Thailand relaxes FX rules to rein in baht strength

[snoop1130]

Thailand relaxes FX rules to rein in baht strength

 

FILE PHOTO: A Thai Baht note with the images of King Maha Vajiralongkorn and the late King Bhumibol Adulyadej is seen during the coronation of King Maha Vajiralongkorn in Bangkok, Thailand, May 4, 2019. REUTERS/Navesh Chitrakar

 

BANGKOK (Reuters) - Thailand's central bank on Wednesday announced a further relaxation of foreign exchange rules in a bid to curb the strengthening of the baht, Asia's top performing currency this year.

 

The changes, effective Nov. 8, include allowing exporters to keep foreign currency proceeds overseas, and retail investors to directly invest in foreign securities, Bank of Thailand Governor Veerathai Santiprabhob told a news conference.

 

Exporters with proceeds below $200,000 per bill of lading will be allowed to keep the proceeds abroad, without a time limit, compared with the current $50,000 threshold, the central bank said in a statement.

 

Exporters with foreign currency proceeds exceeding the new threshold will be allowed to use the revenues to offset foreign currency expenses, without having to repatriate the funds, it said.

 

Retail investors will be allowed to directly invest up to $200,000 per year in foreign securities, it added.

 

-- © Copyright Reuters 2019-11-06

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[nev]

It looks like they are really worried about the strengthening Baht and the damage it is doing.

One step at a time and this will go a long way to reversing the rising Baht.

[SteveK]

2 minutes ago, nev said:

It looks like they are really worried about the strengthening Baht and the damage it is doing.

One step at a time and this will go a long way to reversing the rising Baht.

In fantasy land, yes. In the real world, the house of cards will keep wobbling for many years yet.

[snoop1130]

Central bank takes extraordinary steps to cool off baht

By Wichit Chaitrong
The Nation

 

Central bank governor Veerathai Santiprabhob, centre, announces measures aimed at liberalising capital outflow to stem the baht’s rapid rise in value.

 

The Bank of Thailand has taken unprecedented steps to liberalise capital outflow, allowing residents of the country to take money overseas to invest directly and the domestic trading in gold in foreign currencies.

 

Central bank governor Veerathai Santiprabhob announced the measures this week as a bid to slow the baht’s worryingly rapid appreciation.

 

The new measures will come into effect on Friday (November 8), he said.

 

Exporters will be allowed to park their earnings abroad – up to US$200,000 per invoice, increased from the current $50,000. The figure will rise to $1 million within three months, Veerathai told reporters. 

 

“This is so exporters can manage their exchange risk better, since they’ll be able to bring their money back when exchange rate is more favourable for them, or they could use their foreign currency for their businesses abroad,” he said.

 

Retail investors are allowed to invest up to $200,000 per annum directly in foreign financial assets. Currently they must go through brokerage firms or mutual funds, and even then, only high-net-worth individuals with Bt50 million or more in savings. 

 

“Those who plan to invest overseas should understand the risks,” Veerathai said. “If not, they are advised to invest via brokerage firms.”

 

The central bank will also increase the amount of money fund managers can invest in foreign financial assets, from $100 billion a year to $150 billion, he said, though it must be under the supervision of the Securities and Exchanges Commission.

 

Individuals can take money out of the country more freely – the central bank will no longer apply its “positive list” summarising what’s allowed, but only its “negative list” of what’s prohibited, such as taking money abroad to speculate on exchange rates.

 

It’s now allowed to transfer up to $200,000 overseas without submitting supportive documents to a commercial bank, a rise from the current $50,000. 

 

And it’s alright to buy a home abroad in someone else’s name, such as a child or other relative living overseas.

 

Gold traders are now allowed to use foreign currency in domestic transactions. Veerathai explained that the gold trade has added pressure on the baht because Thai investors sell gold abroad, then bring their earnings back when the gold price rises.

 

“The baht is seen as a safe haven,” he said, referring to investors buying baht-denominated assets during the global slowdown and market volatility. “And gold traders have pushed the baht up against other currencies.”

 

Since Thailand is not a target in any international trade war, the baht has been seen as a safe investment, he noted.

