Thai baht dips after central bank rate cut, others lower

[snoop1130]

Thai baht dips after central bank rate cut, others lower

By Ambar Warrick

 

FILE PHOTO: Thai baht notes are seen at a Kasikornbank in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha

 

(Reuters) - The Thai baht extended losses on Wednesday after an interest rate cut by the Thai central bank, while most other Asian currencies dipped as markets awaited concrete details on China-U.S. tariff concessions.

 

The Bank of Thailand cut rates for a second time this year, with the benchmark one-day repurchase rate now at a record-low level as the bank attempts to shore up inflation and rein in a robust baht.

 

The bank also announced a further relaxation of foreign exchange rules, in particular allowing exporters to keep more foreign exchange proceeds abroad.

 

The baht <THB=TH> fell up to 0.63% after the announcement, touching its weakest level to the dollar in nearly three weeks. The baht is emerging Asia's best performing currency this year.

 

"Asia’s most hawkish central bank finally conceded to the fact that the economy needed lower interest rates to stimulate the domestic spending and also to rein in the rapid pace of baht appreciation that’s been dampening prospects of any near-term recovery," ING said in a note.

 

ING said the baht was likely to stretch its bull run into the year-end.

 

A strong baht has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

"With one more policy meeting to go before the year-end, and given the BoT’s reluctance to ease earlier this year, we expect no more rate cuts this year," ING said.

 

Broader markets tested gains made earlier in the week as investors digested a report suggesting that the United States was considering certain tariff concessions on China. [MKTS/GLOB]

 

China is also insisting that the United States remove tariffs imposed in September as a part of the "phase one" trade deal, which is expected to be signed this month at a yet-to-be-determined location.

 

The Philippine peso <PHP=> fell 0.32% after data showed its trade deficit widened in September from the previous month.

 

Markets however, expect a rebound in its third-quarter gross domestic product growth, according to a Reuters poll. The data is due on Thursday.

 

The Indonesian rupiah <IDR=ID> dipped 0.32%, to hold slightly below a level of about 14,000 to the dollar.

 

Bucking the trend, the Chinese yuan <CNY=CFXS> rose about 0.14% after the People's Bank of China set its yuan midpoint at a three-month high.

 

The currency was also trading below its crucial 7 to a dollar level, having marked strong gains on the perceived progress in Sino-U.S. trade negotiations.

 

-- © Copyright Reuters 2019-11-06

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[RotBenz8888]

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

[Chivas]

Hardly moved lol

Interbank is 30.29 at time of post

[BuddyPish]

11 minutes ago, RotBenz8888 said:

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

Stop whining.
There's more to this than just chopping interest rates.

[sammieuk1]

The baht <THB=TH> fell up to 0.63% after the announcement, touching its weakest level to the dollar in nearly three weeks. The baht is emerging Asia's best performing currency this year.

 

Or a thimble full of wine???? 

[CNXexpat]

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

[kotsak]

We are saved..

 

[Youlike]

7 hours ago, RotBenz8888 said:

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

And the dip is gone already....nothing has changed.

[notmyself]

9 hours ago, CNXexpat said:

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

 

Yep

[J Town]

I just did my monthly Transferwise xfer, got a guaranteed rate of 30.29

[jarda]

What dip?

[moe666]

11 hours ago, CNXexpat said:

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

Your kidding right the local interest rates will not skip a beat

[saengd]

12 minutes ago, moe666 said:

Your kidding right the local interest rates will not skip a beat

Watch the banks MLR numbers, they will change. https://www.ceicdata.com/en/thailand/interest-rates-commerical-banks/prime-rate-minimum-loan-rate-mlr

Edited November 7, 2019 by saengd

[phkauf]

Playing the currency game is a dangerous game for Central Banks (Governments) and it looks like Thailand is going to learn a hard lesson in the near future. While they might have had a sugar high when the Baht was strong, it has come at the cost of killing the economy.

Exports are suffering - just the other day rice exporters are crying about how Thai rice is uncompetitive, which makes sense since it's basically a commodity with little differentiation. 

The hoped for benefit of the US - China trade spat is unlikely to happen now that is coming to an end. Plus with the high Baht, Vietnam and others are more attractive locations as an alternative to Thailand.

The tourism sector is bleeding out. While it's mostly anecdotal (more reliable than TAT), there are constant stories about how this is the worst season in years. I was speaking with a friend yesterday who wholesales high priced wine to hotels and restaurants in Bangkok and this year is horrible. Tourists are not spending on the luxuries like the used to.

Sadly, there is no easy solution to this mess. If they lower rates more to stimulate the economy, that could lead to an outflow of the hot money which would drop the baht but that could also get out of control as well. It looks like the BoT is about as well managed as THAI Airlines.

[hotchilli]

13 hours ago, snoop1130 said:

A strong baht has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

They just caught on?

[Berkshire]

Ah, I was wondering why the USD was strengthening.  Not much, but it stopped the slide.  Good move on the part of the Thai Central Bank.  Hopefully this will slow the hot money coming into the Thai financial markets. 

[Miami007]

9 minutes ago, phkauf said:

Playing the currency game is a dangerous game for Central Banks (Governments) and it looks like Thailand is going to learn a hard lesson in the near future. While they might have had a sugar high when the Baht was strong, it has come at the cost of killing the economy.

