continue its upward momentum.
There are many forces at work that suggest the baht's strength is likely to continue in the months ahead. Chief among these is the dollar's frailty. For the past six months or so the greenback has nosedived to a 15-month low against a basket of major currencies.
To be sure, the greenback's most recent slide could be ascribed to an unwinding of the global flight to safety - US Treasuries were a favoured comfort blanket - that bolstered the currency's value following the financial meltdown. Faith in the global economic recovery has reduced the dollar's haven appeal and prompted investors around the world to shift to non-US assets. However, improved risk appetite is now being eroded by Dubai's debt debacle, as a result of global market overreaction to Dubai World's potential default. But this is likely to be a brief pause in risk appetite. A resurgence in appetite for risky assets, notably emerging-market stocks and commodities, will thus continue to weigh down on the greenback. This influence of risk appetite in determining exchange rate movement has over the past year or so outweighed the historical influences such as interest-rate differentials or the United States' "twin deficits".
Contributing also to the dollar's drubbing this year has been the dollar carry trades - positions in which investors sell a low-interest-rate currency, namely the US dollar, and invest the proceeds in a higher-yielding currency or asset. Rock-bottom US interest rates, the likelihood that the Fed will maintain a loose monetary stance for an extended period, plus improving world economic prospects have morphed the greenback into a favoured funding currency, taking over the mantle from the Japanese yen. US dollar three-month Libor rates have now dipped below those of the yen and Swiss franc making it the cheapest funding currency. As the US Federal funds rate is expected to stay on hold for several months to come, further encouraging dollar carry trades, we could expect the buck to continue its decline.
Another factor bolstering the baht is a surge in capital inflows into emerging Asia. Since March, increased risk appetite has underpinned a rally in emerging-market equities, resulting in hundreds of billions of dollars in investment capital in the Asian equity markets. During the first 10 months of the year, net foreign portfolio investment in equities amounted to $21.2 billion for South Korea, $14.2 billion for India, $10.9 billion for Taiwan and $1.5 billion for Thailand. These foreign capital inflows have pushed up local stock prices and Asian currencies led by the Korean won, Indonesian rupiah and Singapore dollar.
Not only have these speculative or "hot money" inflows inflated stock prices, they have also stoked real estate prices in countries such as Hong Kong, Singapore and China. Increased risk appetite and the fact that growth in Asia will continue to outperform the rest of the world will help attract capital inflows into the region, further bolstering currency appreciation. However, with a relatively less attractive asset market here thanks to sluggish economic recovery and political instability, Thailand will continue to witness only modest capital inflows.
Another fundamental macroeconomic factor currently underpinning the baht is the massive surplus that the country has chalked up on its current account - estimated at about $22 billion in 2009 - as a result of a severe contraction in the Thai economy. This is reminiscent of the year 2007 when our surplus reached a record high with a concomitant rise in the baht. The currency reversed course in the following year when the current account surplus plunged to a measly $1.6 billion from roughly $14 billion.
There is little doubt the baht would have strengthened beyond the current level had it not been for official interventions. Like other central banks in Asia, the Bank of Thailand does not want the baht to become a one-way bet for appreciation against an ailing US dollar due to fears about what that might mean for the country's exports. And to stem the rise in their currencies, central banks have been buying gobs of dollars and accumulating international reserves back up to pre-crisis levels and beyond.
Thailand alone, thus far, has spent more than $15 billion in intervention, catapulting the country's international reserves (including the net forward position) to a record high of approximately $155 billion by the end of November, a rise of about 31% from the beginning of the year. However, the accumulation of foreign exchange reserves is no free lunch, and given prevailing conditions the monetary authority is bound to incur mounting losses through its sterilised foreign exchange interventions.
Looking ahead, the baht and other Asian currencies could be heading for tougher sailing against the greenback as the spate of official interventions in the currency markets will likely intensify amid mounting concerns over another descending currency: the Chinese renminbi. As the currency is pegged to the greenback - China last allowed the yuan to strengthen by 21% from 2005 to July 2008 - it has over the past year or so depreciated steadily against Asian currencies, including the rupiah, the ringgit, the won and the baht. This has allegedly accorded Chinese exporters an unfair trade advantage over their Asian counterparts.
Unless China, a formidable rival, allows its currency to rise - widely seen as a precondition for countries in the region to let their currencies appreciate - we could expect our monetary authority to more actively intervene in the currency market to curb the baht's ascent during the remainder of the year and beyond.
Suphachai Sophastienphong is chief economist for Siam City Bank.
www.bangkokpost.com/business/economics/28728/baht-s-strength-poised-to-continue-likely-leading-to-intervention
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Baht-Yuan trade to increase with FTA
The Nation: 17 Dec 2009
EXCLUSIVE INTERVIEW
More yuan denominated transactions in Asean-China FTA
By Thanong Khanthong The Nation
The role of the yuan will be augmented next year following implementation of the China-Asean Free Trade Area, creating a market of almost 2 billion people, Bank of Thailand Governor Tarisa Watanagase told The Nation in a special interview.
The central bank chief was quick to add that the increasing role of the yuan will be gradual, as China still had to meet several challenges - from allowing its currency to be fully convertible and liberalising its financial markets to improving transparency in its rules and regulations.
"We expect to see more yuan denominated transactions next year after the introduction of the free trade area between China and Asean," said Tarisa.
"The free trade area provides opportunities and challenges for us. Instead of dealing with only a Thai market of 67 million people, we can have a larger market of 600 million people in Asean and close to 2 billion people in Asean and China combined."
Asean statistics show the trade value between the regional grouping and China increased from US$59.6 billion (Bt1.98 trillion at today's rate) in 2003 to $171.1 billion in 2007, a growth rate of about 30 per cent a year.
"The step forward is for Asean to integrate further with China, South Korea and Japan, because we cannot rely on the G3 countries like in the past. Both the US and Europe are facing economic difficulties."
However, Tarisa discounted the possibility of the region having a single currency unit similar to the euro soon.
"As for the timing of a single currency, I think this will not happen any time soon. It will take quite a long time," she said.
Besides, it will not be easy for China to promote the yuan as one of the world's reserve currencies to rival the domination of the US dollar. The dollar, which became the global currency after World War II, has benefited from the superpower status of the US, the size of the US economy, the massive liquidity and the depth of the US financial markets.
Tarisa said the dollar was on a declining trend and needed to stabilise its macroeconomic conditions, although in the short term investors or funds will buy up the dollar because of its safe haven status whenever there is panic in the financial markets.
Fiscal Policy Research Institute director Kanit Sangsubhan expressed support for baht yuan trade. A highly volatile dollar had adversely affected international trade, he said, and he urged the BOT to offer more incentives to commercial banks willing to participate in the scheme.
Baht yuan trade would benefit both sides as bilateral trade has increased recently. At present, 10.2 per cent of Thailand's exports go to China, he added.
Tarisa downplayed concerns over the macroeconomic deterioration in Vietnam, which recently raised its interest rate and also devalued its dong by 5 per cent.
Tarisa explained: "Earlier this year, Vietnam faced high inflation of 67 per cent, which added to the production cost. So when it devalues its currency by 5 per cent, the benefit from a weaker currency is offset."
Vietnam enjoys export competitiveness over Thailand in low quality rice, footwear and textiles. But Tarisa said Thailand could not compete against Vietnam in these products even before Vietnam faced economic difficulties.
As for the possibility of the baht breaking the 33 level against the dollar, Tarisa said the BOT did not set any foreign exchange targets.
"It could happen or it may not happen, depending on several factors and market conditions. All we need to do is to look after the baht so it won't fluctuate to the extent that it hurts the normal business operations of Thai companies," she said.
Tarisa also defended the central bank's management of the baht. She said it was moving in the middle of the pack of regional currencies, appreciating less than the South Korean won, the Indian rupee, the rupiah and the Taiwanese dollar, while appreciating faster than the ringgit and the Singaporean dollar.
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Higher value coins in circulation next year
By The Nation
The Finance Ministry plans to churn out the Bt20 and Bt50 coins next year, to reduce the note printing cost
Deputy Finance Minister Pruttichai Damrongrat said the decision will take into account the Fiscal Policy Office's study. He expected the coins to be popular due to changes in product prices and consumer behaviors.
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Higher value coins in circulation next year
By The Nation
The Finance Ministry plans to churn out the Bt20 and Bt50 coins next year, to reduce the note printing cost
Deputy Finance Minister Pruttichai Damrongrat said the decision will take into account the Fiscal Policy Office's study. He expected the coins to be popular due to changes in product prices and consumer behaviors.
I'm confused, the will reduce the note printing costs, but increase the coin costs. Thought a main reason of going to paper was to reduce costs of using metal? confused1
That being said, I will not be sorry to see the 50 baht note go away, but I will miss the 20 Baht note as that is very convient to use for tipping and such.
confused2
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Thai baht outlook final week of 2009
Bangkok Post: 27 Dec 2009
KRC: Bt33.15-33.40/US$ next week
* Published: 27/12/2009 at 01:47 PM
* Online news: Breaking news
The value of Thai baht in the final week of 2009 should stand around 33.15 to 33.40 baht per US dollar, according to the Kasikorn Research Centre's forecast on Sunday.
The leading thinktank said liquidity of commercial banks had been boosted to facilitate consumers during the New Year's holiday.
The KRC said the short-term interest rate in the money market would likely remain stable at 1.25 per cent.
Investors should closely monitory the economic figures for November from the Bank of Thailand, the movements of Thai and foreign currencies and regional market, and the central bank's signal to intervene to stabilise the baht.
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Thai baht likely to be more volatile in 2010
: 5 Jan 2010
Baht likely to be more volatile this year, says Thai central bank
BANGKOK, Jan 5 (TNA) – Bank of Thailand (BoT) Governor Tarisa Wattanagase on Monday allowed that the baht would fluctuate more heavily this year since foreign capital is set to flow into Asia in a larger amount.
She said liquidity of many countries began returning to normal as confidence in Asia’s economies is higher than in those of other regions.
However, since the global economy is in the first stages of recovery, economic confidence remains fragile. It could be shaken by either good and bad news, as well as local risk factors.
She said Thailand’s central bank has an approach to containing the volatility of the baht. It needs not provide new measures to supervise the baht, but the private sector must have tools to hedge against foreign currency risks.
Mrs Tarisa emphasized that the central bank had not found any speculation in the baht.
She predicted that the inflation rate in the first and second quarters this year would be higher than that in December last year, which stood at 3.5 per cent, due to higher fuel prices and the government’s measures to cut consumer living costs.
The governor said the BoT had closely monitored the inflation rate and the economic recovery, which are key factors in directing the interest rate.
Meanwhile BoT Deputy Governor Atchana Waiquamdee said the suspension of investment projects in the Map Ta Phut Industrial Estate had a negative impact on the economy, but it could be compensated if the government managed to stimulate the economy concretely.
She expressed concern about uncertainties in the government’s investment policy, saying it could have psychological impacts on investor confidence in the long run. (TNA)
http://enews.mcot.net/view.php?id=13573 (http://enews.mcot.net/view.php?id=13573)
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BoT maintains RP rate at 1.25%
Published: 13/01/2010 at 03:37 PM
Bangkok Post: Online news: Economics
The meeting of the Monetary Policy Committee (MPC) has agreed to keep the repurchase rate unchanged at 1.25 per cent - a rate suitable for enhancing economic recovery, a source at the Bank of Thailand said on Wednesday.
The source said the panel’s monetary policy this year is to focus more on ensuring economic stability. The current value of Thai baht is not an obstacle to stabilising the economy.
In addition, Pattanasin Securities reported that large commercial banks are expected to report a combined net profit of about 22 billion baht in the fourth quarter of 2009.
The projected net profit figure represented an increase of 65 per cent from the same quarter of 2008, but a decline of 11 per cent from the third quarter.
According to the report, Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, Kasikornbank, Bank of Ayudhya, Thai Military Bank and Tisco Financial Group are expected to post a combined net profit of 18.74 billion baht in the fourth quarter of 2009, up 61.4 per cent from the same period of 2008’s 11.61 billion baht. However, the net profit is 12.6 per cent lower than 21.45 billion baht reported in the third quarter.
The Thai Military Bank is projected to gain a net profit of 803 million baht, a substantial improvement from a four billion baht loses reported in the fourth quarter of 2008, and a 52.6 per cent increase from 526 million baht reported in the third quarter.
Bank of Ayudhya is expected to experience a net profit of 2.06 billion baht, 143.9 per cent increase from the fourth quarter of 2008 and a 5.2 per cent decline from the third quarter.
Siam Commercial Bank’s net profit is projected at 5.21 billion baht, up 30.9 per cent from the same quarter of 2008 and 0.3 per cent increase from the third quarter.
Tisco Financial Group is expected to report its net profit of 497 million baht, up 28.7 per cent from the same period of a year earlier, but a decline of 3.1 per cent from a previous quarter.
Kasikorn Bank’s net profit in the fourth quarter of 2009 is forecast at 3.21 billion baht, an increase of 15 per cent from the same quarter of 2008, but 13.8 per cent down from the third quarter.
Bangkok Bank is likely to report a total net profit of 5.67 billion baht, up 7.7 per cent year-on-year and an increase of 11.9 per cent from the third quarter.
The net profit of 1.28 billion baht is projected for Krung Thai Bank, a substantial decline of 44.9 per cent from 2.33 billion baht in net profit reported in the same quarter of 2008 and a 69.8 per cent down from the third quarter’s 4.25 billion baht.
Office of State Enterprise Policy Committee deputy director said Kulis Sombatsiri the Finance Ministry will discuss the framework for listing of the leading state enterprises on the Stock Exchange of Thailand (SET) late this month or early next month.
“The listing plan for state-owned firms is in line with the capital market development plan of the government,†Mr Kulis said on Wednesday.
Mr Kulis said his office plans to have about five to six state enterprises and their affiliates listed in the SET and the Market for Alternative Investment (MAI) this year. The state firms will gain benefits from the listing as they can raise funds for business expansion through the stock market.
The timeframe for listing depends on the readiness of each state enterprise and its affiliate, he added.
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Expect strong baht: Bank of Thailand
Bangkok Post: 29 Jan 2010
BoT: Expect strong baht
But rules will ease to aid investment abroad
Businesses must steel themselves for greater exchange-rate volatility, says Bank of Thailand governor Tarisa Watanagase.
Local businesses need to prepare for further appreciation of the baht and volatility in exchange rates, she said.
But the central bank will ease regulations to facilitate capital outflows and support the development of instruments to help companies hedge currency risks.
Dr Tarisa, speaking at a briefing on central bank policy for 2010, said regulations would be eased to allow the private sector to increase investment in international financial markets.
Facilitating overseas investment and capital outflows would help reduce pressure on the baht to rise from capital inflows and trade surpluses.
The baht, currently trading near 33 to the US dollar, has gained nearly 1% against the greenback this year and more than 5% since January 2009.
Most analysts expect the US dollar to weaken in the near term due to weaknesses in the US economy.
Dr Tarisa said at the same time Asian economies, including Thailand, would eventually be forced to raise interest rates to help stem inflationary pressures as economic growth continued.
But the central bank would not turn to capital controls as in 2006, she said, adding that regulators today monitored capital flows on a daily basis compared with every week several years ago.
"We will continue to follow the managed float [exchange] regime. The foreign exchange rate is the first hurdle of the market mechanism," Dr Tarisa said.
"Going forward, we intend to further liberalise outflows so that it will provide leakage from the system. And the public will be able to see more two-way flows, so the public sector can work more efficiently and have more tools to manage risks."
In late 2006, the central bank imposed a 30% unremunerated reserve requirement rule to stop volatile capital inflows from pressuring the baht to appreciate.
The measure was highly controversial and triggered a plunge in stock prices on panic sales by foreign investors. But some economists favour it to help central banks maintain currency stability.
