Baht Weakens Against Us Dollar

[george]

Baht weakens against US dollar in morning trading session

BANGKOK, March 26 (TNA) – The baht has weakened further and hovered around 34.98-35 to the US dollar in Monday morning trading session in the same direction with other major world currencies but the greenback.

Last week, the baht had appreciated sharply and hit a new nine-year high of 34.65 to the US dollar.

A money analyst said the US dollar had appreciated against other global currencies including the baht since a figure on second-hand home sales in the United States released for February was higher than expected.

At the same time, there were rumours in the local market that the Bank of Thailand planned to seek cooperation from commercial banks to oversee money trading transactions to ensure the baht is not too strong.

The analyst projected the baht would not rise to hit a new high this week if it turned to strengthen again this week.

--TNA 2007-03-26

[John K]

From Oanda.com

02/20/2007 34.05760

02/21/2007 33.90710

02/22/2007 33.97160

02/23/2007 34.08020

02/24/2007 33.85750

02/25/2007 33.89680

02/26/2007 33.90

02/27/2007 34.04610

02/28/2007 34.37270

03/01/2007 34.38860

03/02/2007 34.16820

03/03/2007 33.96030

03/04/2007 33.84910

03/05/2007 33.76570

03/06/2007 33.63990

03/07/2007 33.15150

03/08/2007 32.9850

03/09/2007 33.08390

03/10/2007 33.07320

03/11/2007 33.050

03/12/2007 33.05250

03/13/2007 33.10

03/14/2007 33.25710

03/15/2007 33.23790

03/16/2007 33.23210

03/17/2007 33.08660

03/18/2007 33.140

03/19/2007 33.140

03/20/2007 33.09780

03/21/2007 33.11520

03/22/2007 32.73180

03/23/2007 32.14560

03/24/2007 31.95350

03/25/2007 32.0

03/26/2007 32.0

[chiang mai]

From Oanda.com

02/20/2007 34.05760

02/21/2007 33.90710

02/22/2007 33.97160

02/23/2007 34.08020

02/24/2007 33.85750

02/25/2007 33.89680

02/26/2007 33.90

02/27/2007 34.04610

02/28/2007 34.37270

03/01/2007 34.38860

03/02/2007 34.16820

03/03/2007 33.96030

03/04/2007 33.84910

03/05/2007 33.76570

03/06/2007 33.63990

03/07/2007 33.15150

03/08/2007 32.9850

03/09/2007 33.08390

03/10/2007 33.07320

03/11/2007 33.050

03/12/2007 33.05250

03/13/2007 33.10

03/14/2007 33.25710

03/15/2007 33.23790

03/16/2007 33.23210

03/17/2007 33.08660

03/18/2007 33.140

03/19/2007 33.140

03/20/2007 33.09780

03/21/2007 33.11520

03/22/2007 32.73180

03/23/2007 32.14560

03/24/2007 31.95350

03/25/2007 32.0

03/26/2007 32.0

These are offshore NOT onshore rates.

[Naam]

The anal-yst projected the baht would not rise to hit a new high this week if it turned to strengthen again this week.

nomen est omen!

[Flysiam]

Wake me up when something REALLY happens

[thaigene2]

Baht weakens against US dollar in morning trading session

BANGKOK, March 26 (TNA) – The baht has weakened further and hovered around 34.98-35 to the US dollar in Monday morning trading session in the same direction with other major world currencies but the greenback.

Last week, the baht had appreciated sharply and hit a new nine-year high of 34.65 to the US dollar.

A money analyst said the US dollar had appreciated against other global currencies including the baht since a figure on second-hand home sales in the United States released for February was higher than expected.

At the same time, there were rumours in the local market that the Bank of Thailand planned to seek cooperation from commercial banks to oversee money trading transactions to ensure the baht is not too strong.

The analyst projected the baht would not rise to hit a new high this week if it turned to strengthen again this week.

--TNA 2007-03-26

Wishful spin job by TNA-MCOT-WHATEVER..

The above post is probably more accurate - onshore or offshore. So nice try..

[rainman]

Its really not funny anymore..

[Nebukanezar]

Its really not funny anymore..

Not even a little F'ing bit.

