Private Sector Confident Central Bank Will Manage To Curb Baht Volatility

[Jai Dee]

Private sector confident central bank will manage to curb baht volatility

Private-sector representatives have expressed confidence the Finance Ministry and the Bank of Thailand will manage to prevent the baht from strengthening to an extent that exports are affected, according to the Federation of Thai Industries.

Speaking after leading representatives of seven exporters associations to meet and discuss with the central bank governor Tarisa Watanagase, FTI’s Chairman Santi Vilassakdanont said the exporters were confident upon the discussion that the ministry and the central bank would be able to curb the baht volatility and prevent it from affect exports, which are the country’s main economic sector.

He said the central bank chief insisted the 30 per cent reserve requirement is a temporary measure, which could be adjusted to changing environment.

The bank would not come up with additional measures since no grave concerns are found for now.

Since the capital controls were imposed, he said, the baht had become more stable and purchase orders for products had also increased.

He viewed the exporters felt satisfied if the baht hovered around 35.80 to the US dollar.

“Even so, the exporters need to help themselves as well by adjusting a production process to reduce costs and finding new market channels. They cannot rely solely on the currency exchange rate,” he said.

FTI Vice Chairman Adisak Rohitasoon said the appropriate level of the baht for the export promotion is 38 to the dollar and wanted the central bank to come up with more measures such as an interest rate cut to make the baht weaken.

He viewed the capital control measure had both positive and negative effects on various industries.

Source: TNA - 7 February 2007

[Robbie Dye]

Private sector confident central bank will manage to curb baht volatility

Private-sector representatives have expressed confidence the Finance Ministry and the Bank of Thailand will manage to prevent the baht from strengthening to an extent that exports are affected, according to the Federation of Thai Industries.

Speaking after leading representatives of seven exporters associations to meet and discuss with the central bank governor Tarisa Watanagase, FTI’s Chairman Santi Vilassakdanont said the exporters were confident upon the discussion that the ministry and the central bank would be able to curb the baht volatility and prevent it from affect exports, which are the country’s main economic sector.

He said the central bank chief insisted the 30 per cent reserve requirement is a temporary measure, which could be adjusted to changing environment.

The bank would not come up with additional measures since no grave concerns are found for now.

Since the capital controls were imposed, he said, the baht had become more stable and purchase orders for products had also increased.

He viewed the exporters felt satisfied if the baht hovered around 35.80 to the US dollar.

“Even so, the exporters need to help themselves as well by adjusting a production process to reduce costs and finding new market channels. They cannot rely solely on the currency exchange rate,” he said.

FTI Vice Chairman Adisak Rohitasoon said the appropriate level of the baht for the export promotion is 38 to the dollar and wanted the central bank to come up with more measures such as an interest rate cut to make the baht weaken.

He viewed the capital control measure had both positive and negative effects on various industries.

Source: TNA - 7 February 2007

Who kidding who now?? This morning the USD dollar at 33 and a bit, the Pund at 64 and a bit and Euro equally hit, just WHAT is going on??? This is devastating for tourism as well as expats!

[jimbabe]

Private sector confident central bank will manage to curb baht volatility

Private-sector representatives have expressed confidence the Finance Ministry and the Bank of Thailand will manage to prevent the baht from strengthening to an extent that exports are affected, according to the Federation of Thai Industries.

Speaking after leading representatives of seven exporters associations to meet and discuss with the central bank governor Tarisa Watanagase, FTI’s Chairman Santi Vilassakdanont said the exporters were confident upon the discussion that the ministry and the central bank would be able to curb the baht volatility and prevent it from affect exports, which are the country’s main economic sector.

He said the central bank chief insisted the 30 per cent reserve requirement is a temporary measure, which could be adjusted to changing environment.

The bank would not come up with additional measures since no grave concerns are found for now.

Since the capital controls were imposed, he said, the baht had become more stable and purchase orders for products had also increased.

