Fed pushes baht to 6-year high

[webfact]

Fed pushes baht to 6-year high

By The Nation

 

 

THE baht has hit a six-year high, propelled to 31.05 to the US dollar yesterday after the US Federal Reserve signalled possible interest rates cuts of as much as half a percentage point over the rest of this year.
 

The Fed’s flagging of monetary easing comes in response to increased economic uncertainty and a drop in inflation expectations. That was enough to push the baht to its highest since October 2013.

 

At a meeting on Wednesday, the Fed kept interest rates on hold in a 2.25-2.5 per cent target range, amid the US economic uncertainties and the trade tensions with China.

 

The president of the St Louis Fed, James Bullard, voted against his colleagues by seeking a 25 basis point cut in the benchmark interest rate.

 

Bank of Thailand or BOT’s assistant governor financial markets operation group Vachira Arromdee said that BOT has monitor baht strong within two weeks that is following the both internal and external factor that impact to baht currency strong when compare with others currency in this regional.

 

However, if baht still strong higher than others currency by did not relate with the country’s economy based and may be impact with the real economy and the country’s industry, the BOT will restrict with all of financial transaction that has signed to use Thailand to be short-term money supply to speculate on the baht, she said.

 

However, BOT warning private sector to manage their financial risk that will impact from external factor that may be impact with the country’s currency, she said.

 

“In this time is the best time for private and publics sector pay back their loan or their expansion such as invest to buy machinery or investment in term of foreign currency that will benefit for the business when baht strong,” Vachira said. 

 

Jitipol Puksamatanan, chief markets strategist at Krungthai Bank, said it was noteworthy that one Fed member voted for a rate cut, with seven of the Fed’s 17 policymakers foreseeing the rates cuts amounting to 50 basis points this year. 

 

The Fed also introduced some new phrasing in its announcement, describing the economy moving to moderate economic growth from solid growth, while inflation still held below 2 per cent. It added the word “uncertainties” and dropped “patient” from its statement, suggesting the Fed’s main attention is with the economic uncertainties. 

 

US stocks rose after the statement, with the S&P500 Index edging up 0.3 per cent. The yield on 10-year US bonds fell 3.3 basis points to 2.03 per cent. The US dollar depreciated against all assets - from the major currencies to crude oil and gold. 

 

Risk appetite growing

 

The baht is believed to have gained support from capital markets, which are open to more risks and the prospects coming from a clearly easing US monetary policy. 

 

Major risks to US dollar’s continued depreciation are the trade negotiations and the US economic slowdown as a result of the political uncertainty. The Thai currency is forecast to stay in a range of 31.15 to 31.25 to the US dollar. 

 

The Stock Exchange of Thailand Index yesterday continued its rise after surpassing 1,700 points on trade value of Bt107.56 billion on Wednesday. It ended yesterday at 1,717.82 points, up 11.84 points - or 0.69 per cent - from Wednesday’s close. The trading value was Bt75.52 billion. Foreign, institutional, and proprietary investors made net purchases of Bt4.48 billion, Bt1.49 billion, and Bt367.09 million, respectively.

 

On the domestic economic front, Thanavath Phonvichai, director of the University of the Thai Chamber of Commerce, said that the TCC Confidence Index in May fell to 47.4 from 47.8 in the previous month.

 

The index is compiled from a survey of chairmen and directors of chambers of commerce nationwide from May 29 to June 5. 

 

The National Economic and Social Development Council’s announcement of a drop of in economic growth for the first quarter of this year - to 2.8 per cent from 3.6 per cent in the same period of last year - was cited for a decline in the confidence levels. 

 

Other negatives that eroded confidence included a year-on-year drop of 2.57 per cent in exports for April, the SET Index’s 53.3 point slump, concerns over the escalating US-China trade war, Thailand’s rising cost of living and the high prices of products and services. Also cited was the imbalance between people’s incomes and their costs of living. 

 

However, some factors give cause for optimism, such as the Monetary Policy Committee’s recent decision to hold the policy rate steady at 1.75 per cent, along with the slight baht appreciation to 31.796 per US dollar at the end of May from 31.86 at the end of this April.

 

Also helping is an improved outlook for tourism, higher agricultural production to meet increased market demand, and the government’s measures to enhance farmers’ efficiency. 

 

Business operators have urged the government to ease the high living costs for ordinary people as part of efforts to reduce income inequality, while stimulating public investment. 

 

Advances in the country’s transport system should be pushed to increase connectivity and help spur economic expansion. More efforts are also being sought to promote new export markets for agricultural products amid the US-China trade war. Tourism destinations in smaller communities should be promoted, alongside support for greater marketing opportunities for the products under the One Tambon, One Product scheme, business leaders say.

