Thai central bank says won't resist market forces as baht climbs

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thailand's central bank cannot target baht levels <THB=TH> that go against market forces, an assistant governor said on Tuesday, as the Thai currency strengthened.

 

Fixing exchange rates at certain levels will open the door to currency speculation and affect the overall economy, Chantavarn Sucharitakul said in a statement.

 

Global financial markets are likely to be more volatile and trade-related businesses should pay attention to currency risk management, she said after a meeting between the central bank and the Thai National Shippers' Council.

 

The baht rose about 0.2% to 31.06 per dollar on Tuesday after hitting a month-high last week. The group last week said the baht at 33-34 per dollar would help exports.

 

(Reporting by Orathai Sriring and Kitphong Thaichareon; Editing by Martin Petty)

 

-- © Copyright Reuters 2020-08-12

 

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It can't.  

If they do anything at this point they will be marked as a currency manipulator.  

They aren't doing anything other than what they should be doing.  

2 hours ago, webfact said:

The group last week said the baht at 33-34 per dollar would help exports.

Way it's going they wont have to worry about the baht as they will have nothing to export

3 hours ago, RichardColeman said:

Way it's going they wont have to worry about the baht as they will have nothing to export

And at the current fx rate, Thai exports are way expensive

Central bankers to exporters and their millions of employees:  sorry, we have orders to keep the Baht strong—go back to the farms for work...

6 minutes ago, Isaan sailor said:

Central bankers to exporters and their millions of employees:  sorry, we have orders to keep the Baht strong—go back to the farms for work...

That certainly seems to be the message.

Same applies to potential tourists - baht is strong so bring all you can, because you'll need it

12 minutes ago, Isaan sailor said:

Central bankers to exporters and their millions of employees:  sorry, we have orders to keep the Baht strong—go back to the farms for work...

Swings and roundabouts.

Not great for exporters, but very nice for importers.

4 hours ago, RichardColeman said:

Way it's going they wont have to worry about the baht as they will have nothing to export

Got it in one... I have friends in manufacturing, domestic and exports, they all say exports are now 50% of what it was last year and continuing to fall.

1 minute ago, KarenBravo said:

Swings and roundabouts.

Not great for exporters, but very nice for importers.

Imported foods don't appear to have benefitted from the strong baht,

Just now, fulhamster said:

Imported foods don't appear to have benefitted from the strong baht,

But oil has. Check out the price board at your local gas station. That impacts transportation.

3 minutes ago, fulhamster said:

Imported foods don't appear to have benefitted from the strong baht,

Have you looked at imported wine lately?  Price up, along the the Baht.  It makes no sense...

I guess the junta goverment have some toys to pay of like the submarin  , airplanes , thanks , armed trucks , new guns etc etc so great to have a strong bath when you need to pay of all this to your Chines masters ????

The Central Bank can do very little in the face of the US driving rates to near zero. There is only a little wiggle room to lower Thai rates. The Thai government on the other hand can spend massively on capital equipment for infrastructure, etc etc in an effort to reduce the current account surplus a bit...but that has consequences in an economy where VAT revenue collection is already down and runs a fine line between adjusting the level of the Baht/Dollar downward and putting the economy in a long term bind. In short...it's really the elephant in the room (The US economy and Central Bank) that has the greatest sway on the xchange rate....not much any of us can do about it.

Edited August 12, 20205 yr by tonray

Maybe the rise in THB can be put down to the 10 Kg of Gold,

that was donated to the Central Bank.????

regards Worgeordie

2 minutes ago, tonray said:

The Central Bank can do very little in the face of the US driving rates to near zero. There is only a little wiggle room to lower Thai rates. The Thai government on the other hand can spend massively on capital equipment for infrastructure, etc etc in an effort to reduce the current account surplus a bit...but that has consequences in an economy where VAT revenue collection is already down and runs a fine line between adjusting the level of the Baht/Dollar downward and putting the economy in a long term bind. In short...it's really the elecphant in the room (The US economy and Central Bank) that has the greatest sway on the xchange rate....not much any of us can do about it.

There is a lot Bank of Thailand (BOT) can do to lower the value of the baht. There are lots of baht currency restrictions which can be eliminated by BOT. BOT severely restricts the outflow of funds.