He viewed the exporters felt satisfied if the baht hovered around 35.80 to the US dollar.

“Even so, the exporters need to help themselves as well by adjusting a production process to reduce costs and finding new market channels. They cannot rely solely on the currency exchange rate,” he said.

FTI Vice Chairman Adisak Rohitasoon said the appropriate level of the baht for the export promotion is 38 to the dollar and wanted the central bank to come up with more measures such as an interest rate cut to make the baht weaken.

He viewed the capital control measure had both positive and negative effects on various industries.

Source: TNA - 7 February 2007

Who kidding who now?? This morning the USD dollar at 33 and a bit, the Pund at 64 and a bit and Euro equally hit, just WHAT is going on??? This is devastating for tourism as well as expats!

Devastating? Things imported into thailand should be less baht now since it takes less to buy. Will people get bennhefit of this/fosters/gueinness?

[Old Man River]

Private sector confident central bank will manage to curb baht volatility

FTI Vice Chairman Adisak Rohitasoon said the appropriate level of the baht for the export promotion is 38 to the dollar and wanted the central bank to come up with more measures such as an interest rate cut to make the baht weaken.

Source: TNA - 7 February 2007

For a number of years we have been told that a time was soon coming when certain industries in Thailand would no longer be competitive against the cheap labor found in countries like China and Viet Nam. This was again confirmed by the expensive study the previous government commissioned. It is exporters of these industries that need 38 to offset the impact of Thailand's now more expensive labor costs vis a vis some neighboring countries.

It is a sad, hard fact that the time has come when some industries in Thailand are no longer economically viable.

[PeaceBlondie]

I just got 35.68:1 for the dollar. On January 29, I got 35.75. Sounds pretty stable to me. January 4, it was 35.87. Even early December the rates were 35.91 and 35.75. Stable for over two months.

[Plus]

For a number of years we have been told that a time was soon coming when certain industries in Thailand would no longer be competitive against the cheap labor found in countries like China and Viet Nam. This was again confirmed by the expensive study the previous government commissioned. It is exporters of these industries that need 38 to offset the impact of Thailand's now more expensive labor costs vis a vis some neighboring countries.

It is a sad, hard fact that the time has come when some industries in Thailand are no longer economically viable.

That might be the case but now we are dealing with baht appreciating faster than currencies of its competitors. Perhaps they could have made their point better if they showed baht vs regional currencies movement. Exporters are worried that all their efforts might be overwritten by their products suddenly costing 10% more than their competitors'.

[jbowman1993]

I just got 35.68:1 for the dollar. On January 29, I got 35.75. Sounds pretty stable to me. January 4, it was 35.87. Even early December the rates were 35.91 and 35.75. Stable for over two months.

Don't try to interject fact into the discussion PB, you'll only confuse them.....

[Old Man River]

For a number of years we have been told that a time was soon coming when certain industries in Thailand would no longer be competitive against the cheap labor found in countries like China and Viet Nam. This was again confirmed by the expensive study the previous government commissioned. It is exporters of these industries that need 38 to offset the impact of Thailand's now more expensive labor costs vis a vis some neighboring countries.

It is a sad, hard fact that the time has come when some industries in Thailand are no longer economically viable.

That might be the case but now we are dealing with baht appreciating faster than currencies of its competitors. Perhaps they could have made their point better if they showed baht vs regional currencies movement. Exporters are worried that all their efforts might be overwritten by their products suddenly costing 10% more than their competitors'.

I don't know why, but short term investors who are putting money in Asia prefer Thailand more than other area countries and this is the legitimate short term investors. Hence, the THB can be expected to continue to appreciate against the USD. The BOT cannot worry about those needing 38 when they have to protect agricultural exports, which employs a great deal of people, as you know. This is why I think we are headed for a Malaysia type of solution, as draconian as that is.

