Baht drops slightly after central bank’s ‘warning shot’

By Wichit Chaitrong
The Nation

 

Pipat: “I think this was just a warning shot and it implies that the central bank doesn’t really want to lower interest rates.”

 

The central bank’s move to curb the rising baht is just a warning shot and will have little impact on the currency’s value or on the bond and stock markets, analysts said.

 

The Bank of Thailand (BOT) took the first step on Friday by reducing the amount of baht accounts held by foreign investors and called on financial institutions to provide reports on foreign investors holding debt securities issued in Thailand. 

 

After BOT’s move, the Stock Exchange of Thailand closed at 1,731.59, down 8.86 points or 0.51 per cent from trading on Thursday. The baht also weakened by about 20 to 30 satang, depreciating to Bt30.90 from Bt30.60 to the US dollar. 

 

“It is not clear whether the central bank’s action affected the stock market, as the impact on the value of the baht is very small,” said Pipat Luengnaruemitchai, assistant managing director at Phatra Securities Co. “I think this was just a warning shot and it implies that the central bank doesn’t really want to lower interest rates.”

 

If the US Federal Reserve cuts its policy rate later this month, then the baht is likely to move up against the dollar, Pipat said, adding that BOT’s last resort will be to cut the policy rate. 

 

The fast-rising value of the baht has worried both exporters and policymakers as it could further impact Thai exports, which have already suffered from the global economic slowdown. Some economists have called on the central bank to lower the interest rate to prevent the baht from rising further as it could erode the competitiveness of Thai exports as goods from countries with weaker currencies will be cheaper in the global market. 

 

Some analysts have forecast that the baht could edge up to Bt29 or Bt28 to the dollar by the end of this year should the Fed lower its interest rate twice this year. 

 

Tada Phutthitada, president of the Thai Bond Market Association, said foreign investors sold bonds worth only Bt912 million, while their combined total holding is about Bt1 trillion. This is indicative of the fact that the central bank’s measure did not have much of an effect on the bond market. Yields of the 4.4-year bonds rose only 2 basis points, while that of the 9.4-year bond rose only 3 basis point. The year-to-date capital outflow from the bond market is only Bt1.8 billion, he added. 

 

Details of the central bank’s measures are as follows: 

 

1)    In order to prevent speculation in the Thai baht the BOT reduced the limit on the outstanding balance of Non-Resident Baht Account (NRBA) and Non-Resident Baht Account for Securities (NRBS) from Bt300 million to Bt200 million per non-resident with effect from July 22. For NRBA and/or NRBS with outstanding balances that are higher than Bt200 million at the end of the day, financial institutions will have to notify account holders to reduce their outstanding balance within the deadline. 

 

NRBA holders who are non-financial corporates with underlying trade and investment in Thailand, and have opened accounts directly with Thai financial institutions, may submit requests to the BOT for a waiver on this outstanding balance limit, which will be considered on a case-by-case basis.

 

2)    Non-residents holdings debt securities in Thailand will be required to report the names of their end beneficiaries. This measure will help enhance the central bank’s monitoring of non-residents’ investment behaviours. This measure goes into effect as of July 2019. 

 

“The central bank only warned foreign investors on Friday that it may take more action against them later,” Tada said.

 

A statement from the central bank on Friday said: “The BOT will continue to closely monitor the Thai baht’s movements as well as non-resident behaviours and stand ready to use additional measures if undesirable speculative behaviours persist.”

 

Source: https://www.nationthailand.com/business/30372913

 

-- © Copyright The Nation Thailand  2019-07-13

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52 minutes ago, rooster59 said:

The Bank of Thailand (BOT) took the first step on Friday by reducing the amount of baht accounts held by foreign investors and called on financial institutions to provide reports on foreign investors holding debt securities issued in Thailand. 

Maybe i misunderstand but that statement implies that they dont actually Know what is going on regarding foreign capital inflows. The strength of the baht is hardly new news and yet it seems that only now they have turned their attention to it and start asking questions.

8 minutes ago, potless said:

Maybe i misunderstand but that statement implies that they dont actually Know what is going on regarding foreign capital inflows. The strength of the baht is hardly new news and yet it seems that only now they have turned their attention to it and start asking questions.

I think what it means is Thailand is an easy place to hide money , but if BOT now requires notifications of who is behind the money , it will push some people away from hiding money in Thailand . 

9 minutes ago, BestB said:

I think what it means is Thailand is an easy place to hide money , but if BOT now requires notifications of who is behind the money , it will push some people away from hiding money in Thailand . 

Good point.

12 minutes ago, BestB said:

I think what it means is Thailand is an easy place to hide money , but if BOT now requires notifications of who is behind the money , it will push some people away from hiding money in Thailand . 

It was a lot easier for me to hide money in America than Thailand.  Are you sure you know about all the laws that Thailand has agreed to in the past few years?

24 minutes ago, marcusarelus said:

It was a lot easier for me to hide money in America than Thailand.  Are you sure you know about all the laws that Thailand has agreed to in the past few years?

Any links to this Marcus? Thanks.

Thailand's Central Bank raised the interest rate by 0.25 point to 1.75% back in December, and from that time the baht became more expensive; perhaps reducing it to 1.50% again might help, or back to earlier record low 1.25%...????

 

We hope they continue at this rate!

I hope it will continue at a fast pace....

2 hours ago, marcusarelus said:

It was a lot easier for me to hide money in America than Thailand.  Are you sure you know about all the laws that Thailand has agreed to in the past few years?