I'm at the point were I am seriously wishing something drastic to happen to crash the Thai economy..just so long as pepole don't have to die to make it happen.

[marquess]

Its really not funny anymore..

Not even a little F'ing bit.

I'm at the point were I am seriously wishing something drastic to happen to crash the Thai economy..just so long as pepole don't have to die to make it happen.

And so that people can see how the gov, has been keeping them in the dark about the real rates, do you think that any importer, will be buying stuff at 34/35?

[shotover]

These are offshore NOT onshore rates.

If you use a BKK ATM (using a Visa Debit card with the PLUS system) to withdraw baht from your USA bank account, would you normally get the offshore or onshore rates?

[yeti]

These are offshore NOT onshore rates.

If you use a BKK ATM (using a Visa Debit card with the PLUS system) to withdraw baht from your USA bank account, would you normally get the offshore or onshore rates?

If you use your ATM card from a bank account in a foreign country you get the offshore rate (not good).

If you transfer money from your foreign bank account into your thai bank account (transferring in foreign currency) then you get onshore rates.

[bingobongo]

these clowns cant do anything correctly

Thailand Investment Curbs Backfire, Set Stage for Rally in Baht

``The capital controls are supposed to curb the baht's rise but every time they do something stupid it decreases consumption and imports.''

http://www.bloomberg.com/apps/news?pid=206...&refer=asia

Edited April 1, 2007 by bingobongo

[shotover]

If you use your ATM card from a bank account in a foreign country you get the offshore rate (not good).

If you transfer money from your foreign bank account into your thai bank account (transferring in foreign currency) then you get onshore rates.

Thanks Yeti. Looks like I'll be transferring a large chunk of money into my Thai bank account, despite the $45 transfer fee charged by my bank.

Any idea if the dual exchange rates (onshore / offshore) are permanent, or if they will go back to a single exchange rate in the near future?

[yeti]

The dual exchange rate is the result of a measure (30% of foreign transfer funds immobilized for a year for some investments in Thailand) to stop the baht from rising. As the baht has not stopped rising, I don't think they'll withdraw this measure anytime soon.

Btw, you said you were going to transfer a large amount of money in Thailand from your US bank account, keep it under 1 million baht equivalent (around 20000 US$) or the bank of thailand will keep 30% of it for a year.

[Old Man River]

The dual exchange rate is the result of a measure (30% of foreign transfer funds immobilized for a year for some investments in Thailand) to stop the baht from rising. As the baht has not stopped rising, I don't think they'll withdraw this measure anytime soon.

Actually, they should be withdrawing the capital controls very soon. They imposed them to stop speculators which were driving the value of the THB up. Since then, they have imposed the 100% fully hedged requirement, which should have the same effect, making the capital controls unnecessary. They haven't released the controls yet as they said they want to see if there are any loopholes that they missed.

The Bloomberg report that Bongobongo posted a few messages ago is an excellent analysis. It explains the reason the offshore rate is much stronger than the onshore rate (this shouldn't happen). Those with valid reasons to buy THB have to first put their foreign currency into an onshore Thai account and then prove to the BOT that they indeed have a valid reason to buy THB. This is costly and time consuming. Instead, they are buying the THB offshore in a thinly traded market, driving the offshore THB/USD value up, which only gives onshore exporters and speculators the belief that the THB will strengthen further. In other words, the capital controls are one of the reasons the THB is strengthening, making them counterproductive.

Also, the capital controls (along with FBA etc.) have led to declining onshore investment (plummeting imports), causing large current account surpluses, again driving the value of the THB up.

Bottom line, the capital controls are now detrimental to the country and need to be reversed as soon as possible.

[yeti]

This economic analysis is probably True, but forgets about the political climate.

The current military dictatorship uses nationalism to strenghten its power, so I don't think they are ready to take measures to help foreign investment, even if they'd be economically useful, especially if it'd seems as not helpful for Thai exporters.

[Old Man River]

This economic analysis is probably True, but forgets about the political climate.

The current military dictatorship uses nationalism to strenghten its power, so I don't think they are ready to take measures to help foreign investment, even if they'd be economically useful, especially if it'd seems as not helpful for Thai exporters.

I don't forget about the political climate. I live here.