The only other means of protect agricultural exports from an appreciating THB is to have those in the industry cut margins. From what I understand, farmers can't. That would mean the middlemen who move product from the farms to the cities and we both have seen how much noise middlemen have made against the modern trade when moving finished goods from the cities to upcountry. Imagine the hue and cry if told they have to cut their margins when moving ag items to the cities.

This all leaves the BOT in a tight position if the THB continues to strengthen against the USD, as expected.

[Old Man River]

I just got 35.68:1 for the dollar. On January 29, I got 35.75. Sounds pretty stable to me. January 4, it was 35.87. Even early December the rates were 35.91 and 35.75. Stable for over two months.

This is exactly what the BOT is trying to achieve, but the issue here is that they have said they will relax the currency controls which have been successful in pushing speculators into the offshore markets. That is fine if they would stay there, but even the BOT is questioning if they will which is why they are currently reticent to completely lifting the controls. However, sooner or later they must lift them as they are being pressured to do so, making the controls a short term solution to what is feared to be a much longer term problem. Hence, nobody at the BOT is getting complacent with stability over two months.

[John K]

If you go to

http://oanda.com/convert/fxhistory

You can get a history between any currency showing the days rates. It takes about 10 seconds to do.

This list starts a few days before the coup showing USD to THB so you can see the trends. In this case free fall may be a good description.