 

The measures are designed to curb the baht’s rapid rise in value, in the past few days to a six-year high against the dollar. Most analysts believe its value will stay around Bt30 per dollar this year but could surpass that level next year or hover between Bt28-Bt29. Exporters would prefer to see Bt32.

 

Veerathai credited the baht’s rise largely to a high current-account surplus of $26.4 billion in the first nine months of this year. 

 

Foreign direct investment in the same period was also high, at nearly $8 billion, leading to total inflow of $34.4 billion, whereas the outflow from the stock and bond markets was $3.1 billion. 

 

“This shows that current-account surplus, not funds flowing out of the financial market, has had the largest effect on the baht’s value,” he said.

 

Source: https://www.nationthailand.com/business/30378120

 

-- © Copyright The Nation Thailand 2019-11-06

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[RotBenz8888]

If their tiny efforts doesn't help, reality will do it for them, when  the house of cards collapses.

[ThomasThBKK]

Just lower your bs import duty and excise taxes and we leave you alone, alcohol/cheese/cars etc cheaper is all we want, couldn't give a damn about the exchange rate.

[SteveK]

Why would they want to devalue the currency when all these dudes have billions in the bank? They will make small gestures to make it look like they are doing something, but they will have no effect on the forex rates, mark my words. Turkeys won't vote for Christmas!

Edited November 6, 2019 by SteveK

[kevin612]

It cost me a lot of money to withdraw funds from atm. The baht is Killing me.

[EricTh]

This isn't a solution to the rising baht because most Thai people won't invest abroad.

 

Keeping foreign currencies abroad for exporters when the Baht is strengthening will only decrease your income so they won't do that.

 

The problem is speculative funds coming into Thailand from rich countries such as America.

Edited November 6, 2019 by EricTh

[racket]

Thai banks have a rule that foreigners who opens an account without a work permit can't transfer the money outside the jurisdiction. If they would've waived this restriction you'd probably see an outflow.

[racket]

20 minutes ago, EricTh said:

This isn't a solution to the rising baht because most Thai people won't invest abroad.

 

Keeping foreign currencies abroad for exporters when the Baht is strengthening will only decrease your income so they won't do that.

 

The problem is speculative funds coming into Thailand from rich countries such as America.

China rather, because of the uncertainty in the region due to trade war. Political instability in Hong Kong is also a contributing factor. 

[beautifulthailand99]

The London prime real estate market will be licking their lips at the thought of rich Thais buying up property. 

[aspenbkk]

15 minutes ago, beautifulthailand99 said:

The London prime real estate market will be licking their lips at the thought of rich Thais buying up property. 

they all ready have bought in london ,did you not see the policeman with a £1.9 place in london who couldnot explain it on here recently haha.

[Youlike]

6 hours ago, kevin612 said:

It cost me a lot of money to withdraw funds from atm. The baht is Killing me.

And what about the 220 baht surcharge which only Thai banks have to foreigners...? It shows pure Thainess.

[DannyCarlton]

2 hours ago, aspenbkk said:

they all ready have bought in london ,did you not see the policeman with a £1.9 place in london who couldnot explain it on here recently haha.

And Germany and Switzerland. And for much bigger sums of money.

[Borzandy]

10 hours ago, RotBenz8888 said:

If their tiny efforts doesn't help, reality will do it for them, when  the house of cards collapses.

Do you understand takes extraordinary steps

[saengd]

7 hours ago, racket said:

Thai banks have a rule that foreigners who opens an account without a work permit can't transfer the money outside the jurisdiction. If they would've waived this restriction you'd probably see an outflow.

Nonsense, I don't have a work permit, never have, and I can transfer freely between Thailand and the UK.

[EricTh]

7 hours ago, racket said:

China rather, because of the uncertainty in the region due to trade war. Political instability in Hong Kong is also a contributing factor. 

True but I would think American investors are richer and move money in the trillions compared with the Chinese.

Edited November 7, 2019 by EricTh

[MartinKal]

9 hours ago, SteveK said:

Why would they want to devalue the currency when all these dudes have billions in the bank? They will make small gestures to make it look like they are doing something, but they will have no effect on the forex rates, mark my words. Turkeys won't vote for Christmas!