In recent years, the central bank has scrapped the reserve rule and eased overseas investment restrictions for companies and individual investors, through vehicles such as foreign investment funds. The measure has let individuals access international financial markets and diversify their portfolios more easily, and has encouraged capital outflows to ease pressure on the baht.
Dr Tarisa said the baht appreciated last year because of surpluses in the trade and service accounts, with net balance of payment inflows of $20 billion. Inflows could reach $10 billion this year.
Businesses must look beyond exchange rates and raise their productivity to remain competitive, she said.
"Thailand can no longer rely mainly on cheap labour or a weak baht," she said. "We should lift productivity. Our productivity has continued to contract."
For instance, while Thailand is the world's largest rice exporter, yields are 430 kilogrammes per rai compared with 700 kg per rai in other Asean countries.
Sethaput Suthiwart-Narueput, an executive vice-president and chief economist at Siam Commercial Bank, agreed that exchange rate volatility would continue this year due to the problems underlying the US dollar.
In the short run, the central bank would likely continue to intervene in the exchange markets, he said. But in the long term, authorities should do more to encourage foreign investment by Thai investors and businesses.
SCB projects the baht to reach 32 to the dollar by the year-end.
Foreign reserves are now at a record $142.9 billion, up on $133 billion at the end of 2009 and $108 billion in 2008.
Reserves have accumulated as a result of central bank intervention in the currency market.
Teerana Bhongmakapat, dean of Economics at Chulalongkorn University, said educating the public to invest abroad and manage currency risk was a better strategy than intervention. "The central bank should intervene in the foreign exchange market wisely," he said.
"It should have a long-term strategy rather than a short-term policy that favours exporters [by supporting a weak baht]. It should allow market mechanisms to work."
http://www.bangkokpost.com/business/economics/31931/bot-expect-strong-baht (http://www.bangkokpost.com/business/economics/31931/bot-expect-strong-baht)
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Baht should stand at B34 to US dollar
Bangkok Post: 31 Jan 2010
Baht should stand at B34 to US dollar
The Bank of Thailand should make sure that the Thai baht value’s stand at between 33 to 34 baht per US dollar, Manoon Siriwan, an energy expert, said on Saturday.
“If the Thai currency is weaker than that levels, it could affect domestic retail prices of fuelâ€, Mr Manoon said, adding that every one baht in value change of the baht would affect the increase or the decrease in local pump prices by 0.60 baht a litre.
The energy expert expected oil price on the world market to stand at about US$70 per barrel next week.
Kasikornthai Research Centre projected the Thai Baht value would stand at about 32.90 to 33.20 baht per US dollar next week.
http://www.bangkokpost.com/news/local/166978/baht-should-stand-at-b34-to-us-dollar (http://www.bangkokpost.com/news/local/166978/baht-should-stand-at-b34-to-us-dollar)
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Thai baht moves up UK bestseller list
: 6 Feb 2010
Rollercoaster currency rates sort holiday winners and losers
source: http://www.easier.com/65870-rollercoaster-currency-rates.html (http://www.easier.com/65870-rollercoaster-currency-rates.html)
Thailand, last year’s ‘value’ option, is now one of the world’s most popular holiday destinations, according to Post Office Travel Money.
The UK’s largest provider of foreign exchange today revealed that the Thai baht has moved up to tenth place in its 20 bestselling currencies for 2009, a list dominated by the euro and US dollar.
With Thai baht purchases up 15 per cent last year, Thailand was one of seven destinations recording sizeable increases in currency sales at Post Office bureaux de change.
Others included Turkey, Croatia and South Africa. All three moved up the Post Office bestsellers table – to third, 14th and 8th place respectively.
And with sterling now making gains against most holiday currencies, the Post Office has calculated that holidaymakers can look forward to receiving more foreign cash in return for their pounds in 13 of the 20 bestsellers, compared with twelve months ago, when the UK currency hit the doldrums.
Some of the biggest gains will be for tourists travelling mid-haul to Egypt and Dubai, whose currencies have fallen by almost 15 per cent against sterling compared with a year ago. Both gained ground last year: Egyptian pound sales were up nine per cent, consolidating a strong sixth position, while the UAE dirham moved up to 11th in the table on the back of a six per cent rise in sales.
Longer term research for the Post Office’s 2009 Holiday Money Report revealed that Egypt was the decade’s top mid-haul destination with a 45 per cent sales growth since 2005. Demand for Dubai has been unrelenting, despite last autumn’s financial crisis, with a 205 per cent leap in Post Office dirham sales in four years.
Sarah Munro, Post Office Head of Travel Money, said: “Low package prices and cheap resort costs made Egypt popular in the noughties. The weaker Egyptian pound combined with a top ten place in our Worldwide Holiday Cost Barometer3 of destinations offering the lowest costs for tourist staples, should also make Egypt a star choice in 2010.
“Five-star hotels at three-star prices in Dubai should also help to boost demand for the Emirate again in 2010, especially as UK tourists will have almost 15 per cent more dirhams in their pockets, thanks to the stronger UK pound.â€
Meanwhile visitors to the USA can expect a boost to their spending money of nearly 15 per cent as sterling springs back from its low in January 2009. The weakening US dollar has also had a positive knock on effect on destinations with currencies that float with the dollar – in particular the Caribbean Islands.
Holidaymakers visiting Jamaica can expect to receive over 29 per cent more cash and the same benefit applies to tourists planning trips to St Lucia or Antigua where the East Caribbean dollar has dropped in value by nearly 17 per cent. Similarly sterling will buy over 15 per cent more Barbados dollars.
However, people travelling Down Under will get less Australian dollars (-14.8 per cent) or New Zealand dollars (-16.6 per cent), as sterling has slumped against both currencies. Despite this, demand for Australian dollars grew by eight per cent in 2009, according to Post Office currency statistics, making this one of the most resilient holiday destinations.
More information about currencies trends is available in the fourth annual Post Office Holiday Money Report at:
www.postoffice.co.uk/holidaymoneyreport2009 (http://www.postoffice.co.uk/holidaymoneyreport2009)
This reviews 2009 travel trends and identifies ten currencies for 2010, based on exchange rate trends and events taking place during the year.
All major currencies are available at the Post Office. Over 70 currencies can be pre-ordered at 12,000 Post Office branches or online at www.postoffice.co.uk (http://www.postoffice.co.uk) for next day branch or home delivery.
29 currencies are available on demand at 1,600 larger Post Office branches, while an additional 2,600 offer US dollars on demand and a total of over 8,500 branches offer euros on demand.
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Baht expected to move on US Fed rise
: 20 Feb 2010
Baht expected to slightly move
BANGKOK, 20 February 2010 (NNT) - The onshore baht currency value was volatile and moved in a narrow range last week, according to the Kasikorn Research Center. Factors to be monitored include the domestic political situation and the GDP growth of last year’s fourth quarter.
The Thai baht has appreciated towards mid-week in line with the direction of other regional currencies and stocks supported by investors’ decisions to take risks and the appreciation of the euro. The baht has depreciated to 33.20 THB against the US dollar in the morning before appreciating to close at 33.16 THB against the dollar.
Meanwhile, the dollar has appreciated due to the US Federal Reserve’s increase of the discount rate to 0.75%. The dollar values are expected to be influenced by Greece’s financial crunch and the US’s important economic data such as February’s consumer confidence index as well as new and used house sales.
Next week, the baht is expected to move within the 33-33.40 THB range against the dollar. Other factors to be watched are the Bank of Thailand’s measures to stabilize the currency, directions of regional currencies and stocks, as well as the US dollar valuation.
http://thainews.prd.go.th/en/news.php?id=255302200016 (http://thainews.prd.go.th/en/news.php?id=255302200016)
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BoT: Thailand may raise interest before FED
BANGKOK (NNT) – The Thai interest policy is likely to be adjusted up before the US’s, says the Bank of Thailand (BoT).
Speaking of the recent increase of the US’s discount rate, BoT Governor Tarisa Watanagase, stated that it had no impact on Thailand’s policy interest rate because the economic structures of both countries were different, and they were different type of interest.
The governor admitted however that Thailand’s interest rate hike before the US was possible since Thailand and other Asian countries recovered faster than the US and Europe. Low-interest policy was no longer needed but the recuperation was still to be monitored, she said.
Ms Tarisa added that if Thailand’s interest rate was increased ahead of the US, an influx of foreign capital inflows was expected similar to other Asian countries. Thailand must therefore take a precaution against inflows for speculation to prevent an economic bubble.
The US Federal Reserve (FED) has recently increased the discount rate from 0.25% to 0.75%.
http://thainews.prd.go.th/en/news.php?id=255302190046 (http://thainews.prd.go.th/en/news.php?id=255302190046)
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Thai Baht weekly currency outlook
: 1 Mar 2010
Baht likely stand around 32.9-33.3 THB/USD
BANGKOK, 1 March 2010 (NNT) – The Thai Baht currency is expected to move in the range of 32.9-33.3 THB to the US dollar in this week, according to the Kasikorn Research Center (KResearch).
Based on the estimation, liquidity in the financial system would improve after the end of February. Short-term inflation rate is likely to be stable around 1.25% as liquidity in the money market may not change much.
KResearch added that concens over domestic political uncertainty persisted. Measures of the Bank of Thailand to stabilize the currency as well as the directions of regional currencies and stocks should also be monitored.
Regarding the US dollar, the currency may be influenced by the financial crisis in Greece and its own economic data.
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Baht resumes gains on foreign buys
Bangkok Post: 11 Mar 2010
Baht resumes gains on foreign share buys
The baht strengthened yesterday, snapping a two-day decline, as foreign investors added to their holdings of local assets on optimism that economic growth will pick up this year.
Overseas funds bought more Thai shares than they sold for an 12th day on yesterday, the longest stretch of net purchases since September, ahead of anti-government protests this weekend.
"The baht will be trading in a tight range," said Chutima Nuphan, a foreign-exchange trader at TMB Bank. "We saw net buying in stocks. But we have to wait and see what the situation will be during the protests."
The baht rose to 32.65/70 per dollar in Bangkok, against 32.69/74 on Tuesday.
http://www.bangkokpost.com/business/economics/34243/baht-resumes-gains-on-foreign-share-buys (http://www.bangkokpost.com/business/economics/34243/baht-resumes-gains-on-foreign-share-buys)
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Thai baht, bourse, both gain further
The Nation: 17 Mar 2010
Bourse and baht gain further despite protests
By SIRIborn CHANJINDAMANEE
THE NATION
Published on March 17, 2010
Both the stock market and the baht yesterday rose to their highest levels since mid-2008 on foreign investors' confidence the red-shirt protests would not escalate into violence.
The Stock Exchange of Thailand (SET) Index yesterday increased for a fifth day, climbing 17.37 points, or 2.4 per cent, to close at 752.2, its highest level since July 2, 2008. The volume of trading was high at Bt27.39 billion.
Foreign investors were net buyers of Bt21.23 billion worth of Thai shares between March 2 and this past Monday.
FOREIGN INVESTORS 'CONFIDENT'
"Foreign investors remain confident in Thailand, because they believe the protests will not turn violent," said Bank of Thailand Governor Tarisa Watanagase.
SET president Patareeya Benjapholchai said foreign investors were buying Thai equities because of the strength of the nation's economic recovery and corporate-earnings growth.
"Concerns about the present street protests have eased, because they've been peaceful these past few days," she said. "Thai stocks are attractive, because the country's economy and company earnings were stronger than expected in the fourth quarter."
US brokerage Morgan Stanley has increased its weightings for emerging markets, including Thailand, Turkey and the Czech Republic.
The baht also strengthened to a 21-month high after foreign investors added their holdings to baht assets, particularly |Thai stocks, as clear evidence of an economic recovery.
The baht rose 0.3 per cent to 32.45 against the US dollar late yesterday afternoon in Bangkok after reaching 32.41 during the day, its strongest since June 2008.
Some 100,000 red-shirt demonstrators began entering Bangkok last Friday to pressure Prime Minister Abhisit Vejjajiva into dissolving Parliament and calling a fresh general election. They are supporters of ousted premier Thaksin Shinawatra.
However, the red shirts yesterday appeared to have lost their momentum after five days of political rallies out in the scorching heat, and many have decided to return home.
The protesters yesterday donated blood to pour at Government House as a curse.
"Investors are confident the government can keep the situation under control, because the demonstration will not likely bring about any political change," said one local broker.
TOURISM MAY BE AFFECTED
Tarisa said the anti-government protests might affect tourism and consumption.
"Still, the severity of the impact will depend on the length of the protest and level of any violence," she said. "If the situation ends soon without any violence, we expect the effects to be limited and recovery quick."
Thailand Trade Representative Office president Kiat Sittheeamorn yesterday estimated the tourism industry had lost Bt1 billion a day from the rallies.
Finance Minister Korn Chatikavanij reiterated |economic growth in the first quarter would be "more than 5 per cent", against 5.8 |per cent in last year's |fourth quarter.
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BOT to intervene if Thai baht fluctuates
Bangkok Post: 23 Mar 2010
BOT to intervene if baht fluctuates
The Bank of Thailand (BOT) will intervene if the Thai baht fluctuates erratically, BOT assistant governor Paiboon Kittisrikangwan said on Monday.
Mr Paiboon said the central bank will have to make sure that the baht's value would not hurt the private sector.
"BOT governor Tarisa Watanagase always said the central bank will have to prevent the baht from fluctuating too much as that may create difficulties to exporters," he said.
He said the central bank had no policy to maintain the baht's value.
"The appreciation of the Thai currency against the US dollar has not affected the export sector yet, as can be seen from the rising export value," he said.
http://www.bangkokpost.com/breakingnews/172384/bot-to-intervene-if-baht-fluctuates (http://www.bangkokpost.com/breakingnews/172384/bot-to-intervene-if-baht-fluctuates)
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Thai Baht nears 22-month high
The Nation: 30 Mar 2010
Baht approaches 22-month high
The baht was almost at its 22-month high Tuesday on positive Thai economic outlook which attracted overseas demand for local assets.
The government on Monday revised up its GDP 2010 growth estimate from 3.5 to 4.5 percent in view of the improving global economic environment.
The Baht strengthened by 0.1 percent to 32.33 per the U.S. dollar.
The baht has gained 3 percent in the first quarter of this year, should strenghten to Bt31.50 per U.S. dollar by year-end, currency traders said.
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Foreign inflows pump up Thai SET, Baht
The Nation: 8 Apr 2010
Foreign inflows pump up Thai bourse
By The Nation, Bloomberg
Published on April 8, 2010
The Thai stock exchange yesterday continued its upward movement despite the aggravating political crisis, driven mainly by foreign capital inflows that boosted the turnover to Bt36.9 billion.
Nation
The inflows, which further boosted the baht against the US dollar, are expected to counterbalance negative factors induced by the political unrest throughout this month, said several brokerage houses.
The baht traded at 32.34 to the dollar as of 4.22pm in Bangkok, from 32.38 on April 5. It touched 32.25 on March 19, the strongest level since May 2008.
"You still see funds flowing into Thailand, which support the baht, and on the other hand, you have a growing political concern," said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp. "These factors make it hard to put one way pressure on the baht."
SCB Securities remained positive on the market outlook for this month. Though sug gesting to investors not to buy more shares ahead of the Songkran holidays, it advised them to maintain their stocks in the belief that continued capital inflows would offset any negative news caused by the political conflict.
Inflows are estimated at Bt1 billion to Bt1.5 billion per day, below the Bt2billion daily average last month.
According to DBS Vickers Securities (Thailand), the average daily trading value jumped to Bt25.9 billion in March from Bt14.1 billion in February, due to heavy foreign buying.
Foreign investors have been net buyers in the market for two consecutive months. As a result, in March, the Thai market outperformed regional peers, rising 9.2 per cent against regional peers' 7.6percent gain.