Exports are suffering - just the other day rice exporters are crying about how Thai rice is uncompetitive, which makes sense since it's basically a commodity with little differentiation. 

The hoped for benefit of the US - China trade spat is unlikely to happen now that is coming to an end. Plus with the high Baht, Vietnam and others are more attractive locations as an alternative to Thailand.

The tourism sector is bleeding out. While it's mostly anecdotal (more reliable than TAT), there are constant stories about how this is the worst season in years. I was speaking with a friend yesterday who wholesales high priced wine to hotels and restaurants in Bangkok and this year is horrible. Tourists are not spending on the luxuries like the used to.

Sadly, there is no easy solution to this mess. If they lower rates more to stimulate the economy, that could lead to an outflow of the hot money which would drop the baht but that could also get out of control as well. It looks like the BoT is about as well managed as THAI Airlines.

If it were easy.. everyone would do it

 

Exchange rates don't always do what politicians want them to do. And the USA is not looking favorably on countries which take measures to lower their currencies (currency manipulators). 

So Thailand seems to be caught between a rock and a hard place. 

Many of the countries in SE Asia have fairly small economies.. their currencies can easily be impacted by outside forces and they cannot do much about it 

[Isaan sailor]

Let Rome burn. 

[kevin612]

Let’s dip it to 31, but I don’t think that’s possible.

[Brunolem]

There was a time when having a strong currency was bringing pride to the concerned countries (Germany, Switzerland, for example), but in today's terminally ill world, a strong currency only brings fear. 

 

It is not anymore about who will win the race to the top, but about who will win the race to the bottom! 

[Drax]

2 hours ago, J Town said:

I just did my monthly Transferwise xfer, got a guaranteed rate of 30.29

Lol Transferwise locked my acc for two days to ask for extra docs. Glad it happened cuz now I get better rate haha ???? 

[ivor bigun]

Talking about less tourists ,we have friends who come every 4 months stay at the same hotel 1 month , as they are well off ,it does not really effect them ,but they were saying how dead everywhere was ,these last few trips ,also we have another friend ,not so well off ,came for less time ,spent less and also could not believe how quiet it was . Pattaya that is .

[Xonax]

1 hour ago, phkauf said:

Playing the currency game is a dangerous game for Central Banks (Governments) and it looks like Thailand is going to learn a hard lesson in the near future. While they might have had a sugar high when the Baht was strong, it has come at the cost of killing the economy.

Exports are suffering - just the other day rice exporters are crying about how Thai rice is uncompetitive, which makes sense since it's basically a commodity with little differentiation. 

The hoped for benefit of the US - China trade spat is unlikely to happen now that is coming to an end. Plus with the high Baht, Vietnam and others are more attractive locations as an alternative to Thailand.

The tourism sector is bleeding out. While it's mostly anecdotal (more reliable than TAT), there are constant stories about how this is the worst season in years. I was speaking with a friend yesterday who wholesales high priced wine to hotels and restaurants in Bangkok and this year is horrible. Tourists are not spending on the luxuries like the used to.

Sadly, there is no easy solution to this mess. If they lower rates more to stimulate the economy, that could lead to an outflow of the hot money which would drop the baht but that could also get out of control as well. It looks like the BoT is about as well managed as THAI Airlines.

I guess that the Chinese and Indian tourists does not spend much money on expensive wine and other stuff, while vacationing in Thailand.  But Thailand still won´t admit, that the western tourists should have been more appreciated, before they found other holiday destinations.

The original Thailand that western tourists fell so hard in love with, does no longer exist.  Today´s massive concrete hotels located side by side in tourist destinations, leading their faecal waste directly out in the ocean, does not attract any quality tourists.

[phkauf]

1 hour ago, Miami007 said:

Exchange rates don't always do what politicians want them to do. And the USA is not looking favorably on countries which take measures to lower their currencies (currency manipulators). 

So Thailand seems to be caught between a rock and a hard place. 

Great point as well. Now that Thailand NEEDS to lower the Baht, they can't because the US will slam them for manipulation. And this is a clear cut case of manipulation.

They really screwed themselves here and I don't see the brainpower at the BoT being able to figure their way out of this mess. 

[phkauf]

14 minutes ago, Xonax said:

I guess that the Chinese and Indian tourists does not spend much money on expensive wine and other stuff, while vacationing in Thailand.

The Chinese mostly spend on stuff they can take home to resell - buy four LV bags and resell in China to cover the cost of the trip. For the most part they are not spending like Western tourists - expensive meals, spa treatments, etc. 

And the Indians, well let's not go there...

[GreasyFingers]

Is the baht really weakening or is it just the USD rising. DXY has gone from 96.985 to 97.84 in the last 3 days.

[brianbbb]

No mention how much the bank rate was cut

 

 

[Mac98]

Well, when you take the fun factor out of Thailand's nightlife AND strengthen the baht, of course tourism suffers. They may not be able to do much about the baht but they could restore a lot of the fun factor practically overnight. Just lighten up!

[Lacessit]

I'm just wondering where the doomsayers who were predicting the AUD was only going to buy 15 baht have gone.

[Brunolem]

3 hours ago, brianbbb said:

No mention how much the bank rate was cut

 

 

Another 25 bps cut... the rate now stands at 1.25%, where it was at the peak of the 2008-2009 financial crisis... this is called going full circle...