BOT ready to pump Bt1 trillion into ailing financial markets

[billd766]

2 hours ago, saengd said:

BOT intends to buy 100 billion Baht of bonds, that's USD 3.2 billion. Foreign currency Reserves are USD 230 billion, I believe that spend leaves ample for the unemployed, if needed. But I think help for the unemployed is the subject of a different OP, as much as you'd like to hijack this one and make it part of the OP! 

But what will happen if Thailand digs into the foreign reserves and then someone wants his money back in the currency he bought the bonds (ie USD),  and there is not enough currency to pay him? 

 

Because if there isn't, it will go worldwide and EVERY bond holder will want their money back now and where will Thailand be then?

 

Where will the BOT get that 100 billion baht from?

 

The problem as I see it, which isn't very much, is that stock and shares go up and down and the stock is only worth what somebody will pay for it using somebody elses money.

 

IIRC the bonds are underwritten by the government and must be paid on demand at face value plus interest. If they cannot be repaid what happens then?

[saengd]

39 minutes ago, billd766 said:

But what will happen if Thailand digs into the foreign reserves and then someone wants his money back in the currency he bought the bonds (ie USD),  and there is not enough currency to pay him? 

 

Because if there isn't, it will go worldwide and EVERY bond holder will want their money back now and where will Thailand be then?

 

Where will the BOT get that 100 billion baht from?

 

The problem as I see it, which isn't very much, is that stock and shares go up and down and the stock is only worth what somebody will pay for it using somebody elses money.

 

IIRC the bonds are underwritten by the government and must be paid on demand at face value plus interest. If they cannot be repaid what happens then?

"But what will happen if Thailand digs into the foreign reserves and then someone wants his money back in the currency he bought the bonds (ie USD),  and there is not enough currency to pay him?"

 

Thai bonds are redeemable only in Thai Baht, just as the bonds issued by any country can only be redeemed in the currency of that country, Thai bonds cannot be redeemed for any other currency.

 

"Where will the BOT get that 100 billion baht from?"

 

Foreign Currency Reserves are held in 24 different currencies, including in Thai Baht. It is not unusual for BOT to conduct market operations involving billions of Baht and the cash to do that is readily available.

 

"IIRC the bonds are underwritten by the government and must be paid on demand at face value plus interest. If they cannot be repaid what happens then?"

 

All bonds have an interest (coupon) rate and a maturity date. Bonds typically pay interest twice a year but they may not be redeemed until their maturity date, they can however be sold on the secondary market to other buyers. Maturity dates vary but are typically 30 years hence.

 

 

[saengd]

I forgot add, importantly to the above.

 

When foreign owners of Thai government bonds want to sell, even to the BOT, indeed when anyone wants to sell them and go into hard US Dollars instead, that means they have to sell THB and buy USD, That has the effect of strengthening USD (which we have seen) and also of weakening THB...there is therefore a desirable upside to all of this.

Edited March 23, 2020 by saengd

[Fred white]

9 hours ago, tokyoblond said:

• But surely, that is what is hapening already, so how much good will it do? The only good it will do is keep the money where it always has been in Thailand. None of this is helping the lady selling fried chicken at the roadside, or the souvenir seller who scrapes together a profit each day.

The idea that all businesses should close for 2 weeks (or more), which I totally understand in the current situation, is all fine and dandy if you have 10 million baht in your bank account - let's all have a jolly holiday, eh? But the everyday people (yet again) are the ones that will be financially destroyed by this, not the people/insitutions that can afford to be investing in government bonds. Where is the help for the everyday employee now unemployed, or the small business owner, who now has 0 baht income? Oh, there's nothing left for them.... we spent it all on protecting our bonds.

Or buying unnecessary submarines and aircraft carriers ????

[rken2]

corono virus, a black swan event. Created to crash the failing center bank economy, Give the poorly run policies of central banks around the world an out. Still think the corono virus came from a bat.

[Chelseafan]

11 hours ago, tokyoblond said:

• But surely, that is what is hapening already, so how much good will it do? The only good it will do is keep the money where it always has been in Thailand. None of this is helping the lady selling fried chicken at the roadside, or the souvenir seller who scrapes together a profit each day.

The idea that all businesses should close for 2 weeks (or more), which I totally understand in the current situation, is all fine and dandy if you have 10 million baht in your bank account - let's all have a jolly holiday, eh? But the everyday people (yet again) are the ones that will be financially destroyed by this, not the people/insitutions that can afford to be investing in government bonds. Where is the help for the everyday employee now unemployed, or the small business owner, who now has 0 baht income? Oh, there's nothing left for them.... we spent it all on protecting our bonds.

I agree and it sounds like they're using a band-aid to keep their heads screwd on

They should be dishing out the foreign reserve now to the poor and needy

 

[saengd]

10 minutes ago, Chelseafan said:

I agree and it sounds like they're using a band-aid to keep their heads screwd on

They should be dishing out the foreign reserve now to the poor and needy

 

And after the poor have spent them all on somtam and sangsom, what then!

[Chelseafan]

13 minutes ago, saengd said:

And after the poor have spent them all on somtam and sangsom, what then!

You're right. Let them starve. Peasents!

 

[chainarong]

The Oz Government is on war a time footing and printing money , the cost will be up somewhere around a trillion over six months and it all has to be repaid when this little sortie is finished, the banks have waived bank loans, rents cancelled, hire purchase payments stopped, unemployment benefits doubled, (80 thousand registered in the last 2 days) small business helped,  airlines 760 billion to keep them on the ground, that's what you need to spend on not the stock market, that will recover,  you need to have business ready for restart up, the people and small medium business are more important, not the financial markets,  we've gone way past that.