"The Thai market remains one of the cheapest in terms of valuation in the region. But there is lingering political risk, which is a key factor to watch. We remain overweight in banking, energy, and food, which should see higher earnings growth this year," the house said.
As Asean finance ministers gather in Nha Trang, Vietnam, a statement is expected today, suggesting that Southeast Asian economies may need currency flexibility to minimise the risk of capital inflows that have supported the region's rebound.
The global economy remains "fragile" and Southeast Asian governments will continue to pursue expansionary policies until the recovery is "secured", according to the draft of the statement obtained by Bloomberg News.
"We are encouraged by the return of capital to the region, which has supported our improved economic and financial conditions, the ministers said in the draft. "But we are also cognisant of the risks involved and the need to manage capital inflows through exchange rate flexibility and prudential measures."
Asian governments pumped more than $950 billion into their economies through increased investment, tax cuts and cash handouts to boost growth. Rebounding economic activities encourage the capital inflows to the region, the ministers said in the draft.
The Asean economy may expand between 5 per cent and 5.5 per cent this year, after 1.5 per cent in 2009. According to the World Bank, the Thai economy may expand as high as 6.2 per cent this year, from a 2.3percent contraction in 2009.
Malaysia, India and Vietnam are among Asian nations that have raised interest rates to avert asset bubbles and fight inflation. China has asked banks to set aside more money as reserves to reduce liquidity in the financial system.
HSBC in Thailand believes that at the June meeting, the Monetary Policy Committee will raise the policy rate by 25 basis points. This is not primarily to tackle core inflation, but a signal that the economy is recovering strongly and warranting less support with time.
The Asean statement also highlighted the countries' policy to pursue expansionary policies until recovery is secured but at the same time, "we will stand ready to withdraw our fiscal, monetary and financial sector support once private demand has become self sustained," the statement said.
"Our exit strategies will be guided by our respective economic fundamentals, consistent with the goals of medium term fiscal sustainability, price stability and financial stability," the statement added.
The Asean ministers said they will continue to find ways to reduce their nations' dependence on export led growth and boost domestic demand to spur their economies. This requires rebalancing towards domestic demand and services, boosting productivity and enhancing integration of our markets.
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Thai Baht steady but tourism suffers
Bangkok Post: 27 Apr 2010
Baht's ok but tourism suffers
*Published: 27/04/2010 at 05:06 PM
The escalating political crisis has not affected the value of the Thai currency, Bank of Thailand (BOT) deputy governor Bandit Nijthaworn said on Tuesday.
"The baht's value has not been hit by the political turmoil as there are no capital outflows at this time.
"In contrast, the Thai currency has appreciated as a result of continuous capital inflows to the Thai stock and bond markets," Mr Bandit said.
Thailand's credit rating had been recently downgraded but it should not affect the interest rates of foreign loans to the country, he said.
"But the interest rates could rise if the country's credit rating continues dropping because of higher risk," he said.
The central bank will evaluate the overall economy along with the effects on this year's economic growth and will announce its economic projection on Friday.
"I believe the Thai economy can still move forward due to the global economic expansion together with the relaxed monetary policy and interest rates. The financial policy can still help stimulate the economy," the deputy governor said.
Tourism and Sports Minister Chumpol Silpa-archa said the number of foreign tourists arriving at Suvarnabhumi airport has dropped from an average 30,000 a day to 21,000 because of the prolonged and escalating anti-government rally.
"The number of tourists arriving at Suvarnabhumi has notably dropped by about 10,000 a day," Mr Chumpol said.
Mr Chumpol said the Tourism Authority of Thailand (TAT) had proposed a tourism crisis recovery plan to the government.
The plan is in three parts - a public relations campaign, more cooperation with airlines and major foreign travel agencies, and marketing. About 600 million baht will be allocated for a domestic marketing campaign and another 1.45 billion baht for overseas.
"The plan will be executed after the political situation returns to normal," the minister said.
He said other tourism promotion measures, such as the free visa scheme to begin on Wednesday, were expected to boost tourist arrivals.
About 5,800 tourists from China were due to visit Thailand from May 6 to 8, but if the political unrest continues many could well change their plans.
Economic figures should be out after the political rally ends, and the government would then be able help affected businesses, he said.
The red-shirt United Front for Democracy against Dictatorship (UDD) has rallied at Bangkok's Ratchaprasong commercial district since April 3, demanding Prime Minister Abhisit Vejjajiva to dissolve the House of Representatives and call a general election.
http://www.bangkokpost.com/news/local/176019/baht-ok-but-tourism-suffers (http://www.bangkokpost.com/news/local/176019/baht-ok-but-tourism-suffers)
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Thailand urged to resume currency peg
The Nation: 4 May 2010
Thailand urged to resume pegged currency
By ACHARA DEBOONME
THE NATION
Published on May 4, 2010
Thailand and other Southeast Asian nations are being strongly urged to change their foreign-exchange policy, given that major Western currencies could further lose their shine, due to massive public debt.
Independent consultant John Sheehan yesterday advised Thai authorities to consider resuming the currency peg.
"If the baht moves freely, it could further appreciate to 25 to the US dollar. That would destroy exports and tourism," he said.
His argument lies heavily on the massive amount of public debt. Leading the charge is Japan, where public debt now exceeds 200 per cent of gross domestic product (GDP), with Europe and the US hot on their heels. They all need to cut back on spending, but this will result in lower tax receipts and an even bigger deficit. The options are to default on the debts or print more money, which would only lead to hyperinflation.
US public debt rose to US$11 trillion (Bt356 trillion) last year, or nearly the size of that country's economy, against $5 trillion in 2000. Sheehan expects the US to seek partial debt default sometime between 2012 and 2014.
He said the default outlook was imminent, given that inclusive of contingency liabilities, that country's public debt was now 160 per cent of GDP. Western countries are also shouldering a huge burden from unfunded welfare benefits.
The general belief is that a public-debt level of 60 per cent of GDP slows down economic growth. At 90 per cent, it could stop growth.
"If this hits 200 per cent, there are two options: hyperdeflation or default," Sheehan said.
Thus, Southeast Asian economies are urged to change their approach to foreign-exchange risk, because Western currencies are at the beginning of a long-term slide, and for smaller, export-based economies to continue flowing previous foreign-exchange approaches is illogical and will become increasingly risky. This is aside from major investment in new technologies and products and aggressive and active development of new export markets.
Southeast Asian currencies are now strengthening artificially, not in response to domestic growth, but rather to Western weakness. Sheehan said if this intensified, the baht could rise above 30 to the dollar, reaching even 25 - when it was last pegged to the US.
He said the simplest and most logical way of counteracting this was implementation of a managed peg similar to the Chinese model. This would stimulate growth immediately by increasing GDP and automatically build up reserves. The downside is inflation risk, but this is the lesser of two evils, particularly in a global recession.
In this way, Sheehan sees the advantage of the political crisis, which has weakened the baht, and he suggests authorities peg it once it hits bottom.
Last Friday, the baht fell to about 32 to the dollar, making it one of the region's weaker currencies. It is expected to trade at 32-32.40 this month on the uncertainty surrounding the ongoing political turmoil.
Sheehan sees less need for building up foreign reserves to defend the currency, because reserves are needed only to defend an overvalued currency. Given the perilous state of Western markets, the baht is now effectively undervalued. Hot-money flows have also been flagged, but given the likelihood of Western deflation, such flows into Thailand would be an issue regardless of whether the currency was pegged.
The baht can be fixed against a basket of currencies related to, say, export-destination markets, foreign direct investment or even commodity and energy prices, given that Thailand is reliant on exports and energy.
Sheehan ended by saying the sooner a peg was placed, the sooner the benefits would flow. This would also mitigate rebound volatility when the major Western currencies reverse their present long-term decline.
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Background:
The news report unfortunately failed to preface Mr Sheehan's background. To that end, the following is quoted from the AMCHAM website:
John Sheehan
John Sheehan was an Executive Director at Lehman Brothers for ten years until 2008, both here in Bangkok and afterwards in London, where he specialised in real estate investment, structured finance, corporate restructuring and distressed debt, participating in both Thailand's first ever RMBS (residential mortgage backed securities) transaction and also Thailand's first ever rated RMBS transaction. Anticipating the global problems unfolding, John retired from Lehman Brothers in August 2008, a month before the bank failed.
Since then John has been in great demand in a new career, lecturing on the global financial crisis and its effect on local, regional and global markets and supported by and working closely with Bangkok-based wealth manager, MBMG International, has established his own specialist research consultancy, Global Markets Asia (GMA) to give an impartial, informed view of the present and future financial situation. In addition to this John continues to give consultancy & advisory services to corporations, financial institutions and governments regarding debt, non-performing loans and assets, and loan restructuring. The research produced by GMA assist MBMG to advise on over AUD 200 Million of assets under advice in a range of currencies including AUD, US$, Baht and SGD.
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Baht drops to two month low vs USD
Bangkok Post: 18 May 2010
BANGKOK RIOTS
Political chaos sees baht stumble to a two-month low
The baht yesterday dropped to its lowest level against the greenback in nearly two months due to market worries about political violence in Bangkok.
The baht was quoted yesterday at 32.42/48 to the US dollar, compared with 32.32/4 on Friday.
Against the yen, 100 baht traded at 34.83/35.538 yen compared with 34.57/35.18 on Friday.
Thiti Tantikulanan, head of capital markets for Kasikornbank, said market reaction to the violence over the weekend was relatively mild.
"There wasn't really much actually," he said.
"We saw the baht weaken by around seven satang, even as other regional currencies gained ground."
Regional currencies are expected to continue to their rise as a result of fresh market worries about global economic growth and the stability of the euro.
Mr Thiti said investors were moving away from the dollar to Asian currencies, a trend that has been ongoing for the past several months due to expectations that the region will outperform others in terms of economic growth and stability.
"Assuming that the [local political] situation doesn't significantly deteriorate further, we should see the baht trade between 32.35 to 32.55 to the dollar," said Mr Thiti.
In the bond markets meanwhile, trading was relatively thin, with under 20 billion baht in volume in yesterday's morning session, less than half that of normal trade. Government bond yields continued to decline as investors looked to cut risk holdings in favour of "safe haven" bonds.
Ariya Tiranaprakij, an executive vice-president of the Thai Bond Market Association, said bond yields have fallen 20 to 30 basis points (hundredths of a percentage point) since last month as a result of investor concerns about the political situation.
"We expect that yields will continue to decline over the next several days," she said. "If the political situation remains as it is, the bond market will continue to be favoured as a place to park funds."
Ms Ariya said, however, that there was little sign of a mass exodus of funds from the market, despite the political troubles.
"[Outflows] will not come I think unless foreign investors dramatically change their view on the country," said Ms Ariya.
"A credit downgrade for instance, may be a trigger."
Five-year government bonds were quoted yesterday at 3.09558%, down 3.64 basis points, while the 10-year bond fell 1.52 points to 3.69506%.
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Baht biggest monthly decline in 15 months
: 31 May 2010
Baht Has Biggest Monthly Decline in 15 Months on Fund Outflows
(Bloomberg):
Thailand’s baht completed its biggest monthly slide since February 2009 as overseas funds offloaded stocks on concern political violence in the nation’s capital and Europe’s debt crisis will slow economic growth.
“The European crisis may slow exports at a time when domestic demand is already hurt by the political turmoil,†said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “The central bank will probably have to delay the timing of any rate hike, making it better to buy bonds. The baht may stay under depreciation pressure.â€
The baht dropped 0.5 percent in May to 32.51 per dollar as of 3:32 p.m. in Bangkok, according to data compiled by Bloomberg. It climbed 0.1 percent today. The currency may fall to around 32.80 in June, Nishihama said.
Losses from tourism revenue and investments because of the rallies may shave about two percentage points from economic growth this year, Finance Minister Korn Chatikavanij said May 24. The finance ministry, which estimates the economy may grow 4.5 percent this year, will revise the forecast on June 29, Satit Rungkasiri, head of the fiscal policy office, said May 26.
The baht gained today on speculation exporters bought the currency, according to Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl, the nation’s biggest lender.
“The current level of the baht may be a good level for exporters to sell the dollar,†Disawat said.
Bonds and Swaps
The yield on the 3.875 percent bond maturing in June 2019 dropped 24 basis points, or 0.24 percentage points, to 3.26 percent from the end of April, according to intraday prices from the Thai Bond Market Association. The price gained 1.88, or 18.8 baht per 1,000 face amount, to 104.7818. Domestic financial markets were closed on May 28 for a holiday.
The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, dropped to 1.27 percent from 1.315 percent on May 27 and 1.56 percent on March 12 when the anti-government rally began. The drop signals investors pared bets as to when the central bank will increase borrowing costs.
The Bank of Thailand, which next meets to review monetary policy on June 2, has kept its benchmark interest rate at 1.25 percent since April last year, the lowest level since July 2004.
“The central bank cannot raise rates anytime soon,†Dai- ichi Life Research’s Nishihama said. “They probably need to see impact from the political turmoil on tourism, consumption and investment. So, swap rates may stay under pressure to fall.â€
http://www.businessweek.com/news/2010-05-31/baht-has-biggest-monthly-decline-in-15-months-on-fund-outflows.html (http://www.businessweek.com/news/2010-05-31/baht-has-biggest-monthly-decline-in-15-months-on-fund-outflows.html)
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Thai Baht stable: BoT
: 5 Jun 2010
Baht stable despite impact of European public debt crisis: BoT
วันเสาร์ ที่ 05 มิ.ย. 2553
BANGKOK, June 5 (TNA) – Asian currencies including the Thai baht are holding their stability at present despite the heavy volatility of the Euro, fuelled by the public debt crisis in some European countries, according to the Bank of Thailand (BoT).
BoT Assistant Governor Suchada Kirakul said the regional currencies had not been adversely affected by the debt problems in Europe because the economic fundamentals of the Asian countries are rather strong as could be witnessed by the impressive economic growth of many countries in the first quarter of this year. She indicated Singapore as an example, which enjoyed a 15 per cent growth, and Thailand 12 per cent expansion.
“The regional currencies including the baht are seen weakening slightly on a daily basis, but they have nonetheless strengthened since early this year. For
instance, the baht has risen 2.4 per cent, the Indonesian rupiah by 2.6 per cent and the Malaysian ringgit by 4.8 per cent,†she said.
The baht had moved rather steadily partly because the currency had already weakened to a certain extent due to tensions in the Korean peninsula and Thailand's domestic political disorder.
Capital movements have been rather balanced for the moment although foreign capital have been flowing out from the stock market in some amount.
She said that some foreign funds had still flowed into the bond market and foreign investment funds (FIF) remitted investment returns.
Simultaneously, the trading of exporters and importers had been rather in equilibrium, resulting in the baht becoming stable, she said. (TNA)
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Baht opens lower in line with region
: 7 Jun 2010
THB opened at 32.62-32.64 THB/USD, speculated to weaken
BANGKOK, 7 June 2010 (NNT) — The Thai currency opened at 32.62-32.64 THB/USD today and is speculated to weaken from the Euro zone debt crisis.
According to financial experts from the Bank of Ayudhya, the Thai baht has weaken compared to its closing value of 32.60 THB/USD on Friday evening. At 08.45 hrs this morning, the value of the Thai baht reached a high of 32.67 THB/USD.
The depreciation of the Thai currency follows other regional currencies as the US dollar has appreciated, experts said.
Meanwhile, investors are still uncertain about the Euro zone crisis, which lead to the weakening of the Euro currency. According to financial experts, the political and domestic factors play less role in the movement of the Thai currency as the situation is gradually returning to normal.
The THB is speculated to move in a narrow frame of 32.60-32.75 THB/USD.
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Yuan hits highest level in five years
Bangkok Post: 21 Jun 2010
Yuan hits highest level in five years
AFP
China's yuan exchange rate hit its highest level against the dollar in five years Monday, after policymakers pledged at the weekend to make the currency more flexible, Dow Jones Newswires reported.