09/17/2006 37.32170

09/18/2006 37.32040

09/19/2006 37.34350

09/20/2006 37.41410

09/21/2006 37.81220

09/22/2006 37.56040

09/23/2006 37.45860

09/24/2006 37.50

09/25/2006 37.50

09/26/2006 37.47740

09/27/2006 37.53180

09/28/2006 37.55940

09/29/2006 37.57240

09/30/2006 37.58490

10/01/2006 37.720

10/02/2006 37.720

10/03/2006 37.65150

10/04/2006 37.60260

10/05/2006 37.61370

10/06/2006 37.62450

10/07/2006 37.60060

10/08/2006 37.56320

10/09/2006 37.660

10/10/2006 37.61310

10/11/2006 37.55290

10/12/2006 37.49610

10/13/2006 37.52150

10/14/2006 37.48220

10/15/2006 37.570

10/16/2006 37.570

10/17/2006 37.48570

10/18/2006 37.41980

10/19/2006 37.38570

10/20/2006 37.35250

10/21/2006 37.28870

10/22/2006 37.40

10/23/2006 37.40

10/24/2006 37.29640

10/25/2006 37.26550

10/26/2006 37.15640

10/27/2006 37.04110

10/28/2006 36.86960

10/29/2006 36.86040

10/30/2006 36.860

10/31/2006 36.7920

11/01/2006 36.76190

11/02/2006 36.68010

11/03/2006 36.71530

11/04/2006 36.72310

11/05/2006 36.87660

11/06/2006 36.880

11/07/2006 36.77310

11/08/2006 36.68950

11/09/2006 36.71210

11/10/2006 36.72850

11/11/2006 36.65670

11/12/2006 36.75570

11/13/2006 36.760

11/14/2006 36.58950

11/15/2006 36.46690

11/16/2006 36.53950

11/17/2006 36.54330

11/18/2006 36.62360

11/19/2006 36.77470

11/20/2006 36.780

11/21/2006 36.66290

11/22/2006 36.630

11/23/2006 36.61140

11/24/2006 36.56620

11/25/2006 36.54340

11/26/2006 36.66640

11/27/2006 36.66940

11/28/2006 36.47920

11/29/2006 36.39660

11/30/2006 36.14810

12/01/2006 36.00470

12/02/2006 35.87050

12/03/2006 35.93930

12/04/2006 35.940

12/05/2006 35.90040

12/06/2006 35.70630

12/07/2006 35.66490

12/08/2006 35.63550

12/09/2006 35.58870

12/10/2006 35.73560

12/11/2006 35.740

12/12/2006 35.62550

12/13/2006 35.36050

12/14/2006 35.29540

12/15/2006 35.2620

12/16/2006 35.26050

12/17/2006 35.36570

12/18/2006 35.370

12/19/2006 35.53710

12/20/2006 35.98650

12/21/2006 35.99670

12/22/2006 36.50610

12/23/2006 36.41270

12/24/2006 36.24690

12/25/2006 36.250

12/26/2006 36.50480

12/27/2006 36.31380

12/28/2006 36.0160

12/29/2006 35.57850

12/30/2006 35.50030

12/31/2006 35.9440

01/01/2007 35.950

01/02/2007 35.950

01/03/2007 35.81670

01/04/2007 35.59790

01/05/2007 35.75230

01/06/2007 35.81310

01/07/2007 35.950

01/08/2007 35.950

01/09/2007 35.79310

01/10/2007 35.86480

01/11/2007 36.04380

01/12/2007 35.9780

01/13/2007 35.9520

01/14/2007 36.04620

01/15/2007 36.050

01/16/2007 36.00020

01/17/2007 35.92760

01/18/2007 35.84070

01/19/2007 35.50230

01/20/2007 35.32510

01/21/2007 35.370

01/22/2007 35.3510

01/23/2007 35.25220

01/24/2007 35.08620

01/25/2007 35.19560

01/26/2007 34.66530

01/27/2007 33.99050

01/28/2007 33.68310

01/29/2007 33.67530

01/30/2007 34.15520

01/31/2007 34.63230

02/01/2007 34.80

02/02/2007 35.17180

02/03/2007 35.29970

02/04/2007 34.90720

02/05/2007 34.90

02/06/2007 34.92620

02/07/2007 34.91860

02/08/2007 34.78540

02/09/2007 34.54730

02/10/2007 34.22550

02/11/2007 33.70720

02/12/2007 33.70

02/13/2007 33.82070

02/14/2007 34.00920

[usatrader]

I just got 35.68:1 for the dollar. On January 29, I got 35.75. Sounds pretty stable to me. January 4, it was 35.87. Even early December the rates were 35.91 and 35.75. Stable for over two months.

Excuse the intrusion, just adding an observation hoping it has some meaning and relevance to the subject;

When you use, say Bangkok Banks "Onshore" rates you get something similar to what you said.

http://www.bangkokbank.co.th/Bangkok+Bank/...es/FX+Rates.htm

Then when you get a wire transfer rate from its Branch on Broad Street NY you get an "offshore" buy rate of 33.36 and sale rate of 33.65???

* Bangkok Bank, Ltd.

29 Broadway, 20th Floor

New York, NY 10006

Phone: 212-422-8200, Fax: 212-422-0728

Email: [email protected]

Telex: (023) 175459 BKBK UT

Swift: BKKB US 33

FED Routing: 026008691

CHIPS ABA: 0869

I find the same thing for just about any offshore Currency transfer there is. Perhaps a 3 to 5 % differential to the Sterlin to the Euro as well.

Here is a a recent run of comparsion to onshore and offshore rate differences as quoted depending in where you are.

Just an observation. There ssems to be a supply and demand imbalance as to offshore currency pricing perhaps??

------------Bkk Bk NY--Bkkbank--50 to 100$--Off vs On

------------Off shore---Buy Bhat---Sell bhat---Shore rate

2/1/07-----35.13-------35.46-------36.11----- -0.93%

2/2/07-----34.92-------35.49-------36.14----- -1.61%

2/5/07-----34.48-------35.45-------36.1------ -2.74%

2/6/07-----34.08-------34.96-------36.01----- -2.52%

2/7/07-----34.18-------35.44-------36.09----- -3.56%

2/8/07-----34.22-------35.41-------36.06----- -3.36%

2/9/07-----33.6---------35.4--------36.06---- -5.08%

2/12/07----33.6--------35.42-------36.07----- -5.14%

2/14/07----33.36------35.41-------36.06----- -5.79%

* Does not include BKK banks 500 Bhat transfer fee or most US bank transfer fees of $25.

http://www.x-rates.com/d/THB/USD/data30.html