Releasing the capital controls won't be viewed as a measure to help foreigners, it will be viewed as a measure to help weaken the THB. This is what the BOT wanted to do when they initiated them. Now the capital controls are having an opposite effect for the reasons discussed in the Bloomberg report. Hence, they are counter productive to what the BOT is trying to achieve. Therefore they will have to release them as soon as possible. Dr. Tarisa and the new Finance Minister (who opposes the capital controls) have said they will release them soon, but they just want to make sure that the full hedging requirements also recently imposed will be 100% effective and there are no loopholes.

To protect their agricultural exports, which are already being hurt by droughts, they have to release the capital controls as soon as possible.

[Lithobid]

I do understand the concept of the invisible market, and I realize the onshore/offshore pricing difference and why it's come about. Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht, whilst fewer "dollars" are being sold to Thai banks artificially weakening the baht. I.E. not enough baht at foreign banks, so the price goes up, and not enough dollars in the Thai banks so the baht goes up. And this has totally screwed the import/export business because suddenly you pay one price at the door and another when you leave. So everyone has to cut corners to get along, and the guy who really gets screwed is the farmer, cause he's got no money to begin with and now his potato's cost to damned much to sell!

I get all that, what I don't get is why. On Dec 18th, (remember the Thai military still controls the government (coup in progress....lol)) the military decided that it would put a 30% hold for one year on all investments over 1 million baht ($20,000). They did this thinking it would stabilize the economy, but it's scared the shit out of every investor in Thailand, and now Cambodia's looking fairly nice, at least they have french bread, and good coffee. What I don't understand is I'm uneducated in accounting and economics, hel_l I was a potter for 6 years, and I know that what the government did wouldn't help the economy, so why would they think that it would. What was in their heads?

Any Ideas boys?

[Naam]

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

[Lithobid]

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

Thanks for the explanation, you'd make a hel_l of a teacher!

[Ijustwannateach]

On behalf of my friends who get their income from foreign lands, I'm glad to hear this news.

[cclub75]

Now the capital controls are having an opposite effect for the reasons discussed in the Bloomberg report. Hence, they are counter productive to what the BOT is trying to achieve. Therefore they will have to release them as soon as possible. Dr. Tarisa and the new Finance Minister (who opposes the capital controls) have said they will release them soon, but they just want to make sure that the full hedging requirements also recently imposed will be 100% effective and there are no loopholes.

We all agree.

But let's think a little bit beyond. Why do you think they are taking their time ? It's because they are still... trying to figure out how it can work...

Do you really believe that the "full hedging" can solve the problem ? Actually, this brillant idea is totally impracticable , on a global and compulsory scale. We are not talking about loopholes here...

It's funny to see those central bankers playing, but without any ability to think about the consequences.

Remember december ? Paf, news flash, 30 % reserve. No one at banks received any directives (paperwork, process etc.). It took a long time to put the system in practice.

And actually, we can question the system : what is the total amount of money actually put in this famous 1 year 30% reserve since mid december ?

My guess : ZERO.

Anyway. It's even more funny to see people repeating the BS served on a golden plate by those central bankers.

To understand how work the hedging for currency.

http://en.wikipedia.org/wiki/Hedging#Contr...for_differences

Let's face it : an hedging system, global and compulsory for all the incoming money... is de facto a capital control ! And a form of pegging for the currency too.

Amazing Thailand.

[Naam]

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

Thanks for the explanation, you'd make a hel_l of a teacher!

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

Thanks for the explanation, you'd make a hel_l of a teacher!

what's there to teach? please read again what you wrote.

why should any company buy a needed "product" (in this case the currency Thai Baht) from a more expensive (offshore) source than otherwise (onshore) available? will those building companies you mentioned buy their cement, bricks, steel, etc. from suppliers which charge higher prices? are building companies interested to strengthen the prices for their raw materials?

[JimGant]

If you use your ATM card from a bank account in a foreign country you get the offshore rate (not good). If you transfer money from your foreign bank account into your thai bank account (transferring in foreign currency) then you get onshore rates.

Not necessarily. Visa/Plus ATM, credit, and debit cards have been using the onshore rates from day one. MasterCard/Cirrus, on the other hand, were using offshore rates up until a month or so ago. Now they too are using onshore rates. Anyway, this is based on my experience, and several others. Nevertheless, there may be some rogue banks out there.