 

Source: http://www.nationmultimedia.com/detail/Economy/30371482

 

-- © Copyright The Nation 2019-06-21

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[smedly]

good news 

 

Baht UP against EURO Sterling Aus $ and US $ - what could go wrong

 

For now it seems nothing

[RichardColeman]

Gonna have to send the wife out to work

[Puchaiyank]

30.865 as I write this morning...yet another negative for US expats...

[AlexRich]

Can't help thinking that the real Thai economy will be taking a hit in the near future, the rising Baht is a double-edged sword.

[arithai12]

3 hours ago, webfact said:

However, if baht still strong higher than others currency by did not relate with the country’s economy based and may be impact with the real economy and the country’s industry, the BOT will restrict with all of financial transaction that has signed to use Thailand to be short-term money supply to speculate on the baht, she said.

Is this a google translate effect, or does she really speak like that and if so what the hell does she mean?

[arithai12]

1 hour ago, AlexRich said:

Can't help thinking that the real Thai economy will be taking a hit in the near future, the rising Baht is a double-edged sword.

It is already, see the news about economy slowing down and revised growth forecast.

[neeray]

12 minutes ago, arithai12 said:

Is this a google translate effect, or does she really speak like that and if so what the hell does she mean?

I think this was the point in the OP where I gave up reading it and skipped on down to the highly intellectual and literate TVF members comments.

[bdenner]

1 hour ago, AlexRich said:

Can't help thinking that the real Thai economy will be taking a hit in the near future, the rising Baht is a double-edged sword.

Self appointed financial experts, on this forum, have been saying that for years! I, for one, am not holding my breath!

[mikebell]

4 hours ago, webfact said:

BOT has monitor baht strong within two weeks that is following the both internal and external factor that impact to baht currency strong when compare with others currency in this regional.

 

This reads like Google translate wrote the article!

[sammieuk1]

Think of the planet the 70p pound is saving on paper ????

[RBOP]

Yet we see no decrease in prices of imported products. Things here only get more expensive. Amazon and Ebay far cheaper than the stores here. Good time to sell baht. 

[Beggar]

19 minutes ago, RBOP said:

Yet we see no decrease in prices of imported products. Things here only get more expensive. Amazon and Ebay far cheaper than the stores here. Good time to sell baht. 

I am not so sure. I remember when the USD was declining from above 50 to 46 Baht the Central Bank here in Thailand said the Baht will not go up further. Now the USD is below 31. Whenever the Central Bank made such a statement the Baht went up further. Perhaps one day Thais retire in western countries because they are so cheap.... 

[zydeco]

It was met with derision when I said almost a year ago that Trump would drive the dollar down below the lows of the Yingluck years, which was almost 28 baht to the dollar. Well, it's coming. How do you like that Trump economy now? It is Trump's policy to accumulate debt and make the dollar cheap. A US middle class that is a shell of its former self, fat rich bankers and CEOs, and expats in Thailand forced out of the country because of the policies of the man they voted for. Without that 800K in the bank, people seeking extensions are going to be in trouble. A five to ten percent reduction in the exchange rate will destroy the income method for a lot of people.

[monkeycu]

Hard to  say what she is on about, maybe she is still suffering from last night 

[soalbundy]

3 hours ago, arithai12 said:

Is this a google translate effect, or does she really speak like that and if so what the hell does she mean?

I agree, this is bar girl English

[soalbundy]

1 hour ago, monkeycu said:

Hard to  say what she is on about, maybe she is still suffering from last night 

It is are not raining in Bangkok also

[RobbyXNorway]

This might be the golden window for those who want to sell property/cars/whatever in Thailand and move somewhere else. More bang for your baht.

 

But I find the steadily rising THB fishy to say the least. Most countries are actively trying to devalue their currencies for an export advantage. Thailand seems to want to go the other way. Which makes zero sense to me.

 

As I said in a different thread, are big players setting up a carry trade in THB (high yield bonds) vs USD? That means borrowing in USD (low interest) and buying THB bonds (high yield). The same was done with Japanese Yen by borrowing in Yen (low interest) and buying USD bonds (higher yield at the time this was ongoing).

 

THB moves makes no sense on a National economical viewpoint.

[Nowisee]

Tolerable if just doing a 25k baht ATM pull every few months.

BUT, if you are unlucky enough to have to be taking 800k from USD account now for extension purposes... ouch.  
 

[Kasane]

Thai baht appreciation has been a great bonanza for farangs who moved their savings to Thai banks. There's perhaps more to come as Western economies go into a tailspin.

[RobbyXNorway]

32 minutes ago, Kasane said:

Thai baht appreciation has been a great bonanza for farangs who moved their savings to Thai banks. There's perhaps more to come as Western economies go into a tailspin.

If you/they still have the baht in the bank, then yes absolutely. But if that money was put into property, then maybe not! The real-estate market in Hua Hin at least is bogged down in the mire.

 

Many western economies will go into tailspin when the central banks loose control of the markets. But Thailand is not isolated in the global economy and will likely crash into tailspin also. Thailand has been attracting capital, but when the origin country of the capital goes into the said tailspin, then the capital might be yanked out to put out fires in the portfolio elsewhere.