The yuan surged to 6.8089 to the dollar on the nation's main foreign exchange trading market, its highest since July 2005.
The People's Bank of China set the central parity rate -- the centre point of the currency's allowed trading band -- at 6.8275 to the dollar, unchanged from Friday, according to a statement on its website.
The dollar had closed Friday at a higher rate of 6.8262 yuan.
"At the beginning the market was trying out around the level of Friday's close, but it has since turned to focus on the prospect of yuan appreciation in the near term," a Shanghai-based trader at a foreign bank told Dow Jones.
"Everyone is selling dollars now."
China's central bank said Saturday it would "strengthen the flexibility" of the yuan exchange rate, which some analysts saw as a sign Beijing was ready to adjust the dollar peg in place for two years and allow the currency to rise.
However, the bank moved Sunday to douse expectations, saying there would be no "large swings" in the currency and no one-off adjustment.
China has effectively pegged the yuan at about 6.8 to the dollar since mid-2008 to prop up exporters during the world financial crisis.
But it has come under mounting pressure ahead of next weekend's Group of 20 summit in Toronto to allow the currency to strengthen.
The issue has been a constant irritant in US-China ties, with American lawmakers charging Beijing deliberately undervalues the yuan, unfairly boosting Chinese manufacturers and costing US jobs.
The currency has been allowed to move within a 0.5-percent range on either side of the peg, and the central bank said Saturday it would maintain the existing trading band.
Analysts expect the currency to appreciate, albeit by a very small amount, this week in the belief that Beijing wants to head off an ugly spat with Washington at the June 26-27 meeting in Canada.
"I would expect some appreciation ahead of the G20 as a token of goodwill," said Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong.
However, the central bank's decision to leave the central parity rate unchanged Monday showed "gradualism will remain the guiding rule", he added.
Simpfendorfer expects a three percent yuan appreciation over the next 12 months, a pace that could invite renewed US impatience and pressure on China.
The central bank stressed it would maintain control over "exchange rate fluctuations" and ensure the "basic stability" of the currency -- official speak for keeping a tight grip on the yuan.
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RELATED ARTICLE:
KBank predicts Baht to be stronger in next 3 months
BANGKOK, 21 June 2010 (NNT) –Kasikorn Thai bank foresees Thai baht to be stronger in the next three months with the rate probably at 32.20 THB/ USD.
Kasikorn Thai Executive Vice President Songpol Chevapanyaroj stated that the baht currency would move in the rage of 32.20-32.30 THB/USD within the next three months, due to the increase of investors’ confidence from the expansion of export sector and the internal political improvement.
In the case of Chinese government’s measure to release Yuan from pegging the currency to US dollar, resulting in the strengthening of the Yuan and other currencies in the region, Mr Songpol viewed that the Bank of Thailand (BoT) would play a role in controlling the baht from volatility.
He added that the strength of Yuan would benefit Thai export in price competition particularly among the exports of agricultural, food and textile.
http://www.bangkokpost.com/news/asia/182030/yuan-hits-highest-level-in-five-years (http://www.bangkokpost.com/news/asia/182030/yuan-hits-highest-level-in-five-years)
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Bank of Thailand checks baht rise
The Nation: 24 Jun 2010
BOT steps in to check baht rise
By The Nation, Agencies
Published on June 24, 2010
The Bank of Thailand early this week intervened in the foreign exchange market, following irregular movement in the US$/baht exchange rate, BOT Assistant Governor Suchada Kirakul said yesterday.
The baht's appreciation against the greenback was faster than the $/yuan rate, she said.
Yesterday's weakening of the baht was not because of the intervention but due to the market mechanism, she said.
The baht slid 0.1 per cent to 32.37 per dollar as of 3.32pm in Bangkok, according to data compiled by Bloomberg. On Tuesday, it touched 32.23, the strongest level since May 10.
BOT Deputy governor Bandid Nijathaworn admitted that the yuan's strengthening would pull up other Asian currencies, which is supporting longterm economic stability. He is also confident that Asia will be the major growth driver of the world.
"Asia is resilient to the European debt crisis. The middleclass population is also increasing and boosting consumption. This attracts foreign investment," he said.
Still, he expressed concern that Thailand's economic acceleration in the second half may pressure inflation and it could drive the central bank to take action soon. He also noted that inflation next year might exceed this year's target of 0.53 per cent, on economic acceleration.
Credit Suisse Group said China's policymakers would likely let the yuan rise as much as 5 per cent over the next 12 months, more than forward contracts suggest.
The yuan is about 50 per cent "undervalued", the Swiss lender estimated in a June 21 research note, citing factors, including trade.
Morgan Stanley said in a report that the yuan will strengthen about 10 per cent by the end of next year.
"We would not be surprised to see a 5 percent appreciation," wrote Andrew Garthwaite, global equity strategist in London at Credit Suisse. "Clearly, every commentator including us believes the move will be gradual."
The yuan was 0.05 per cent stronger at 6.8099 per dollar as of 2.35pm in Shanghai, extending this week's advance to 0.24 per cent, according to the China Foreign Exchange Trade System.
Non deliverable forwards show investors are betting on a 2.2percent appreciation over the next 12 months.
Economists at Citigroup expect the yuan will strengthen 2 per cent against the US dollar through the end of this year and nearly 3 per cent within a year, compared with a 19percent appreciation between 2005 and 2008.
Citigroup expects the end of yuan's peg will boost Asian currencies and benefit the region's natural resource producers, tourism companies and property developers.
"China's renminbi policy shift could spark a rally in Asian currencies and markets as investors positioned in anticipation of currency gains," Chua Hak Bin, head of research at Citigroup in Singapore, wrote in the report released this week.
Increasing overseas investment by China should raise the bankloan demand in affected regions, benefiting banks, including PT Bank Mandiri and Bangkok Bank, according to the report.
Natural resource producers, including Banpu's Indo Tambangraya Megah, Kuala Lumpur Kepong and Golden AgriResources, should benefit from stronger commodity demand.
With a stronger yuan and increasing wealth, Chinese tourists will likely increase and that should contribute to profits of carriers and other tourism related companies.
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I was just wondering why will Thailand not learn about business? As they all know that tourism is down massively before the effects on the global recession on all the major currencies. And now, Thailand believes people will still flock to Thailand when it will become as expensive or more than staying home.
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"Why won't Thailand learn about business?" That must be one of the funniest questions I have ever seen on this forum.
As an example the UK are 150+ billion pounds in dept. Shouldn't it be them that are learning about business. The Thai baht is not strong. It is the Pound,dollar and euro that are shite.
The tourists will still come. Thailand knows that so are not worrying about it. For people carrying pounds, dollars or euros there are not any cheap holiday destinations.
It's the people that stay here that are winging most. The same people that said things like "Why should I put my money into a Thai bank account at 1 per cent interest. Better to leave it over seas." Well I brought most of my money over here at 68 to the pound and accepted the low interest.
When will you next see that rate???? Probably never.
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BoT: Strong Baht in line with region
The Nation: 20 Jul 2010
BoT: Strong Baht in line with regional currencies
The three per cent appreciation of the baht should not affect Thai exports significantly, as it was in line with regional currencies, the Bank of Thailand's Governor Tarisa Watanagase said on Tuesday.
The currencies of Singapore, Indonesia and India had all appreciated more than the baht this year, with the exception of Vietnam's dong currency, the central bank governor added.
Thai rice exporters have complained that the strong baht relative to Vietnam's dong currency has hurt the Thai rice exports.
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Foreign capital flows back to Thailand
: 4 Aug 2010
Foreign capitals flowing into Thailand
BANGKOK, 4 August 2010 (NNT) – Foreign capital inflows have returned to stand in positive territory throughout the past few days due to a better economic condition of Thailand, reports the Bank of Thailand (BOT).
According to BoT Assistant Governor for Financial Market Operations Group, Suchada Kirakul, foreign capitals have started flowing into the Stock Exchange of Thailand (SET) and the Thai bond market. The net capital inflow had been in deficit since the beginning of 2010.
The Thai Baht currency movement during this period is not too strong when compared with other foreign currencies. Appreciation of many currencies, including the Thai Baht has been triggered by the improvement in significant economic figures and Dow Jones Indexes of the US.
In addition, the improving US economic figures have prompted investors to take risk in speculating their investment. At the same time, the US dollar has been depreciating, sending other currencies including the Baht to appreciate.
A considerable amount of foreign capitals had been flowing out of the country during the recent political abyss in May; however, the situation has been improving after the domestic political situation has eased off.
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Baht near 3 month high on inflows
: 4 Aug 2010
Baht Trades Near 3-Month High on Fund Inflows, Growth Outlook
By Yumi Teso
Aug. 4 (Bloomberg) -- Thailand’s baht rose for a third day as signs economic growth is gathering momentum spurred speculation that overseas investors will increase purchases of local stocks.
HSBC Holdings Plc today increased its forecast for Thailand’s gross domestic product growth to 7.6 percent in 2010 from its June prediction of 6.1 percent. Overseas investors bought $53.5 million more local shares yesterday than they sold, the biggest amount in a week, helping to send the benchmark SET Index to the highest close since May 2008.
“There have been quite a lot of inflows into Thailand recently, supporting the baht,†said Parson Singha, chief markets strategist in Bangkok at HSBC. “People are in general bullish on Thailand’s economic growth.â€
The baht traded at 32.18 per dollar as of 8:19 a.m. in Bangkok from 32.21 yesterday, and touched 32.13 for a second day, matching its April 26 high. HSBC expects the baht to strengthen to 31.5 by year-end, Parson said.
Rising exports will continue to support the Southeast Asian nation’s growth, HSBC said in a research note today. The upward revision was also due to “relatively subdued†impact from the political violence in April and May, it added. HSBC also raised its year-end forecast for Thailand’s benchmark interest rate to 2 percent from 1.75 percent.
Overseas sales increased by 47.1 percent in June from a year earlier to a record $17.9 billion, the central bank said July 30.
The one-year onshore swap rate, the fixed cost needed to receive a floating payment, was at 1.75 percent, unchanged from yesterday. The rate has increased 37 basis points since the end of June, suggesting investors have boosted bets for interest- rate increases over the next 12 months. A basis point is 0.01 percentage point.
The Bank of Thailand on July 14 raised its benchmark interest rate for the first time in almost two years, raising the one-day bond repurchase rate by a quarter of a percentage point to 1.5 percent. Policy makers will next meet on Aug. 25 to review monetary policy.
http://www.businessweek.com/news/2010-08-03/baht-trades-near-3-month-high-on-fund-inflows-growth-outlook.html (http://www.businessweek.com/news/2010-08-03/baht-trades-near-3-month-high-on-fund-inflows-growth-outlook.html)
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Asian currencies rise led by Thai Baht
Bangkok Post: 9 Aug 2010
Baht appreciates to 26-month high
The Thai baht strengthened to a 26-month high on Monday morning due to the country's high export growth and economic expansion, Finance Minister Korn Chatikavanij said on Monday.
Mr Korn said he would like the Bank of Thailand to fine-tune its handling of the baht's appreciation.
The baht was valued at 31.99-32.00 baht per US dollar on Monday morning. Its value on Friday was 32.05-32.06 baht a dollar. The currency is at its strongest since May 2008.
http://www.bangkokpost.com/business/economics/190212/baht-appreciation-hits-26-month-high (http://www.bangkokpost.com/business/economics/190212/baht-appreciation-hits-26-month-high)
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Asian Currencies Advance, Led by Thai Baht, on Growth Outlook
August 09, 2010, 5:29 AM EDT
Aug. 9 (Bloomberg) -- Asian currencies strengthened, led by the Singapore dollar and Thailand’s baht, on optimism the region’s growth outlook will lure funds.
Singapore’s currency advanced to its strongest level in more than two years after Prime Minister Lee Hsien Loong said yesterday that gross domestic product expanded 17.9 percent in the first half, keeping the economy in contention for the world’s fastest-growing market in 2010. Taiwan’s dollar advanced for a third day as a report showed exports gained for a ninth month, and the won rose on speculation the central bank will raise interest rates.
“Money has been flowing into the region, putting appreciation pressure on currencies,†said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “When you compare growth in Asia and the rest of the world, you want to invest in the region.â€
The Thai baht appreciated 0.3 percent to 31.96 per dollar as of 4:04 p.m. in Bangkok and earlier touched 31.92, the strongest level since May 2008, according to data compiled by Bloomberg. The Singapore dollar advanced 0.3 percent to S$1.3472, its highest level since July 2008. The Indian rupee rose 0.2 percent to 46.075 per dollar.
Asia’s developing nations will expand 9.2 percent this year, while advanced economies will grow 2.6 percent, the International Monetary Fund said on July 7. Overseas funds pumped more than $21 billion into equities in India, South Korea and Taiwan this year, according to data from the respective exchanges.
http://www.businessweek.com/news/2010-08-09/asian-currencies-advance-led-by-thai-baht-on-growth-outlook.html (http://www.businessweek.com/news/2010-08-09/asian-currencies-advance-led-by-thai-baht-on-growth-outlook.html)
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Baht stabilizes after BoT intervention
: 11 Aug 2010
THB stabilizes after BoT intervention
BANGKOK, 11 August 2010 (NNT) – The Thai currency has become more stable after the central bank’s intervention over the last few days. Bankers forecast a high trade surplus this year and expect the baht to strengthen to 31.50 THB against the USD.
A financial analyst from Siam Commercial Bank said that the movement of Thai baht on Tuesday was quite stable. It opened at 31.96/98 THB per USD, and then reached the highest of 31.955 THB during the day before weakening slightly down to 31.95/97 THB per USD at the closing with normal volume of transaction.
The recent appreciation of the baht has been favored by the vast trade surplus generated by growing exports over the past several months in coherence with the weakening of the USD. The trend is expected to continue and may soon hit 31.50 THB per USD.
The baht has fast rebounded to its leap in the past 2 days. However, it is considered rather steady under the control of the Bank of Thailand.
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Baht hits new high on investment wave
The Nation: 18 Aug 2010
Investment wave pushes baht to a new high
By THE NATION
Published on August 18, 2010
The unstoppable wave of capital inflow pushed the baht to its strongest level in two years yesterday, while analysts expected further appreciation to Bt31.7 to the US dollar this month and at Bt31 by year-end.
Yesterday, the baht appreciated 0.4 per cent to Bt31.72 per dollar as of 3.35pm in Bangkok, the biggest advance since May 18 and the strongest level since May 2008, according to data compiled by Bloomberg.
Analysts attributed the appreciation to capital inflow, as investors shifted their funds from the United States and Europe, which are reeling under bad news. Thai exporters, however, are also converting to the US dollar to prevent further baht appreciation.
Over two days, the baht gained 20 satang against the dollar, without much intervention from the Bank of Thailand, according to analysts. They expect the baht to move in the range of Bt31.65-Bt31.80 today thanks to huge gains over the past few days, as well as importers buying dollars to fulfil their purchase obligations due late this month.
Thiti Tantikulanan, head of Kasikornbank's Capital Markets Business Division, said the baht had moved in line with regional currencies. Thanks to the inflows in the past two weeks, the baht has gained 1.5 per cent, the Singapore dollar 0.7 per cent, the Malaysian ringgit 1.1 per cent, the Philippine peso 1.2 per cent and the South Korean won 1 per cent.
He acknowledged that the baht's appreciation was slightly beyond that of other regional currencies, based on the inflow of about Bt6 billion to Bt7 billion so far this month.
"With a trade surplus of nearly US$7 billion [Bt222 billion] in the first half, the baht may further strengthen, and it could hit Bt31 per dollar at this year's end," Thiti said.
Hideki Hayashi, a global economist at Mizuho Securities in Tokyo, said: "With anticipation of further declines in the dollar, local exporters will rush to sell them, boosting the baht.