 

It's a total pain!   By now I thought we would be seeing a good improvement for Au$ to baht but apparently not.  Oh well, I get a bit of interest on my money in Oz while it sits waiting for better times.  But the downside for Thailand is: The new Haier vertical freezer we want hasn't been bought...and neither has the new motorcycle...on top of that the cost of living keeps rising.  Take for example Thai made Pepperoni, which is OK seeing it's the only one I can get in Makro Phitsanulok.  Last time, 3 months back,  was 755 baht last week 890 baht!  They can stick it up their....rhymes with grass!  And many other items local and imported are Going up!  I like to be economical with my cash, always have been, so what gets to expensive just doesn't get bought. 

5 hours ago, Blumpie said:

It can't.  

If they do anything at this point they will be marked as a currency manipulator.  

They aren't doing anything other than what they should be doing.

So Blumpie, what happens to a country that can see that their only way out of an impending crises --the mass unemployment and everything that comes with it, is to lower their Currency---

What do they (rest of the world) do to a currency manipulator?........... I know in the case of Chine it is---just buy more off of them.

 

What would it be in Thailand's situation?

42 minutes ago, KarenBravo said:

Swings and roundabouts.

Not great for exporters, but very nice for importers.

and Thai Hiso rich investors

Hmmmm!!!  I love the smell of Yuan in the morning

1 hour ago, KarenBravo said:

Swings and roundabouts.

Not great for exporters, but very nice for importers.

Tanks and Submarines maybe?

1 hour ago, hotchilli said:

Got it in one... I have friends in manufacturing, domestic and exports, they all say exports are now 50% of what it was last year and continuing to fall.

If that is the case and imports stay the same then this problem will resolve itself. 

2 minutes ago, steevjee said:

Hmmmm!!!  I love the smell of Yuan in the morning

drink it down slowly

1 hour ago, Banana7 said:

There is a lot Bank of Thailand (BOT) can do to lower the value of the baht.

As I am not an economist, I expect to be shot down in flames here. Why cant the Thai gov. just do the same as the west? Print money. Distribute the money to the unemployed which would help to keep local economies afloat and maybe take the edge off a strong Baht? 

Based on news during these last months. State employees, teachers, policemen, military have borrowed such amounts that the Teachers's pension fund is nearly exhausted. Then they started to borrow from the Teachers' Funeral fund. Until that was as good as on its last legs. Bad loans. And bad bank loans. When this ends in a banks crisis I will not be surprised. Right now, in terms of economy, could be the calm before the storm. 

Edited August 12, 20205 yr by Eddy Ozark
Spelling

All comes back to China and their Wuhan-19 virus.  Once it slammed the US, the Fed had no choice but to lower interest rates and throw everything they had against the virus.  Interestingly, in Europe, the banks have negative interest rates.  But investors prefer to bash the dollar instead.

40 minutes ago, potless said:

As I am not an economist, I expect to be shot down in flames here. Why cant the Thai gov. just do the same as the west? Print money. Distribute the money to the unemployed which would help to keep local economies afloat and maybe take the edge off a strong Baht? 

I would read a bit more about how the value of a currency is formed.

 

If there are more imports then exports a currency is going down, if there are more exports then imports a currency is going up. 

 

If bonds have a high yield and are considered safe then people will buy them and the currency goes up.

 

So what your talking about does not really influence it at all. It all has something to do with foreign currency reserves.

 

The US$ holds its value for instance because oil is traded in $ if that became Euros the U$ would crash (for instance). Thai gold is traded in THB now they might change that to $ and it would drop the THB. 

12 minutes ago, robblok said:

So what your talking about does not really influence it at all. It all has something to do with foreign currency reserves.

Thanks for your reply. I was under the impression that the more there is of something, the less value it has. So if there was more Thai baht, it would be worth less. In your opinion, what would be the effect of printing money and distributing it as I suggested?

6 minutes ago, potless said:

Thanks for your reply. I was under the impression that the more there is of something, the less value it has. So if there was more Thai baht, it would be worth less. In your opinion, what would be the effect of printing money and distributing it as I suggested?

Not always so its not a sure thing. What i mentioned are sure things. 

 

I also forgot to mention less tourists mean a lower exchange rate too as there is less demand for THB. 

 

Below a better but technical explanation of what your asking about. 

 

 

https://www.economicshelp.org/blog/11550/currency/money-supply-and-the-exchange-rate/#:~:text=Therefore%2C there will be less,2.&text=Also%2C if you increased the,downward pressure on interest rates.

Strength of the Baht is going to destroy the rice export business here in Thailand.

3 hours ago, engamann said:

great to have a strong bath when you need to pay of all this to your Chines masters ????

I recommend red fuming sulphuric acid for a strong bath. It even dissolves wrist watches.