If all foreign plastic were using the offshore rates, it would be a no-brainer to wire money to your Thai bank vice using your homecountry plastic. But since foreign plastic is using the on-shore rates, you'll need to wire a large chunk of change to amortize the fixed fees at both ends in order to come out ahead of using plastic. How big a chunk depends, of course, on the fees involved with both types of transactions. And if you have one to those rare no-fee ATM or credit cards, which don't even pass on Visa and MC's 1% foreign exchange fee, you'll always be ahead with plastic, since plastic uses the Interbank Exchange Rate, which is always slightly higher than the telex rate used when wiring (34.98 vs. 34.87 yesterday).

[Lithobid]

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

Thanks for the explanation, you'd make a hel_l of a teacher!

Major building companies are bypassing the Thai banks and buying the baht from foreign banks artificially strengthening the baht..

I get all that, what I don't get is why.

unfortunately you did not "get" too much. no offence meant mate!

Thanks for the explanation, you'd make a hel_l of a teacher!

what's there to teach? please read again what you wrote.

why should any company buy a needed "product" (in this case the currency Thai Baht) from a more expensive (offshore) source than otherwise (onshore) available? will those building companies you mentioned buy their cement, bricks, steel, etc. from suppliers which charge higher prices? are building companies interested to strengthen the prices for their raw materials?

Well, as I understand it, any amount of money a company transferes into baht in thailand that is over 1 mil, or $20,000 the thai gov now holds 30% for a year. Imagine now your multi-millon Dollar construction job, that needs to be completed in 6-8 months, now just jumped in price by %30, or you can buy your currency from foriegn banks and move into thailand hassle free, for a lower price 10%-15% at the present moment. Furthermore any companies who are trying to move money out of thailand, are being snagged by the difficulty of doing so (paperwork, meetings, stamps, ect... we all know how that goes here TIT)

So companies are slowly pulling money out, and any baht they buy is on the foriegn market, yes it's more expensive there, but in the long run, I imagine cost estimates are lower than the %30 penalty they would be facing by moving funds into the country.

"will those building companies you mentioned buy their cement, bricks, steel, etc. from suppliers which charge higher prices? are building companies interested to strengthen the prices for their raw materials? "

Right now building companies will buy anything from anyone who has it to get by. The price dosen't matter, they're in the hole already since dec. They just want to get the job done, hence the price change "onshore" .

[Naam]

"Well, as I understand it, any amount of money a company transferes into baht in thailand that is over 1 mil, or $20,000 the thai gov now holds 30% for a year."

that is not correct. not a single Satang is held back when the purpose is plausibly explained (working capital).

So companies are slowly pulling money out, and any baht they buy is on the foriegn market, yes it's more expensive there, but in the long run, I imagine cost estimates are lower than the %30 penalty they would be facing by moving funds into the country.

that calls for an explanation. companies pulling out of Thailand are buying Baht???

[shotover]

Not necessarily. Visa/Plus ATM, credit, and debit cards have been using the onshore rates from day one. MasterCard/Cirrus, on the other hand, were using offshore rates up until a month or so ago. Now they too are using onshore rates. Anyway, this is based on my experience, and several others. Nevertheless, there may be some rogue banks out there.

Thanks for sharing some 1st hand experience. Would you know if Kasikorn ATMs are one of the banks which provides the onshore rate when withdrawing funds from a foreign bank account?

[bonobo]

I need to bring in about $12,000 US to buy some silk (for my own private company, not my real job).  To realize the biggest bang for the buck, what do you recommend?

I bought about $3,000 last month, and I lost about 2,000 baht because my secretary took it right to the bank.  Can I change that much with the local money changers?  Will it do better if I wire it?  Any suggestions?

[astral]

Not much of a weakness.............

[JimGant]

Would you know if Kasikorn ATMs are one of the banks which provides the onshore rate when withdrawing funds from a foreign bank account?

If they post the Cirrus and/or Plus symbol-- and that's what your card has on it too -- you then should get the onshore rate, as it's the network, not the ATM owner, that dictates the exchange rate.