"Some Asian countries may boost interest rates while the US is expected to keep them low, which is supportive of regional currencies," he told Bloomberg.
The one-year swap rate yesterday rose to 1.72 per cent from 1.705 per cent on the previous day. The rate has increased 34 basis points since the end of June, as investors expected the Bank of Thailand to raise the policy rate.
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Thai government to oversee baht's value
Bangkok Post: 28 Aug 2010
PM: Govt to oversee baht's value
The government will oversee the value of baht to prevent it fluctuating too much, Prime Minister Abhisit Vejjajiva said on Friday afternoon.
“Relevant state agencies will introduce needed measures to stabilise the value of the Thai currency, but will not act against the money market’s mechanism. We have already experienced an expensive lesson from doing so in the past,†said Mr Abhisit.
The prime minister said the Bank of Thailand must oversee the baht's value and interest rates to ensure they stay at appropriate levels and in line with the changing situation. Any decision to adjust the policy rate must be made carefully as the central bank is also duty-bound to curb inflation.
He had discussed the economic situation with the Office of the National Economic and Social Development Board and believed the current inflation rate is controllable. Inflation is unlikely to be higher than the current level.
Mr Abhisit said even though the economy would grow at a slower pace in the second half of the year, the growth rate could be higher than seven per cent this year. He projected economic expansion would slow down to four to five per cent next year.
Asked if the government would allow manufacturers to raise prices of their products due to higher production costs, Mr Abhisit said the Ministry of Commerce would propose the matter for consideration by the cabinet at next week’s meeting.
“Consideration of whether to allow price increases will not be based mainly on cost of production as other factors would also be taken into account,†he said.
Asked whether the increase in prices could lead to an increase in the minimum wage rate, the prime minister said it is possible the daily wage would be raised - either before or at the same time as the salary of government servants is increased.
Civil servants have been promised a rise of five per cent in basic salaries next April.
http://www.bangkokpost.com/business/economics/193231/pm-govt-will-oversee-baht-value (http://www.bangkokpost.com/business/economics/193231/pm-govt-will-oversee-baht-value)
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Baht may hit 13 year high on fund inflows
The Nation: 1 Sep 2010
Baht may hit 13-year high on fund inflows
By THE NATION, BLOOMBERG
Published on September 1, 2010
Thailand has witnessed a continued increase in net capital inflows, expected to keep the baht on the appreciation path probably to a level unseen since 1997.
According to the Bank of Thailand, in July, net capital inflows were worth US$2.7 billion (Bt84 billion), which went to all parts of the economy, including $987 million to non-bank business.
Mathee Supapong, director of the central bank's domestic economy department, said inflows to the non-bank sector were either foreign direct investment or investment in the stock market. The banking sector attracted only $571 million, mostly short-term financing and some as investment in banking shares through the stock market.
London-based Barclays predicts that the baht may strengthen to levels not seen since 1997 over the next year as accelerating growth encourages foreign investors to keep pouring money into the nation's assets.
The baht could appreciate 1 per cent to 31 per US dollar over three months, 1.8 per cent to 30.75 in six months and 2.6 per cent to 30.50 in a year, Singapore-based economist Rahul Bajoria wrote in a research report. In January, the bank forecast that the baht would advance to 31.75 in a year.
"We expect the baht to enjoy continued trend appreciation, as the external position remains robust," Bajoria wrote. "Strong inflows into local-currency bond and equity markets, along with current-account surpluses, should generate further upward pressure on the currency."
Last month, the baht advanced 3.2 per cent, its biggest monthly gain since February 2008. According to Bloomberg, it advanced to 31.29 per dollar.
"There will be more willingness on the part of the central bank to let the currency appreciate," Bajoria said. "The appreciation is going to be in line with regional currencies, so it's not going to harm the competitiveness of the external sector."
Mathee said the Bank of Thailand had no specific level where the baht would go, but would maintain equilibrium with regional movements. This should limit negative impacts on exporters.
The currency drew support from government data showing that growth in gross domestic product in the first two quarters, at 12 per cent and 9.1 per cent, was the best since 1995.
According to the Bank of Thailand, the economy in July kept expanding, though at a slower rate than in the previous month. While private consumption, exports and manufacturing slowed because of sharp growth in the first half, tourism showed continued recovery. In the month, Thailand welcomed 1.25 million visitors, up 14.9 per cent year on year, while the hotel occupancy rate stayed at 46.9 per cent compared with 37.3 per cent in the previous month.
Private investment rose 22.1 per cent year on year, mostly in the electronics, electric-appliance, automobile and construction sectors. Private consumption rose 5.1 per cent on-year, while exports at $15.48 billion rose 21.2 per cent. Industrial manufacturing expanded 16.3 per cent, down from 21.9 per cent in June. Inflation in the month accelerated on higher fresh-food prices and higher industrial and retail employment.
The central bank is widely expected to raise the policy rate again next month to 2 per cent.
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Calls grow louder for action on Thai baht
Bangkok Post: 11 Sep 2010
Calls grow louder for action on baht
29.50 exchange rate possible by OctoberBusiness leaders have stepped up their calls for the government to make a greater effort to curb the impact of the strengthening baht, according to Payungsak Chartsutthipol, chairman of the Federation of Thai Industries (FTI).
The baht was trading yesterday at a 13-year high of 30.82/85 to the US dollar, compared with 33.15 baht in January. The 7.6% increase is the highest in the region behind the Malaysian ringgit.
However, the impact is less pronounced in Malaysia because its economy is not as export-dependent as Thailand's, said Mr Payungsak.
"The stronger baht has both positive and negative sides," he said. "While it benefits the industries that have high import content and those needing to pay back loans, exporters face a reduction in competitiveness. Looking after the economy means taking care of every sector.
"We want the government to send signals that it will come and provide help."
FTI vice-chairman Thanit Sorat said the Thai baht could reach 29.50 by the end of October if it gains another 1% against major currencies per month. This would have a more pronounced negative affect on exporters unless the Bank of Thailand has measures to curb the flow of money coming into the country.
Thailand's interest rates are high compared with those elsewhere in the region, which is encouraging the inflow of money to the country, said Mr Thanit.
He said gross domestic product (GDP) growth this year could be half a percentage point lower than forecast if the baht continues to rise.
Vallop Vitanakorn, vice-chairman of the Thai National Shippers Council, said the central bank should seek co-operation from commercial banks to provide packing-credit loans in both baht and dollars. Currently the loans are provided mostly in baht.
"Whenever the baht reaches 29 baht per dollar, that will be the crisis for the garment sector," said Mr Vallop.
The FTI has proposed six remedies for the export sector, starting with an explicit acknowledgement by the government that rises in export goods prices are reducing exporters' competitiveness against their rivals.
It said the central bank needed to intervene more in the currency market to stabilise the exchange rate so the gains are more in line with those of other regional currencies.
As well, the FTI said, both the government and the central bank should take immediate measures to prevent speculators from pursuing short-term profits.
It is also asking the Port Authority of Thailand to lower service fees for exporters for three months. Customs duties for exports should also be reduced.
The FTI is also proposing that the government allow exporters to pay time-charter rates for ships in foreign currency.
The heavy inflows of funds into Thailand reflect robust economic growth and relatively low valuations of local stocks, said Yunyong Thaicharoen, head the Capital Market Research Institute at the Stock Exchange of Thailand.
Capital inflows to the bond market have totalled $3 billion so far this year, in addition to nearly $600 million into the SET.
The trend reflects the interest rate differential between Thailand and other countries, particularly at a time when the US Federal Reserve has signalled there will be no increases in its benchmark rate for a long time because the recovery is so weak.
However, the baht's appreciation will lessen the central bank's need to increase interest rates to curb inflation in the future. Its Monetary Policy Committee has raised the short-term rate by a quarter percentage point each in two consecutive meetings to 1.75% from 1.25% in mid August.
"I don't think it is necessary to use strong measures right now. The inflows reflect the economy's fundamentals and a catch-up move [from an underperforming market in the first half of the year]," said Dr Yunyong.
The economic fundamentals now are different from those in 2006, when policymakers feared that only exports could save the economy after a coup shook investor confidence.
"The economy is in a better position to cope with the baht's strength than in 2006. Domestic demand has recovered satisfactorily and the economy has good momentum," he said.
http://www.bangkokpost.com/business/economics/195718/calls-grow-louder-for-action-on-baht (http://www.bangkokpost.com/business/economics/195718/calls-grow-louder-for-action-on-baht)
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Foreign reserves surge in September
: 27 Sep 2010
International reserves surge in September
MCOT online news
Thailand’s international reserves as of Sept 17 stood at US$159.1 billion or some Bt4.9 trillion, up $1.5 billion or Bt46 billion from the $157.6 billion or Bt4.86 trillion registered the week before, according to the Bank of Thailand (BoT).
The reserve amount is calculated based on the current baht value standing at Bt30.7 to the US dollar.
The net forward contract position amounted to $12.5 billion, up $800 million from $11.7 billion listed in the previous week.
A commercial bank source said the fact that Thailand's international reserves this week increased rather considerably from the week before was likely to have stemmed from the central bank giving more weight to possible intervention in managing the stronger baht by purchasing more US dollars in the market and keeping them in the reserve.
Last week, the Bank of Thailand experienced strong criticism in the market that it had paid little attention to overseeing the stability of the baht.
According to the central bank’s report, the cash flow circulating in the system this week totaled Bt1,008 trillion, down Bt30.8 billion from Bt1.039 trillion the week before. The cash amount
had decreased despite the country’s economic recovery. (MCOT online news)
http://www.mcot.net/cfcustom/cache_page/107007.html (http://www.mcot.net/cfcustom/cache_page/107007.html)
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Baht climbs closer to sub-30 USD range
Bangkok Post: 5 Oct 2010
Baht climbs closer to sub-30 range
The baht continued its rise to 13-year highs yesterday after new data added to evidence that demand in China, a key market for Thailand, is strengthening, traders said.
The baht has gained 10% so far this year, the second-best performer in Asia behind the ringgit and the yen, as foreign investors have pumped a net $1.4 billion into local equities to benefit from the fastest economic growth in 15 years.
The non-manufacturing purchasing managers index in China rose to 61.7 in September from 60.1 in August, reports showed. "The better Chinese data and the increase in its domestic demand mean exports from Asia to China may expand, boosting regional currencies," said Tohru Nishihama, an economist at Dai-ichi Life Research Institute in Tokyo.
The baht traded yesterday in Bangkok at 30.19/23 to the US dollar compared with 30.33/37 on Friday, and briefly hit 30.08, the highest since July 1997.
http://www.bangkokpost.com/business/economics/199708/baht-climbs-closer-to-sub-30-range (http://www.bangkokpost.com/business/economics/199708/baht-climbs-closer-to-sub-30-range)
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SET slides on rumour of capital controls
The Stock Exchange of Thailand Index has tumbled 14.36 points, or 1.47%, on rumours that the Bank of Thailand might adopt capital control measures to prevent a further strengthening of the baht.
The index closed yesterday at 964.22 with hefty trading volume of 48.92 billion baht. The stock nosedive was mainly caused by local institutional and retail investors who were net sellers of 1.36 billion baht and 1.17 billion baht, respectively. Foreign investors remained net buyers of stocks worth 3.57 billion baht.
Kasikorn Securities assistant managing director Kavee Chukitkasem said speculation about possible capital controls was widespread in the market yesterday as the baht has appreciated 9% from early this year. Still, he said, investors should not panic.
"Foreigners would be the first to leave the market in response to such capital controls but they're still net buyers. I think it's just a rumour released for local investors to take profit," he said.
Phatra Securities analyst Therapong Vachirapong said the reason the market had fallen since the index had risen to nearly 1,000 points was local investors taking profit.
http://www.bangkokpost.com/news/local/199683/set-slides-on-rumour-of-capital-controls (http://www.bangkokpost.com/news/local/199683/set-slides-on-rumour-of-capital-controls)
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Regional moves needed to curb baht rise: Korn
By ACHARA DEBOONME
THE NATION
'National policy required for public, private response'
Thailand needs to draw up a national policy and seek concerted action from Asian countries, as unilateral efforts have been futile in weakening their currencies against the US dollar amid excessive capital inflows that normalise the impacts of central banks' intervention, economists have said.
The suggestion comes after Finance Minister Korn Chatikavanij said in a teleconference from Washington DC last Saturday that the issue would be discussed at the G20 meeting next month.
Korn noted that the public and private sector must jointly consider options to adjust to the strong baht, to maintain competitiveness as weakening the baht would be tough to do "against the tide". Bank of Thailand could just soften the pace of appreciation and there was no sure way to weaken the baht, he said.
While the BOT was taking care of foreign exchange rates, his ministry would launch relief measures to soften the impact of the strong baht. Aside from measures to help SMEs, the Revenue and Excise Departments would come up with moves to speed up investment to lift production quality, Korn said.
While exporters have complained about the "lack" of intervention to steady the currency, the central bank has bought dollars massively to weaken the baht. This is especially true of the last few months, as reflected by growing international reserves. Reserves ballooned by US$18 billion (Bt540 trillion) from the end of June to $164.8 billion as of October 1. This is a sharp rise from $138.4 billion at the end of 2009. Despite intervention, the baht last week broke the 30 per dollar level, and now the market expects the currency to end the year at 28-29.
"Thailand has been on the right direction in slowing down the currency appreciation pace. We need measures to help the affected. More importantly, what we can do and must do is seek regional cooperation. Acting singly, Asian nations would never beat the trend. Second, we need to rebalance the situation, as with more outflows, the appreciation could slow next year," said Usara Wilaipich, a senior economist at Standard Chartered Bank (Thai).
She believes that concerted action would at least give a reason for dollar buying, concurrently ahead of the closing of trading accounts at the end of the year. "Traders are now scrambling for a reason to take money back home. This should help, at least in this round."
"BOT and other Asian banks will run out of resources to bring down their currencies soon," said a treasurer at a local bank who asked not to be named. "Thailand needs a longterm strategy, with a joint brainstorming session from the public and private sectors. How can Thailand survive when the baht is 20something per dollar. The central bank should no longer underwrite the risks for exporters. We have complained only on the negative impacts, but we haven't yet considered options to use the advantages in strengthening long-term competitiveness."
While admitting negative impacts on some, an economist noted that Thailand gains net benefits from the baht strengthening. While agriculture, labour-intensive and resources sectors are hard hit, benefiting from this are energy, auto parts, capital goods and raw material importers. Totally, benefits are double the size of losses.
CIMB Thai Bank executive vice president Padej Piroonsit, Siam Commercial Bank's economist Pornthep Jubandhu and Usara at Standard Chartered agreed that Thailand and other countries cannot fight this battle alone, as it is sparked by the weak dollar policy. Japan's intervention in September, the first since 2004, failed to weaken the yen. Thanks to US quantitative easing, which flooded global markets with liquidity, and to the fragile recovery in the US, investors are channelling money to wherever they find good economic growth stories - including Thailand, which in the first half recorded nearly 10 per cent in economic growth. Year to date, foreign investors have remained net buyers in the stock market, with net purchases surpassing net sales by Bt49.4 billion. More than Bt100 billion is invested in government bonds with maturity of over one year, marking a record high.
"In the past month, the strength of the baht had more to do with US dollar weakness than Thailand's economic fundamentals," said Thiti Tantikulanan, chief of Kasikornbank's Capital Markets Business Division. In September alone, the dollar weakened 10 per cent against the euro, 6.9 per cent against the Australian dollar, 5 per cent against the Indian rupee, 4.7 per cent against the Swiss franc, 4.6 per cent against the Korean won and 3.6 per cent against the Taiwanese dollar and Thai baht.
