Thai Baht currency NEWS

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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)

[Admin]

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

[TBWG]

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!!


TBWG

[dave the dude]

Well thanks a bunch!

Having just transferred a shed load of Sterling to avoid the ATM charge!

How not to do it!!


TBWG

David
Can you not use the ATM's that still do not charge 150b???

DtD

[Admin]

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

[Admin]

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

[Admin]

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

[Admin]

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.

[urleft]

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?   

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. 

 

[Admin]

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.

[Admin]

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

[Admin]

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.

[Admin]

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

[Admin]

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 fuel”, 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

[Admin]

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

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.”

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

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 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.