Securities Execs, Bankers Back New Finance Minister

[george]

Securities execs, bankers back new finance minister

BANGKOK: -- Newly-appointed Finance Minister Chalongphob Sussangkarn is reputed to be a competent academic with strong critical knowledge in economics and finance who is backed up by a strong team of researchers from the Thailand Development and Research Institute with whom he has worked for some years, according to executives in the securities and banking sectors.

Montri Sornpaisal, president and CEO of Kim Eng Securities Plc, said Mr. Chalongphob has knowledge and competence in economic affairs and economics, and could cooperate well with the private and public sectors.

He said the former TDRI chief had earlier expressed his view that the 30 per cent reserve requirement imposed by the Bank of Thailand was too harsh and interest rates should be cut to ease pressure on the baht appreciation.

Because of this, Mr. Montri said he believed the capital control measure would be cancelled, which could boost investment sentiment in the Stock Exchange of Thailand.

Pichit Akarathit, president of MFC Asset Management Co, said Mr. Chalongphob is suitable for the finance minister post since he is well versed with the macro-economic affairs and had a strong team of researchers from TDRI.

He said he believed the new finance minister could liaise well with the private sector.

Banluesak Pussarangsri, Director of Bangkok Bank Plc’s Macro-economy Analysis Centre, said Mr. Chalongphob is a smart, well-educated person who had assumed chairmanship of TDRI at age 45.

Although he is quite well versed in macro-economic matters, he is not well known among foreign investors.

Mr. Banluesak said he believed the new finance minister should be given the opportunity to work for a few months to prove whether he could manage to boost investor confidence.

He said he believed the minister would turn to count on interest rate cuts to curb the volatility of the baht.

--TNA 2007-03-08

[jing jing]

Rates have already been cut by almost 1 percent and the baht continues to appreciate, now trading at something like 32.75 to the dollar and getting stronger by the day. I wonder, how much of a rate cut does he think will be necessary to do the job?

[Old Man River]

Rates have already been cut by almost 1 percent and the baht continues to appreciate, now trading at something like 32.75 to the dollar and getting stronger by the day. I wonder, how much of a rate cut does he think will be necessary to do the job?

That sounds like the offshore rate. The onshore rate has been running in the 35-36 range.

To answer your question on how low interest rates could go should it be needed, according to Korn (Demo's), interest rates could be cut up to 2% from recent highs. He bases this on the fact that inflation appears well in control (with oil prices now down).

[dingue2rep]

Rates have already been cut by almost 1 percent and the baht continues to appreciate, now trading at something like 32.75 to the dollar and getting stronger by the day. I wonder, how much of a rate cut does he think will be necessary to do the job?

That sounds like the offshore rate. The onshore rate has been running in the 35-36 range.

To answer your question on how low interest rates could go should it be needed, according to Korn (Demo's), interest rates could be cut up to 2% from recent highs. He bases this on the fact that inflation appears well in control (with oil prices now down).

How high can the Baht rise? How will this affect Thailand economically? Is the Baht higher because of the weakening dollar? Is the BOT likely to act against this and when?

[mumbu]

It is very difficult to explain a short-term movements of any given currency , Thai baht including. However, the discussion in this thread and elsewhere is based on the premise that the baht is overvalued. I do not believe there is any evidence of that.

True, the former finance minister believed in that. He generally belongs to a paranoidal and xenofobic group of Thai aristocrates who think that foreigners are here to get them. As a result, we saw an idiotic recent measure of BOT with the idea to hurt this "nasty foreigners". Did he care about consequences for Thailand? Obviously not. Good riddance!

Even current governer of BOT has said recently that she does not believe that baht is overvalued.

On the other hand, some of the long-term trends regarding relative behavior of a number of major currencies are pretty clear. In the long run currencies like US dollar and UK pound are going to depreciate quite drastically versus many Asian currencies. There are objective reasons for that. Sorry for those who retired on fixed income in these currencies in places like Thailand. Either you have plan B or you are going to suffer. And, please, do not blame speculators or Thais who should , in your opinion, do their best to devaluate baht versus dollar. This should not be any of Thais concern nor it is, in fact, possible.

[thedude]

It is very difficult to explain a short-term movements of any given currency , Thai baht including. However, the discussion in this thread and elsewhere is based on the premise that the baht is overvalued. I do not believe there is any evidence of that.

True, the former finance minister believed in that. He generally belongs to a paranoidal and xenofobic group of Thai aristocrates who think that foreigners are here to get them. As a result, we saw an idiotic recent measure of BOT with the idea to hurt this "nasty foreigners". Did he care about consequences for Thailand? Obviously not. Good riddance!

Even current governer of BOT has said recently that she does not believe that baht is overvalued.

On the other hand, some of the long-term trends regarding relative behavior of a number of major currencies are pretty clear. In the long run currencies like US dollar and UK pound are going to depreciate quite drastically versus many Asian currencies. There are objective reasons for that. Sorry for those who retired on fixed income in these currencies in places like Thailand. Either you have plan B or you are going to suffer. And, please, do not blame speculators or Thais who should , in your opinion, do their best to devaluate baht versus dollar. This should not be any of Thais concern nor it is, in fact, possible.

dont worry. with less foreign investments coming in, less capital equipment will be bought, which means less export oriented production, which means less demand for the thai baht, which means a weaker thai baht as the thai people adjust to a more comfortable pace of life and a more sufficiency based economy. well done to the Surayud administration, they got it all figured out, what were we dumb foreigners thinking?

[Thai-Aust]

I do believe that anyone who dares to make comment on this topic should know at least a basic economic knowledge and not to express their opinions solely based on a superficial perception.

Edited March 9, 2007 by Thai-Aust

[mumbu]

I do believe that anyone who dares to make comment on this topic should know at least a basic economic knowledge and not to express their opinions solely based on a superficial perception.

I completely agree with the two last posters. Indeed, the market will take care of exchange rates and, if not the measure of BOT which created an artificial shortage of Bahts on international markets, Baht would have been already lower. Another interesting question: guess who is paying the difference between off-shore and onshore exchange rates.

Here is a simple receipt how to produce dollars from "thin air". One wires US dollars to her Thai baht nonresidential account

(in chunks less than 20000 US). Dollars are exchanged upon arrival into Thai bahts with onshore rate. Then she wires Thai bahts to an appropriate dollar account to an offshore bank. Bahts are exchanged into dollars in offshore rates. (Do not try it at home but it gives you the idea. I want to emphasize that all operations described above are perfectly legal). Thus, she ends up with extra dollars. Well, somebody had lost it. Guess who?

Edited March 13, 2007 by mumbu