While suggesting Thailand not resume universal capital control, like the one imposed in 2006, as that will shock the financial market, an economist who asked not to be named suggest an investment in infrastructure projects, like logistics networks that rely heavily on imported equipment. While this would facilitate outflows, it would also enhance Thailand's long-term competitiveness.
The situation could get worse if the US Federal Open Market Committee announces a second round of quantitative easing on November 3, with the injection of over $500 billion into the economy.
"Whatever we do now, if the US announces another quantitative easing, a new round of inflow would hit Thailand in January," Usara said.
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News broadcasts in UK are talking about a Bhat de-valuation!!!!!!!!
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BoT says Thai baht value weakening
Bangkok Post: 12 Oct 2010
BoT says baht's value weakening
The value of Thai baht weakened on Monday morning due to concerns about the government's plan to introduce measures to curb the strong baht, Bank of Thailand assistant governor Paiboon Kittisrikangwan said.
The central bank will continue closely monitoring the baht's situation and foreign capital inflow, Mr Paiboon said.
BoT domestic economy department director Methee Supapong said the Monetary Policy Committee will meet on Oct 20 to decide whether any action would be taken to stabilise the baht's value.
Thai Chamber of Commerce (TCC) deputy secretary-general Pornsilp Patcharintanakul said the private sector supported the government’s idea to collect a 15 per cent withholding tax from foreign investors buying government bonds.
Mr Pornsilp said he believed the tax measure could help curb the baht’s appreciation, just as Chile had arrested its currency’s rise by introducing a similar tax policy.
A withholding tax on government bonds for foreigners was lifted some years back to help stimulate the economy.
He said the government’s policy to curb the strengthening baht by encouraging private firms to increase investment overseas would not be fruitful over the short term.
Mr Pornsilp suggested that, in the short term, the government should clearly separate those manufacturers hard-hit by the strengthening baht from those not affected, and then provide financial assistance to each identified firm.
He said most small and medium enterprises have no knowledge on the foreign exchange system and the effects of the baht’s value movement.
“The government should rapidly step in to provide training courses about foreign exchange to these people to enable them to adjust to the changing circumstances,†he said.
Mr Pornsilp expected that the Thai currency would rise to 29.50 baht to the US dollar by the end of the year. His projection was based on the continuing expansion in the country’s exports, the US policy to double its exports this year and the tendency that the Chinese yuan would further strengthen.
He also predicted the Thai currency could strengthen to 28.50 baht against the US dollar in 2011.
Labour permanent secretary Somkiat Chayasriwong said the tripartite wage committee will not make any decision yet on an increase next year in the minimum daily wage, but it will discuss ways to raise the rate that could fit in with the rising cost of living and employers' costs.
The official wage committee would be appointed next week, so this acting committee cannot set next year's wage increase, he said.
Mr Somkiat said there was a need for a thorough study of an appropriate new wage level, and this could lead the way to future increases.
On Prime Minister Abhisit Vejjajiva's proposal to increase the minimum daily wage from 206 baht to 250 baht nationwide, Mr Somkiat said this just sets a framework to improve the quality of living of the workers.
However, issues including workers' living expenses, employers' operating costs and the growth of the economy would have to be addressed when the committee discusses the wage increase.
It was still not possible to say whether a wage increase could be approved to the figure suggested by the prime minister, Mr Somkiat said.
http://www.bangkokpost.com/business/economics/200822/bot-says-baht-value-weakening (http://www.bangkokpost.com/business/economics/200822/bot-says-baht-value-weakening)
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BoT: Fixed exchange rate 'dangerous'
Bangkok Post: 15 Oct 2010
BoT: Fixed exchange rate “dangerousâ€
The Bank of Thailand will not reintroduce the fixed exchange rate policy as it is harmful for the country’s exchange rate system, governor Prasarn Trairatvorakul said on Friday.
The 1997 financial crisis occurred because the then government introduced this policy, Mr Prasarn added.
The BoT chief was responding to the suggestions by former deputy prime minister and finance minister Virabongsa Ramangura that the central bank should cut its policy rate and reintroduce the fixed exchange rate policy to curb the baht’s appreciation.
“The central bank is now using the flexible exchange rate policy in order to avoid distorting the money market mechanismâ€, said Mr Prasarn.
Asked about the suggestion on cutting the repurchase rate, BoT governor said it depends on the decision of the Monetary Policy Committee which will meet next Wednesday. The baht’s value related issues, including the exchange rate will be considered at the meeting.
BoT Board chairman MR Jatumongkol Sonakul said on Friday that he personally sees that the need to raise the central bank’s policy rate is now lessened as the strengthening baht had slowed down inflation.
“The repurchase rate could not be immediately cut as called for. The changing in the monetary policy must be gradually done to get ready for dealing with possible negative impactâ€, he said.
MR Jatumongkol said even though he is the BoT Board chairman, but he has no authority in setting the policy rate. It is the authority of the Monetary Policy Committee.
http://www.bangkokpost.com/breakingnews/201545/bot-fixed-exchange-rate-dangerous (http://www.bangkokpost.com/breakingnews/201545/bot-fixed-exchange-rate-dangerous)
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Rate cut viewed as tonic for Thai baht
Bangkok Post: 16 Oct 2010
Rate cut viewed as tonic for baht
Businesses say inflation no worry
Businesses are calling on the Bank of Thailand to slash its benchmark interest rate by 50 basis points to 1.25% to help discourage capital inflows and arrest the appreciation of the baht.
The central bank's Monetary Policy Committee (MPC) is scheduled to meet on Wednesday to review its one-day repurchase rates, which is currently at 1.75% and already one of the lowest n the region. The MPC has one more meeting scheduled this year, on Dec 1.
The central bank raised its rate for a second straight meeting on Aug 25 and signalled further increases were in the pipeline after the economy overcame political unrest to grow faster than estimated in the second quarter.
However, central bankers have since said that pressure to raise rates has eased as inflation remains benign.
Payungsak Chartsutthipol, chairman of the Federation of Thai Industries (FTI) said that in any case, low interest rates in the range of 1.25% to 1.75% were not factors that would cause a significant increase in inflation. He noted that the interest rates of most commercial banks had not been increasing to the same extent as the central bank rates.
"The central bank thus should not use inflation as a reason to increase interest rates, as currently general rates in the market are as high as 3.4%," he said.
Mr Payungsak warned that an increase in interest rates also affected the bond market, as purchases of government bonds rose 71.6% for the first nine months of this year to 163.23 billion baht from 575.07 billion in the same period last year.
FTI vice-chairman Thanit Sorat added that the impact of the strong baht would be felt very clearly by the first quarter of next year.
"Now we are talking about the baht reaching 28 to the US dollar. Once exports slow down, all supply chains would be hard hit. There will be an oversupply of products in the domestic market with price competition," said Mr Thanit, who also heads the FTI's economic and logistics department.
"We are not asking for unrealistic proposals, such as fixing the currency rate. But the baht has gained by 7% in August and September, which is too fast for us to adapt."
Mr Thanit added, however, that the proposal to lower interest rates to 1.25% was only one part of the remedy as other measures were also needed to ensure effectiveness.
However, Deputy Prime Minister Trairong Suwannakhiri said a rate cut by the central bank was unlikely to weaken the baht, pointing out that all currencies in the region were gaining strongly against the dollar.
Instead, he said the rate cuts would affect inflation.
"It must be admitted that we could not fight against the powerful United States, which is now [using the weakness of] its dollar to rehabilitate its economy," he said.
"What we should do is to find appropriate measures to help those who are really hit by the baht appreciation."
Areepong Bhoocha-oom, permanent secretary for the Finance Ministry said the central bank would take into account all suggestions and recommendations made by the private sector.
"The entire private sector is not being hurt by the strengthening baht," he said. "Some manufacturers are actually benefiting from it, and many of them are not hurting at all."
Nonetheless, he said the ministry had no plans to tax profits gained from the difference between domestic and overseas interest rates, as suggested by some private-sector executives.
"It is a difficult thing to do. No country in the world has introduced such a tax policy. In addition, the imposition of such a tax could lead to the misunderstanding that Thailand does not welcome foreign capital," he said.
In a separate development, food exporters are calling on the government to waive the 2% import tariff on raw materials for animal feed. They also want the government to encourage commercial banks to extend soft loans secured by dollars to exporters in equivalent amounts to the differences between the current foreign exchange rate and the rate at which they have secured purchase orders.
At best, the government might help subsidise those differences, said the food exporters who met Vatchari Vimooktayon, the Internal Trade Department director-general yesterday to discuss ways to ease the impact on their businesses.
For its part, the Commerce Ministry is worried that exporters might use their problems as an excuse to cut the prices they pay to farmers.
The government is being urged to introduce special foreign-exchange channels for exporters by offering exchange rates that are competitive to those in rival countries.
http://www.bangkokpost.com/business/economics/201654/rate-cut-viewed-as-tonic-for-baht (http://www.bangkokpost.com/business/economics/201654/rate-cut-viewed-as-tonic-for-baht)
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The private sector may not be suffering,,,,,,,,What a load of Boll_x!!!!
The tourist sector is hardly a major contributor any more ,,,Just look at the ex rates,,,Plenty of other destinations ,,,far less expensive too
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Kasikornbank sees baht at 25 in 2 years
Bangkok Post: 30 Oct 2010
Kasikornbank sees baht at 25 in two years
Baht has appreciated more than any Asian currency except Japanese yen
The Kasikornbank research unit forecasts the Thai baht will reach 28 baht per US dollar next year and keep rising to hit 25 baht within two years.
Wiwan Tharahirunchote, executive chairman of the research unit, said the baht will keep rising next year in line with the weakening dollar, foreign capital inflows and the country's trade surplus.
The baht has appreciated by 10.3 per cent to 29.95 to the dollar for the year to date, the second highest among Asian currencies behind the yen.
"It is possible to see the baht touch 25 baht to the dollar, but it will probably take a year or two. Exporters should set their prices to offset a currency gain of 10 per cent from the actual exchange rate," said Mrs Wiwan.
KBank forecasts Thai GDP growth between 3.5 per cent and 4.5 per cent next year as the world recovery is still wobbly, meaning exports will grow only 9-10 per cent after this year's 24.5 per cent expansion. In 2011, it predicts the trade surplus will fall to between $4.5 and $7.6 billion, below this year's $10 billion, while the trade account balance is estimated at $5.5 billion to 8.6 billion from this year's $9.8 billion.
Foreign investment is expected to grow by 7.5 per cent to 9 per cent next year, down from 10.2 per cent. Inflation is expected to expand to 2.5 per cent to 4 per cent next year following this year's estimate of 3.4 per cent, which may rise to 3.5 per cent due to the floods.
Core inflation this year is predicted to rest at 0.9 per cent, increasing to between 1.8 per cent and 3 per cent next year.
"In 2011, inflation will likely expand as the country copes with floods and rising food prices, but this is not cause to worry as interest rates should also rise," said Mrs Wiwan.
Gold prices will be high but volatile, possibly reaching $1,380 an ounce but not lower than $1,300, she said.
"Investors should follow the Fed's announcement on interest rates, and once it announces a rate increase, which should not happen before the third quarter, the time to make money from gold prices will have ended," said Mrs Wiw
http://www.bangkokpost.com/business/economics/203906/kasikornbank-sees-baht-at-25-in-two-years (http://www.bangkokpost.com/business/economics/203906/kasikornbank-sees-baht-at-25-in-two-years)
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Just how long will it be until the Baht has to be devalued AGAIN,,,,,,,Who was here the last time it collapsed,,,92 to the GBP
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Asian currencies fall led by Thai baht
: 15 Nov 2010
Asian Currencies Weaken on Concern Policy Makers Will Seek to Curb Gains
source: bloomberg.com
By Yumi Teso - Nov 15, 2010 10:22 AM GMT+0700
Asian currencies fell, led by Thailand’s baht, on concern policy makers around the region will unveil measures to curb inflows of funds to stem currency gains.
The Bloomberg-JPMorgan Asia Dollar Index hovered near a two-week low as growing concern over the stability of Ireland’s finances spurred demand for safer assets. Ireland’s cabinet hasn’t discussed seeking a rescue and the country has no immediate need for cash, Enterprise Minister Batt O’Keeffe said yesterday. Germany is pressing the nation to seek aid before a Nov. 16 meeting of European finance ministers to calm market volatility.
“Investors seem to be a bit risk-averse and are using Ireland’s concern as an excuse to sell securities that have risen sharply,†Yuji Kameoka, a senior economist based in Tokyo at the Daiwa Institute of Research Ltd, said. “There is some concern Thailand and South Korea may introduce measures to control capital flows.â€
The baht dropped 0.7 percent, the most since June 2008, to 29.99 per dollar as of 9:14 a.m. in Bangkok, according to data compiled by Bloomberg. The Singapore dollar lost 0.5 percent to S$1.2988 and the Philippine peso slipped 0.2 percent to 43.815.
Each one of Asia’s 10 most-traded currencies has gained this year as overseas investors poured $51.5 billion into stocks in India, South Korea and Taiwan. The Group of 20 leaders agreed in Seoul last week to allow emerging markets to adopt regulatory steps to cope with the surge in capital inflows, offering them cover to limit currency gains.
Tax Revival
The baht, which has advanced 11.2 percent this year, slid for a fourth day. Southeast Asia’s second-biggest economy last month removed a 15 percent tax exemption for foreigners on income from domestic bonds, and Governor Prasarn Trairatvorakul said on Oct. 21 that the Bank of Thailand is studying additional measures to reduce currency volatility. Prime Minister Abhisit Vejjajiva said on Nov. 12 he is “still worried†about the baht’s appreciation.
South Korea’s won climbed 0.1 percent to 1,127.20 per dollar. Grand National Party lawmaker Kim Song Sik last week submitted to parliament a bill to revive a 14 percent tax on overseas investors’ bond holdings.
Taiwan’s dollar climbed 1.7 percent, the most since 2000, to NT$30.26, according to Taipei Forex Inc. The currency traded near a two-year high before a report this week that economists predict will show the economy grew for a fourth straight quarter. The Ministry of Finance said last week the central bank, the financial regulator and the ministry will study measures to manage fund inflows. Global funds have pumped $2.3 billion into the island’s stocks this month alone.
The Philippines will take steps to “ensure less volatility†in the peso, President Benigno Aquino said on Nov. 12. There should be “concerted action,†he said.
Elsewhere, Malaysia’s ringgit fell 0.2 percent to 3.1183 per dollar and Indonesian’s rupiah lost 0.1 percent to 8,938.
http://www.bloomberg.com/news/2010-11-15/asian-currencies-weaken-on-concern-policy-makers-will-seek-to-curb-gains.html (http://www.bloomberg.com/news/2010-11-15/asian-currencies-weaken-on-concern-policy-makers-will-seek-to-curb-gains.html)
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Baht headed for second weekly drop
: 19 Nov 2010
Baht Headed for Second Weekly Drop on Capital Curbs Concern
source: Bloomberg.com
By Lilian Karunungan - Nov 19, 2010 9:31
The Thai baht was poised for a second weekly decline on concern policy makers may step up curbs to discourage inflows that cause volatility in the currency.
Bank of Thailand Governor Prasarn Trairatvorakul said yesterday the central bank is in talks with other countries on joint measures to deal with capital inflows. South Korea’s finance ministry yesterday said that the government supports a law reviving a bond tax on international investors as it seeks to stem capital inflows arising from monetary easing in the U.S.
“Authorities in Thailand are looking at South Korea, which is talking about imposing capital measures,†said Radhika Rao, a regional economist at Forecast Pte in Singapore. “For BOT, they’ve already frontloaded their measures. The BOT has been very active in limiting baht appreciation.â€
The currency dropped 0.4 percent this week to 29.90 per dollar as of 8:47 a.m. in Bangkok, according to data compiled by Bloomberg. It rose 0.1 percent today. The currency reached 29.46 on Nov. 10, the strongest level since 1997. The baht is Asia’s best performer outside of Japan this year, rising 11.3 percent.