[AlexRich]

4 hours ago, bdenner said:

Self appointed financial experts, on this forum, have been saying that for years! I, for one, am not holding my breath!

If Thailand were China in the 1990’s I’d agree with you ... but it’s not ... it has a junta government. It reminds me a little of Turkey, which looked unassailable under Erdogan a few years back ... but isn’t any longer.

[watcharacters]

7 hours ago, RichardColeman said:

Gonna have to send the wife out to work

 

At 10K baht a month?    Why bother?

 

[AlexRich]

1 minute ago, watcharacters said:

 

At 10K baht a month?    Why bother?

 

Maybe he meant “freelancing”?

[watcharacters]

1 hour ago, Kasane said:

Thai baht appreciation has been a great bonanza for farangs who moved their savings to Thai banks.

 

How would it matter unless  the farang uses his baht outside Thailand?     And don't forget to factor in those nasty little currency exchange fees.    ????

[Kasane]

58 minutes ago, RobbyXNorway said:

If you/they still have the baht in the bank, then yes absolutely. But if that money was put into property, then maybe not! The real-estate market in Hua Hin at least is bogged down in the mire.

 

Many western economies will go into tailspin when the central banks loose control of the markets. But Thailand is not isolated in the global economy and will likely crash into tailspin also. Thailand has been attracting capital, but when the origin country of the capital goes into the said tailspin, then the capital might be yanked out to put out fires in the portfolio elsewhere.

It's a myth that CB's have control of economies. If they did have control then there will be no recessions. Forget if's and but's. USD is on a precipice. That's why gold is soaring. 

Edited June 21, 2019 by Kasane

[Nong Khai Man]

1 hour ago, RobbyXNorway said:

If you/they still have the baht in the bank, then yes absolutely. But if that money was put into property, then maybe not! The real-estate market in Hua Hin at least is bogged down in the mire.

 

Many western economies will go into tailspin when the central banks loose control of the markets. But Thailand is not isolated in the global economy and will likely crash into tailspin also. Thailand has been attracting capital, but when the origin country of the capital goes into the said tailspin, then the capital might be yanked out to put out fires in the portfolio elsewhere.

 The real-estate market in Hua Hin at least is bogged down in the mire......Think that goes Nationwide, Only 8/9 Years Ago Friends of Ours bought Land & Built a House HERE In Nong Khai,Total cost was close to 14 Million Baht, It's Now been up " For Sale " for 2 Years & The Latest " OFFER " They've had is 3.5 Million !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[connda]

9 hours ago, webfact said:

The Fed’s flagging of monetary easing comes in response to increased economic uncertainty and a drop in inflation expectations. That was enough to push the baht to its highest since October 2013.

Love the way this article was written. 
The US Fed eases rates which makes the Thai Baht stronger.  But that's not reality.

The US Fed eases rates which makes the US Dollar weaker.  That's reality.

It's not about the Thai Baht strengthening against other currencies due to another country's central bank policy, it's about another country's currency weakening against other global currencies, including the THB, due to it's own central bank policies.  

[andytime]

None of the world is too healthy.. with almost 13 trillion in negative yielding bonds.  The global experiment will go on but could end very quickly and sadly painfully for most of us.  For those in the west expectant of a pension system... sadly days and benefits very numbered.  One suspects as globalization unwound the water will be going out for many investments, lifestyles and some major readjustments.  Maybe with the yuan's weakening against the baht Chinese money for property will flow a little less and the condos built for Mickey Mouse and Donald Duck and the Thai Winter Olympics bid maybe about to set off a painful revision of Tom Yum something....interesting times..

[connda]

1 hour ago, RobbyXNorway said:

If you/they still have the baht in the bank, then yes absolutely. But if that money was put into property, then maybe not! The real-estate market in Hua Hin at least is bogged down in the mire.

 

Many western economies will go into tailspin when the central banks loose control of the markets. But Thailand is not isolated in the global economy and will likely crash into tailspin also. Thailand has been attracting capital, but when the origin country of the capital goes into the said tailspin, then the capital might be yanked out to put out fires in the portfolio elsewhere.

Yeah, when I showed up in 2007 the BKK skyline was littered with mega-projects gone South after the 1997 financial crash.  
I fully expect to see that scene again in the not too distance future.  

Thai banks have over-extended debt on their balance sheets.  The illusion of prosperity in Thailand is a debt-driven phenomenon, probably more so than the West.  Most Thais I know carry more debt than they can service - and Thai banks keep extending more debt, albeit, at usurious interest rates as they provide their depositors with next to nothing.  Fractional reserve banking on steroids backed by Credit Default Swaps that won't be worth the paper they are printed on.  

When the next financial tsunami hits - Thai banks will go down with the rest of the fleet.  Then?  BKK Skyline 1997 Redux.