No I do not have a clue but can not wait to be educated by you

2 hours ago, OnTheRun said:

Any links to this Marcus? Thanks.

https://en.wikipedia.org/wiki/Anti-Money_Laundering_Office_(Thailand)

Reported post removed.

1 hour ago, khunPer said:

Thailand's Central Bank raised the interest rate by 0.25 point to 1.75% back in December, and from that time the baht became more expensive; perhaps reducing it to 1.50% again might help, or back to earlier record low 1.25%...????

 

Reducing interest rate works but if other countries do the same then it’s back to where it started 

47 minutes ago, marcusarelus said:

https://en.wikipedia.org/wiki/Anti-Money_Laundering_Office_(Thailand)

So according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

With the stroke of a pen they can confiscate all those 800,000 baht accounts, it would seem.

1 hour ago, BestB said:

So according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

Do you know how much the Chinese can take out of China in a suitcase?  Might want to look it up.  

6 minutes ago, IAMHERE said:

With the stroke of a pen they can confiscate all those 800,000 baht accounts, it would seem.

I think you mean the USA 

https://en.m.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States

1 hour ago, marcusarelus said:

Do you know how much the Chinese can take out of China in a suitcase?  Might want to look it up.  

It makes no difference how much they can take out and you do not know either(without googling the answer) What matter is how much they bring in unregistered.

 

So try again, according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

Baht still overpriced.  On USD, 10-year average = 32.40

47 minutes ago, BestB said:

It makes no difference how much they can take out and you do not know either(without googling the answer) What matter is how much they bring in unregistered.

 

So try again, according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

Of course I know.  It's $50,000 per year and soon to be lowered to $10,000

10 minutes ago, Isaan sailor said:

Baht still overpriced.  On USD, 10-year average = 32.40

Can't be overpriced because the price is what people are willing to pay for it.  No one sets the value it floats and has since 1997.

3 minutes ago, marcusarelus said:

Of course I know.  It's $50,000 per year and soon to be lowered to $10,000

Google is your friend, but that still does not change the question asked, so lets try 3rd time

 

What matter is how much they bring in unregistered.

 

So try again, according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

 

Also wise to read the entire google sentence, not only the first paragraph

 

China's current regulations for Chinese nationals are that people can buy up to US$50,000 in foreign currency per year at the bank. For taking out the foreign currency, the person can just finish the process at the local bank if the amount is under US$10,000 in a day.

33 minutes ago, BestB said:

Google is your friend, but that still does not change the question asked, so lets try 3rd time

 

What matter is how much they bring in unregistered.

 

So try again, according to you anti laundering office makes it hard to hide money in Thailand ? Is that why chinese and Russians can bring suitcases full of cash to buy condo’s ? And tourists can open bank accounts without declaring where money came from? Or anyone can transfer money into Thai bank just by providing silly explanation if bank bothers to ask 

 

Also wise to read the entire google sentence, not only the first paragraph

 

China's current regulations for Chinese nationals are that people can buy up to US$50,000 in foreign currency per year at the bank. For taking out the foreign currency, the person can just finish the process at the local bank if the amount is under US$10,000 in a day.

In 2018, Chinese buyers accounted for roughly 25% of total foreign investment in U.S. residential real estate.  Thailand and the USA make it hard for people to hide money.  Is buying a condo hiding money?  China may tighten up restrictions but nothing to do with Thailand.  Chinese money is a good source of foreign investment nothing illegal about it from a Thai point of view.  

Inflammatory post removed.  

 

14 minutes ago, marcusarelus said:

In 2018, Chinese buyers accounted for roughly 25% of total foreign investment in U.S. residential real estate.  Thailand and the USA make it hard for people to hide money.  Is buying a condo hiding money?  China may tighten up restrictions but nothing to do with Thailand.  Chinese money is a good source of foreign investment nothing illegal about it from a Thai point of view.  

Everything is illegal about it when money is brought in unregistered. and taken out from country unregistered.

If the Thai baht does not get back up to at least 33 baht to the dollar soon the Thai economy is going to crash. Seems the Bank of Thailand and the government are determined for a repeat of 1997. More Thais are in deep debt than ever before. Most can barely afford to live yet are buying new cars and building more homes. I guess they want to copy foreigners once again. A fatal mistake. Within a year i predict the bubble will burst .

3 hours ago, IAMHERE said:

With the stroke of a pen they can confiscate all those 800,000 baht accounts, it would seem.

You are only just figuring that out now? A article 44 and all those accounts are gone minutes later

 

Only thing stopping them is would be financial suicide, both for banking system and economy as a whole as no one, foreign or thai, would trust the banking system here again.

17 hours ago, potless said:

Maybe i misunderstand but that statement implies that they dont actually Know what is going on regarding foreign capital inflows. The strength of the baht is hardly new news and yet it seems that only now they have turned their attention to it and start asking questions.

The final confession of a 20%-30% drop in tourism got someones attention !

10 hours ago, Mitkof Island said:

If the Thai baht does not get back up to at least 33 baht to the dollar soon the Thai economy is going to crash. Seems the Bank of Thailand and the government are determined for a repeat of 1997. More Thais are in deep debt than ever before. Most can barely afford to live yet are buying new cars and building more homes. I guess they want to copy foreigners once again. A fatal mistake. Within a year i predict the bubble will burst .

1997 happened because the baht was pegged to the USD.  Can't happen again because the baht is not pegged to the USD.  

10 hours ago, BestB said:

Everything is illegal about it when money is brought in unregistered. and taken out from country unregistered.

You can bring in 500,000 baht unregistered legally.