The government last month removed a 15 percent tax exemption for foreigners on domestic bond income.
Reports today and next week may show exports increased for a 12th straight month in October and gross domestic product grew for a fourth consecutive quarter.
Data due today will show overseas shipments climbed 19.6 percent from a year earlier after having gained 21.2 percent in September, according to the median estimate of economists in a Bloomberg survey. A report on Nov. 22 may say gross domestic product rose 7.2 percent in the third quarter from a year earlier, after having increased 9.1 percent three months earlier, a separate survey shows.
http://www.bloomberg.com/news/2010-11-19/baht-headed-for-second-weekly-drop-on-capital-curbs-concern.html (http://www.bloomberg.com/news/2010-11-19/baht-headed-for-second-weekly-drop-on-capital-curbs-concern.html)
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Baht weakening only for the short run, says BoT chief
source: MCOT News
วันศุกร์ ที่ 19 พ.ย. 2553
BANGKOK, Nov 19 – Bank of Thailand (BoT) Governor Prasarn Trairatvorakul on Thursday indicated the weakening of the baht to 30 to the US dollar stemmed from the current capital outflow, but emphasised that the situation would proceed only for the short term.
He said the outflow took place following the sell off for profit-taking in the stock market and the currency exchange market by foreign investors, who turned again to holding the dollar upon renewed concerns on public debt problems in such European countries as Ireland, Greece, and Portugal.
However, he believed the outflow would continue in the short run and that the Thai baht would again turn to strengthen because the United States still counts on easing financial measure by injecting a large amount of money into its economic system again.
BoT Governor Prasarn conceded the central bank is studying various measures to contain foreign capital inflows. Whether the measures will be taken or not depends on the influx of capital, the overall financial environment, side effects, and effectiveness
But for now he foresees no need to implement further measures to control the capital inflow.
Next year, he projects that foreign capital inflows would mount. So, it is necessary for the central bank to implement the policy with caution and prepare financial tools to cope with the situation.
Mr Prasarn affirmed that Thailand’s international reserves are now sufficient if the central bank wants to count on the reserves to maintain the country's financial stability in case of the capital outflow.
Also, the bank had to monitor the implementation of the loan control policy by China to curb the accelerating inflation rate because China is a major country engaged in trade with many countries worldwide including Thailand, he said.
The BoT chief admitted that the political situation is considered the gravest internal risk to the Thai economy next year because the economy could not enjoy substantial growth if the political climate is instable. (MCOT online news)
http://www.mcot.net/cfcustom/cache_page/131798.html (http://www.mcot.net/cfcustom/cache_page/131798.html)
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Baht Rises on Speculation Economic Growth Will Lure Investors
source: Bloomberg.com By Yumi Teso
Nov. 22 (Bloomberg) -- Thailand’s baht rose before a report today that economists predict will show Southeast Asia’s second- largest economy expanded for a fourth straight quarter.
Gross domestic product increased 7.2 percent in the three months to September from a year earlier after climbing 9.1 percent in the second quarter, according to the median estimate in a Bloomberg survey before the data at 9:30 a.m. The baht also gained after Irish Finance Minister Brian Lenihan said yesterday the country will seek aid from the European Union and the International Monetary Fund to shore up its banking system.
“With the stabilizing situation of the Ireland issue, investors are becoming less risk averse, encouraging them to put more money into Asia and boosting regional currencies,†said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “The growth rate is higher in the region than the major economies and there are yield advantages.â€
The baht rose 0.1 percent to 29.94 per dollar as of 8:23 a.m. in Bangkok, according to data compiled by Bloomberg. The currency may advance to around 29.70 this week, Hayashi said.
The baht has strengthened 11.2 percent this year against the greenback, the best performance among major currencies in Asia, as the nation’s fastest economic growth in 15 years attracted overseas investors to local stocks. Global funds bought $1.8 billion more Thai equities than they sold this year, according to exchange data.
Thailand’s benchmark interest rate is 1.75 percent, compared with near zero in Japan and the U.S., helping to lure a net $7.9 billion into local debt in the first 10 months of 2010, according to data from the Thai Bond Market Association.
Government notes rose. The yield on the 3.125 percent debt due December 2015 fell two basis points to 2.94 percent, according to Bloomberg data. The rate last week reached a three- month high of 2.99 percent.
The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, dropped two basis points to 1.315 percent. A basis point is 0.01 percentage point.
http://www.businessweek.com/news/2010-11-21/baht-rises-on-speculation-economic-growth-will-lure-investors.html (http://www.businessweek.com/news/2010-11-21/baht-rises-on-speculation-economic-growth-will-lure-investors.html)
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Thai baht set for third weekly decline
: 26 Nov 2010
Baht Set for Third Weekly Loss on Slowing Growth, Rate Outlook
source: Bloomberg.com By Yumi Teso
Nov. 26 (Bloomberg) -- Thailand’s baht was headed for a third weekly decline on speculation a slowing economy may encourage the central bank to leave borrowing costs unchanged during a review next week.
The currency has dropped 0.5 percent since government data on Nov. 22 showed Southeast Asia’s second-biggest economy grew at the slowest pace in three quarters in the three months through September. The Bank of Thailand will keep its one-day bond repurchase rate at 1.75 percent when it meets on Dec. 1, according to economists in a Bloomberg survey.
“We are seeing a slowing of growth, and it’s probably not as attractive to come into Thailand right now as before,†said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl. “We don’t expect a rate hike next week. Any gains in the baht will be gradual.â€
The baht slid 0.4 percent this week and 0.1 percent today to 30.08 per dollar as of 8:39 a.m. in Bangkok, according to data compiled by Bloomberg. The currency has still gained 10.7 percent this year, the most among Asia’s 10-most traded currencies.
Standard Chartered Plc lowered its rating on the baht to “neutral†from “overweight,†saying a slowing economy and political risks are likely to damp capital inflows. The central bank will also likely be less tolerant of appreciation, Thomas Harr, Singapore-based head of Asian foreign-exchange strategy at Standard Chartered, said yesterday. The U.K.-based lender cut its end-2010 forecast for the currency to 30 per dollar from 29.50, and its end-June projection to 31.50 from 31.
Government bonds were unchanged this week and today. The yield on the 3.125 percent debt due December 2015 was 2.96 percent, according to data compiled by Bloomberg.
The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, was unchanged from a week ago. It fell 2.5 basis points from yesterday to 1.335 percent. A basis point is 0.01 percentage point.
--Editors: Ven Ram, Sandy Hendry
http://www.businessweek.com/news/2010-11-25/baht-set-for-third-weekly-loss-on-slowing-growth-rate-outlook.html (http://www.businessweek.com/news/2010-11-25/baht-set-for-third-weekly-loss-on-slowing-growth-rate-outlook.html)
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Baht likely to reach 26-27 to US dollar next year: UTCC forecast
source: MCOT News วันศุกร์ ที่ 26 พ.ย. 2553
BANGKOK, Nov 26 – The baht is set to continue appreciating and will likely reach 26-27 to the US dollar next year, as the global economy remains fragile due to economic uncertainties in the United States and Europe, according to a leading economic forecaster.
Thanawat Polvichai, director of the University of Thai Chamber of Commerce’s Economic and Business Forecasting Center, said the economic volatilities faced by the US and Europe could cause the world economy to grow only 2% next year instead of 3-4 per cent as earlier expected.
He said the stronger baht would have an adverse impact on Thailand’s exports, which are forecast to grow only 8 per cent against 10-13 per cent as previously projected.
Simultaneously, global oil prices are likely to surge to US$100 per barrel. Given these factors, Thailand’s gross domestic product (GDP) is expected to grow around 4 per cent. Local consumption and tourism are expected to serve as major driving forces in place of exports for economic growth.
Because of this, Thanawat said, the Bank of Thailand needs to intervene in the baht movement, come up with a tax measure to stem speculation, encourage investment overseas, and help small- and medium-size enterprises (SMEs) affected by the baht surge.
Dr Thanawat said SMEs need to adjust themselves to the changing business environment. They must closely assess business risks, take advantage of new technology for production, as well as try to understand and catch up with market trends. (MCOT online news)
http://www.mcot.net/cfcustom/cache_page/134961.html (http://www.mcot.net/cfcustom/cache_page/134961.html)
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Thai baht gains to slow pace in 2011
: 5 Jan 2011
source: Bloomberg.com
Thailand's Baht May Underperform in 2011 on Capital Curbs, Aberdeen Says Thailand´s baht, Asia´s third-biggest gainer in 2010, will strengthen at a slower pace than regional currencies this year as regulators curb inflows, Aberdeen Asset Management Ltd. said.
Policy makers may limit gains to about 3.8 percent in the next six months, said Pongtharin Sapayanon, head of fixed income in Bangkok for Aberdeen, which manages $281.6 billion globally.
The median estimate in a Bloomberg survey is for a gain of 1.9 percent in the first half and 3.7 percent in 2011, a smaller advance than for the currencies of South Korea, the Philippines, China and India.
The baht´s 11 percent advance last year prompted the central bank to remove a 15 percent tax exemption for foreigners on income from domestic bonds in October.
South Korea and Taiwan have also tightened capital control measures as the U.S. Federal Reserve´s bond purchases made more funds available for investment in higher-yielding assets.
"We are definitely expecting the underperformance of the Thai baht relative to Asian peers such as South Korea´s won and the Singapore dollar," Pongtharin said.
"If it once again outperforms in Asia, it´s likely that the Bank of Thailand will impose other measures to stem that appreciation, probably targeting the fixed-income market once again."
http://www.bloomberg.com/news/2011-01-05/top-stories-business-and-finance.html (http://www.bloomberg.com/news/2011-01-05/top-stories-business-and-finance.html)
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'Yuan appreciation will not affect baht'
Bangkok Post: 8 Jan 2011
CURRENCY
Prasarn: Yuan appreciation will not affect baht
China's plan to allow the yuan to appreciate by as much as 5% this year will not place much pressure on the baht to appreciate in 2011, say economists.
Prasarn Trairatvorakul, the central bank governor, said gains in the baht had considerably exceeded the appreciation of the yuan in the past year or so.
``Regional currencies have close ties with the yuan and their trade is increasingly linked. The yuan appreciated slightly last year, while the baht and the Malay sia ringgit strengthened considerably. As a result, the baht is likely to appreciate less this year,'' Dr Prasarn said.
However, he acknowledged the baht could be more volatile in line with the weak recovery outlook in the United States and Europe's fiscal crisis this year. Analysts expect Thailand's gains from exports will continue to register a surplus and act as an underlying factor for further baht appreciation.
The baht was the region's strongest currency, appreciating by 10% against the dollar and 7% on a trade-weighted basis in 2010. China allowed the yuan to appreciate by 3% against the greenback last year. The yuan weakened by 7% on a trade-weighted basis with other currencies.
Beijing plans to continuously introduce monetary tightening measures including increasing banks' reserve requirement ratios and interest rates to decrease lending and stem pressure on consumer and asset prices induced by the US Federal Reserve's loose monetary policy.
Dr Prasarn said a slowdown in the Chinese economy could have a more tangible impact on the economy. Demand outside the G3 economies _ the United States, Japan and the European Union _ has been increasing in recent years and grew by 20% in 2010 with a 10% share in total exports.
But Thailand's economic fundamentals remain satisfactory. The slower growth projection is due in part to a higher base this year, he said.
The Finance Ministry's plan to cut the budget deficit in fiscal year 2012 would be healthy for the economy be cause public debt as a percentage of the economy would decrease, he said.
Wellian Wiranto, an economist with HSBC, forecast economic growth of 5.3% this year with exports, domestic consumption and foreign direct investment supporting factors.
``The domestic economy proved immune to the fallout of the April-May political unrest last year, particularly private consumption,'' he said.
``Consumer confidence has rebounded, aided by robust employment and low inflation.''
http://www.bangkokpost.com/business/economics/215031/prasarn-yuan-appreciation-will-not-affect-baht (http://www.bangkokpost.com/business/economics/215031/prasarn-yuan-appreciation-will-not-affect-baht)
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Thai baht weakens to lowest in five months
Bangkok Post: 11 Jan 2011
SET dives as baht weakens
The Thai stock market plunged by more than 20 points, or two per cent, on Monday afternoon following a continuous sell-off by foreign investors, as the baht weakened to 30.70/75 baht per US dollar, the lowest in five months.
Stock analysts said foreign investors had started taking out their profits in face of the baht's depreciation.
The Stock Exchange of Thailand (SET) composite index closed at 1,018.03 points, down 18.42 points or 1.78 per cent, on today's trading session. The trade value was 46.11 billion baht.
Soybean and Rice Bran Oil Processors Association chairman Vichit Vitayatanagorn said bottles of soybean cooking oil are rapidly disappearing from retailers' shelves after the government approved an increase in the price of palm cooking oil from 38 to 47 baht for a one litre bottle last week.
"Some department stores don't limit purchases, allowing customers to hoard cooking oil products," Mr Vichit said.
"However, production capacity remains the same, and the quantity of cooking oil products delivered to department stores has not changed."
He said 70 per cent of consumers buy palm cooking oil and about 28 per cent buy soybean oil.
The number of people buying soybean oil would increase if the price of palm oil is higher than soybean oil, he said.
Internal Trade Department director-general Vatcharee Vimuktayon said the government will not intervene and will allow the market mechanism to run its course.
Mrs Vatcharee said if people believe products were being hoarded or sold at unrealistic prices they can report it to her department on the 1569 hotline.
Real Estate Information Centre director-general Samma Kitsin said the real estate sector is hopeful the domestic market will be on the upswing in the first half of this year, but is concerned that the price of construction materials will increase.
Mr Samma said the confidence index of business operators towards the overall economy and the real estate market for the first six months of 2011 rose to 68.7 per cent. The index previously stood at 65.6 per cent.
The confidence index of real estate firms listed in the stock market stood at 74.7 per cent, higher than other unlisted companies at 62.7 per cent.
"Most businesses don't expect any major political events or violence like last year, but they are worried about the likely increase in the price of construction materials because the wholesale price index in this area in 2010 rose two per cent year-on-year," he said.
The price of steel, wood, electrical and plumbing equipment and other construction items had gone up last year.
He said the retail price of cement dropped eight per cent in 2010, but would likely increase later this year.
http://www.bangkokpost.com/business/economics/215352/falling-stocks-baht-weakens (http://www.bangkokpost.com/business/economics/215352/falling-stocks-baht-weakens)
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The GBP Pound is at 48.80 for cash in the Bangkok Bank this morning,,,,,thats the highest for several months
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I have been waving my magic wand for long enough.............maybe all that hard work is paying off!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :biggrin:
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I have been waving my magic wand for long enough.............maybe all that hard work is paying off!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :biggrin:
Be careful you can get locked up for that nono nono nono
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The GBP Pound is at 48.80 for cash in the Bangkok Bank this morning,,,,,thats the highest for several months
Spoke to sooooooooon
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Baht slide triggers inflation worries
By The Nation
2011-01-26
MR Chatu Mongol Sonakul, chairman of the Bank of Thailand, said yesterday that monetary authorities were facing a delicate balancing act, as the trade-off between exchange and inflation rates, coupled with domestic political upheavals, could trip up the economic expansion.
"There's been a need for the baht to weaken. Now, it's weakening but it puts pressure on inflation. It's a Catch-22 situation. Vietnam could not make it because of this. In principle, the MPC [Monetary Policy Committee] has to try to strike a balance. The political issue is another risk factor," he said.
The rise in inflation stems partly from the weakening baht, while the central bank and the central bank's MPC will have to maintain equilibrium between the exchange rate, interest rate, inflation rate and foreign exchange reserves, he said.
The baht yesterday broke the 31-per-dollar level, hitting 31.05 before closing at 30.96-97.