Because rhe billions are in foreign banks and now it's easier to move out more

[huberthammer]

10 hours ago, SteveK said:

Why would they want to devalue the currency when all these dudes have billions in the bank? They will make small gestures to make it look like they are doing something, but they will have no effect on the forex rates, mark my words. Turkeys won't vote for Christmas!

pls elaborate how them having billions in the bank has anything to do with the strong baht....

Edited November 7, 2019 by huberthammer

[30la]

12 hours ago, RotBenz8888 said:

If their tiny efforts doesn't help, reality will do it for them, when  the house of cards collapses.

Soon!!!!

 

[johng]

12 hours ago, snoop1130 said:

“This is so exporters can manage their exchange risk better, since they’ll be able to bring their money back when exchange rate is more favourable for them, or they could use their foreign currency for their businesses abroad,” he said.

 

12 hours ago, snoop1130 said:

Individuals can take money out of the country more freely – the central bank will no longer apply its “positive list” summarising what’s allowed, but only its “negative list” of what’s prohibited, such as taking money abroad to speculate on exchange rates.

Isn't bringing money back when the exchange rate is favourable the same as currency speculation ???

[Isaan sailor]

Unfortunately, government has a huge infrastructure project for high speed trains--and will have to pay China.   And they insist on paying in Baht, instead of USD (of which they have billions in reserve)  So how genuine does their offer to curb the Baht seem now?

Edited November 7, 2019 by Isaan sailor

[saengd]

17 minutes ago, Isaan sailor said:

Unfortunately, government has a huge infrastructure project for high speed trains--and will have to pay China.   And they insist on paying in Baht, instead of USD (of which they have billions in reserve)  So how genuine does their offer to curb the Baht seem now?

What do you mean they have billions in reserve, where, how? Foreign Currency Reserves are 98% in foreign currency, everything else is budget accounts. China and Thailand have foreign currency swap agreements in place for trade purposes, that requires a stable exchange rate, if they were to manipulate that exchange rate it would hurt them on trade.

Edited November 7, 2019 by saengd

[Charlie1]

9 hours ago, racket said:

Thai banks have a rule that foreigners who opens an account without a work permit can't transfer the money outside the jurisdiction. If they would've waived this restriction you'd probably see an outflow.

Now taking up to 200.000 U$ out of the country is allowed

[saengd]

2 minutes ago, Charlie1 said:

Now taking up to 200.000 U$ out of the country is allowed

I don't believe it says that. What it says is retail investors may invest $200,000 in overseas securities, (using an onshore broker).

[yellowboat]

Sounds like last call for buying overseas assets.  Buy that UK property or football team before it is too late.  Buy now

[yellowboat]

Sounds like too much control, too much manipulation.   Not a target of a trade war yet, but importing into Thailand is an extreme headache.  At least let a decent beer in, Beer Lao. 

[PETERTHEEATER]

11 hours ago, racket said:

Thai banks have a rule that foreigners who opens an account without a work permit can't transfer the money outside the jurisdiction. If they would've waived this restriction you'd probably see an outflow.

Thai commercial banks don't make the rules the Bank of Thailand does. Up until this amendment non-Thais without a work permit could transfer money from their Thai bank account via Outward Remittance application for a maximum amount daily set by the BoT. One reason that I have kept my FTT monthly pensions in an FCA account so that I can send it back home in the same currency without exchange rate penaltiy.

[PETERTHEEATER]

.......It’s now allowed to transfer up to $200,000 overseas without submitting supportive documents to a commercial bank, a rise from the current $50,000. 

 

And it’s alright to buy a home abroad in someone else’s name, such as a child or other relative living overseas.

 

This is in conflict with the current BoT website regulations so I hope that it gets updated tomorrow. The present daily limit on Outward Remittances for individuals is around USD 15,000 so sending an amount sufficient to buy (say) a property in another country could take weeks via individual daily transfers.

 

Ironically, an individual is permitted to export up to USD One million in a single year!