The depreciation of the baht will give a push to exports, the country's main economic engine, which will definitely support economic growth. The central bank favours a leisurely easing of the baht now that the currency is yielding some of its gains from last year.
"When the baht is depreciating, we have to manage it so that it is not too fast as the depreciating baht will help exporters, but it may also impact inflation," Chatu Mongol said.
The economy could continue to accelerate if inflation is low, he said. Countries with high inflation mostly have low rates of growth, as investors are afraid of making investments, while those with low inflation will enjoy higher economic expansion.
The University of the Thai Chamber of Commerce was also concerned about inflation and the political situation.
The government should extend the freeze on product prices and raise the price ceiling for diesel to Bt31-Bt32 per litre, said Thanavath Phonvichai, director of the university's Centre for Commerce and Business Studies.
Continuing the moratorium on price hikes, scheduled to expire in March, would slow down the rise in product prices, he said. Rising prices could put pressure on inflation and the central bank will have to notch up the policy interest rate to contain inflation, he said.
The policy rate should increase in the third quarter of this year, as production costs will not be affected much, he said. The rate is expected to move up 50-100 basis points this year.
The cap on diesel price at Bt30 per litre should not last beyond March. Increasing the diesel price ceiling to Bt31-Bt32 per litre is another suggestion for allowing more time for people to adjust. Maintaining the diesel price for too long and using other parts of the budget like excise taxes, to support the policy will not be positive for the economy in the long run, he said.
Political gatherings are another risk factor for the economy now. This was reflected in the big loss on the Stock Exchange of Thailand last Monday, he said.
Even though the political problem has not eroded consumer confidence, it affects the economy, especially confidence in tourism, he said. If the government can't control the political situation, it will definitely affect the economy, he said.
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The GBP is moving the right way again
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Hi Bums
50 baht to the pound almost there!!!
Currently BBC site shows 49.97970 baht to the £
TBWG sawadi
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The currencies to watch are the Asian regional monetary units. Less the Western rates, keep an eye on the Japanese Yen, HK Dollar, and Chinese Yuan.
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BoT: Thai baht could keep see-sawing
Bangkok Post: 4 Feb 2011
Foreign capital outflows from Thailand have been benign recently, although foreign investors recorded net sales during the past two weeks, says Atchana Waiquamdee, the deputy governor for Monetary Stability with the Bank of Thailand.
"Some capital shifted out. But some investors moved funds to the bond market or deposited them in non-resident baht accounts. I think investors found excuses for profit-taking," she said.
The recent baht depreciation was partly driven by gold importers responding to prices dipping to $1,300 from $1,400 per ounce at the end of last year, she said.
"There is increasing dollar demand from importers amid the weakening baht," Dr Atchana said.
The baht has been seesawing in light of uncertainties in the United States and European economies. Foreign investors have increased their hedging ratio because of foreign-exchange volatility.
"The dollar index has dropped 40%. If we regard the US dollar as a blue-chip stock, investors might bottom-fish it in the hope that it will rebound. The baht might weaken again," she said.
Factors affecting foreign exchange are expectations of movements in major currencies, economic trends in advanced and developing economies, and Asian economies increasing policy interest rates.
The central bank, meanwhile, is preparing a master plan to promote freer outward portfolio investment to meet the Asean Economic Community framework from 2015.
"In point of law, we may not seem very open. But in fact, we rarely refuse permission if there is a request. Inadequate hedging is an obstacle to the promotion of freer capital accounts as investors perceive higher costs from the weakening baht resulting from the outflows," Dr Atchana said.
The central bank aims to promote individual direct investment abroad as right now only listed firms are keen on outward investment.
She also said the central bank, in line with regional monetary policymakers, did not rule out capital controls to keep the impact of freer capital accounts manageable. "Admittedly capital control measures are not that effective at deterring the inflows, but there is no clear evidence on the cost of using them either."
The central bank's implementation of the 30% unremunerated reserve requirement in 2006 was an example as investors expected the baht to strengthen after it was rescinded. Also the Brazilian central bank has gradually increased its tax on capital inflows from 2% to 6%.
"We have prepared various degrees of capital control measures to ensure they are proportionate to the degree of inflows. We will use them when they are really needed," said Dr Atchana.
She said a major difference between 2006 and now is that the central bank can issue bonds to absorb funds injected from foreign-exchange intervention without seeking Finance Ministry approval.
The baht was second in Asia last year, appreciating 10% against the dollar, underpinned by a $30-billion surplus from trade and services income combined with net capital inflows. Appreciation pressure is expected to ease this year as the surplus is likely to decline. Meanwhile, uncertainties in major currencies could reduce pressure from inflows, Dr Atchana said.
http://www.bangkokpost.com/business/economics/219799/bot-baht-could-keep-see-sawing (http://www.bangkokpost.com/business/economics/219799/bot-baht-could-keep-see-sawing)
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Thai baht weakens as oil price rises
Yahoo Finance: 2 Mar 2011
Thai Baht Weakens as Oil Price Rises on Middle East Turmoil
Thailand’s baht weakened for the first time in three days as political turmoil in the Middle East pushed up oil prices, raising concern global economic growth will slow.
Crude for April delivery rallied past $100 a barrel and U.S. Federal Reserve Chairman Ben S. Bernanke said yesterday a sustained jump in the price of oil threatened to cause slower growth and higher inflation.
Rising commodity costs resulted in Thailand’s current-account surplus shrinking to $1.09 billion in January from $1.75 billion in December, the central bank said last month. The country has raised borrowing costs four times since June.
“Thailand relies on imported oil, so higher crude prices will be negative for the current account,†said Vishnu Varathan, an economist in Singapore at Capital Economics Asia) Pte. “Inflation is becoming a big concern. We believe the Bank of Thailand will continue to tighten.â€
The baht fell 0.1 percent to 30.58 per dollar as of 9:42 a.m. in Bangkok, according to data compiled by Bloomberg. The currency earlier rose by as much as 0.2 percent to 30.49.
Consumer prices rose 2.87 percent in February from a year earlier, easing from a five-month high of 3.03 percent the previous month, a commerce ministry report said yesterday.
Bank of Thailand policy makers raised the one-day bond repurchase rate by a quarter percentage point to 2.25 percent on Jan. 12. They next meet on March 9.
http://www.bloomberg.com/news/2011-03-02/thai-baht-weakens-as-oil-price-rises-on-middle-east-turmoil.html (http://www.bloomberg.com/news/2011-03-02/thai-baht-weakens-as-oil-price-rises-on-middle-east-turmoil.html)
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moneysmileCURRENCY moneysmile
BoT: Baht pressure to ease this year
Bangkok Post: 25 Mar 2011
Pressure on the baht appreciation should ease from last year in line with a declining trade surplus and rising outbound foreign direct investment, says Pongpen Ruengvirayudh, a Bank of Thailand assistant governor.
"Most foreign exchange pressure will still derive from the sale of US dollars by local exporters. But we expect baht demand from them to decline and demand for dollars from importers to speed up this year," she said.
After accelerating in last year's fourth quarter, export sales have slowed this year, causing the baht to weaken.
Meanwhile, outbound foreign direct investment amounted to 870 million baht in the first two months of this year, with lending for their expansion totaling 2.65 billion baht.
For all of 2010, outward direct investment was 1.3 billion, with lending for expansion totaling 7.2 billion baht.
"We expect the baht to move in more of a two-way direction this year, as many global uncertainties exist that could cause volatile foreign capital flows such as the political turmoil in North Africa and the Middle East, the Japanese earthquake and the European sovereign debt crisis," said Ms Pongpen.
The central bank has also found foreign bond investors are buying more hedging contracts. Net foreign selling has been recorded so far this year by the Stock Exchange of Thailand, while the bond market has recorded net foreign buying.
The central bank expects the net gains from trade and service revenue to stand at US$10-13 billion this year, down from $15 billion last year.
"Local exporters have increasingly bought hedging contracts, driving the baht's strength, while importers have hardly bought any hedging instruments," said Ms Pongpen.
She said the central bank's priority in foreign exchange management is to ensure that baht volatility is acceptable to businesses.
"We would not go against economic fundamentals, as that would lead to imbalances. Bu we will maintain long-term competitiveness compared with all trade partners' currencies, not just the dollar," said Ms Pongpen.
She said the baht initially weakened immediately after the earthquake in Japan but appreciated afterward. Exports to that country may decline in the short term but will pick up as reconstruction begins.
"The effects of the Japanese earthquake on capital flows remain uncertain. In the near term, repatriation of funds might occur, but we expect Japan's direct investment to Thailand to increase, as it will likely diversify more of its manufacturing abroad, especially automobiles and electronics," she said.
The central bank expects core inflation will rise above the 3% upper range of the target toward year-end, in line with the rising oil price and salary increases.
It currently forecasts headline consumer prices will increase by 2.5% to 4.5% this year.
http://www.bangkokpost.com/business/economics/228509/bot-baht-pressure-to-ease-this-year (http://www.bangkokpost.com/business/economics/228509/bot-baht-pressure-to-ease-this-year)
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Thailand 2011 GDP to be revised: BOT
: 1 Apr 2011
BoT: 2011 GDP growth projection to be revised
BANGKOK, 1 April 2011 (NNT) – The Monetary Policy Committee (MPC) will review its estimation for the Thai economic expansion for 2011 due to several domestic and foreign factors, according to the Bank of Thailand (BoT).
BoT Monetary Policy Group Director Mathee Supapongse stated that the BoT will present information pertaining to the recent massive earthquake and tsunami in Japan, violence in Libya, and serious flooding in the southern part of Thailand to the MPC for discussion on 20 April 2011.
Mr Mathee continued that all the information would be used to support the MPC’s decision whether a review of the Gross Domestic Product (GDP) growth figure for 2011 was necessary.
The director estimated that Thai businesses, particularly in the automotive and auto parts industries, would be affected in a short term by the twin catastrophes in Japan. He said delay in auto assembly and delivery became noticeable since some auto parts and raw materials must be imported only from Japan.
Nevertheless, Mr Mathee believed the automotive demand is likely to be higher, and entrepreneurs would be able to seek raw materials for their production from other sources instead of Japan; therefore, the Thai automotive and auto parts industries are likely to expand strongly in a long term.
Regarding the Thai economic growth in the first quarter of this year, the director said a positive growth was likely judging from the conditions in January, February and the beginning of March.
However, Mr Mathee noted that the BoT must assess the overall situation again as there have been many negative issues, especially the incidents in Japan which have been sending impacts on the national economy since the middle of March.
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BoT: Thai econ in Feb expanding continuously
BANGKOK, 1 April 2011 (NNT) – The Bank of Thailand (BoT) has reported that the Thai economy in February 2011 was expanding continuously following the growing consumption and investment in the country plus foreign demands for Thai goods.
BoT Monetary Policy Group Director Mathee Supapongse elaborated that domestic consumption and investment expansion remained good while foreign demand was rising in both the export and tourism sectors.
The director however noted that the industrial production was plummeting because of many reasons such as closure of giant refineries for maintenance, which dragged down production of petroleum products in the country.
In addition, Mr Mathee admitted that the hard disk drive production shrank compared with the same period last year while other industries from auto, electric appliances as well as electronic parts were going on well.
Moving to agricultural produces, the director reported that the production in the agricultural sector was expanding smoothly, except for oil palm and tapioca, which were facing threats from natural disasters and insects.
As for economic stability, Mr Mathee detailed that there was continuous pressure. Although the headline inflation rate was reducing, the inflation rate expectation and production cost were projected to rise further, which would cause pressure to the inflation rate later on.
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Baht gains on fund inflows
The Nation: 8 Apr 2011
Fund inflows drove the Thai baht above 30 per dollar for the first time since January 3. The currency made a new 3-month high when it touched 29.50 per dollar some time in the afternoon today, but intervention was attributed for the weakening.
The currency was last traded at 30.03-4 as of 6.30pm. It was 29.50 in November, 2010.
Foreign funds return to Thailand as well as other Asian markets due to strong economic outlook, compared with increasing risks elsewhere in the world.
This week alone, global funds' stock purchases outpaced their sale by US$332 million, boosting this month's net-buys to $606 million. According to the Thai Bond Market Association, overseas investors bought a net $941 million of government debt this week, as bond yields rose on higher benchmark rates.
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Thai baht likely to remain volatile
Bangkok Post: 12 Apr 2011
CURRENCY
Baht likely to remain volatile
Growing divergence in monetary policy among major economies and rising oil prices could increase the baht's volatility in the near term, say analysts.
The European Central Bank's move last week to increase its policy interest rate for the first time since the 2008 global downturn, by a quarter of a percentage point to 1.25%, also marked the first time it had ever led the US Federal Reserve's cycle. The Fed is still maintaining its easing stance with a session of money pumping, which started in November and is due to finish in June.
China raised required reserves last month before hiking its interest rate by a quarter of a percentage point this month.
Thailand's Monetary Policy Committee is due to meet on April 20, with its interest rate now standing at 2.5%.
Atchana Waiquamdee, deputy governor for monetary stability at the Bank of Thailand, said the baht's appreciation was driven by the strengthening of the euro after the European Central Bank's interest rate increase.
An increase in gold bar exports in the wake of higher prices had also caused demand for the baht to increase.
Dr Atchana said the central bank had acted in the same vein as regional central banks by buying dollars from the market to prevent the baht from overshooting. The European debt crisis remained a risk to global economic growth, with Spain's acceptance of financial assistance from the International Monetary Fund highlighting its limited capacity to stimulate its economy through fiscal policy.
"The G-3 economies might increase interest rates in the near future to keep inflation in check," she said. "The central bank will be mindful not to let the interest rate increase to deter economic growth and we are ready to change policy direction to support it. But we havent't witnessed a local economic slowdown."
Finance Minister Korn Chatikavanij yesterday said the baht's appreciation would help reduce the impact of rising oil prices on the economy. The oil price (West Texas Intermediate) hit its highest point for two and a half years at US$127 per barrel. It is trending higher mainly due to Libya's political crisis.
Usara Wilaipich, an economist with Standard Chartered Bank, said a possible change in the Fed's monetary policy in light of oil-driven inflationary pressure could reverse the baht's trend.
"I think the baht's appreciation was a short-term phenomenon. The baht will likely be highly volatile in the second quarter and might weaken to 30.50 to 31.00 to a dollar," she said.
Parson Singha, a strategist with HSBC, said the baht had appreciated minimally since the start of the year and had been slightly volatile because the central bank had continued to buy dollars.
"China's stance to allow the yuan to continue to appreciate and expectation that Singapore will allow its currency to be firmer had reduced upward pressure on other regional units," Mr Singha said.
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Stronger baht due to foreign capital inflow
:22 Apr 2011
MCOT NEWS วันศุกร์ ที่ 22 เม.ย. 2554
Stronger baht due to capital inflows, says BoT
BANGKOK, April 22 – Bank of Thailand (BoT) Assistant Governor Pongpen Ruengvirayudh on Thursday said the continued strengthening of the baht at present was attributed to foreign capital inflows into Asian countries including Thailand.
She said many Asian currencies including the baht had appreciated sharply.
The central bank continued monitoring the situation closely, but had not yet taken special measures to oversee foreign capital inflows.
Songtham Pinto, director of the BoT Office of Macroeconomics, said that capital flowing into the region remains usual at present. Whether the baht would strengthen or weaken depends on many factors, not only the policy interest rate hike.
On mounting concerns the higher policy interest rate would negatively affect current economic conditions, he said the interest rate is weighted on average at 4 per cent of total costs.
The higher interest rate could negatively impact Thailand's business sector, he said, but the central bank defends the interest rate rise because inflationary pressure remains high.
The bank must closely monitor inflation and attempt to control its upward movement through monetary policy and regulating consumer prices
He conceded the policy interest hike would have a short-term impact, but would benefit the economy in the long run if it could contain rising inflation. (MCOT online news)
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