Baht Controls

[ray23]

Central bank may end capital controls

(dpa) - The Bank of Thaliand may lift its controversial capital controls after acknowledging that they have failed to slow the appreciation of the baht currency against the dollar, BoT governor Tarisa Watanagase said Thursday.

Ms Tarisa acknowledged that huge capital inflows into Asia had caused the baht to appreciate 4.3 per cent against the dollar already this year, after appreciating more than 8 per cent against the greenback in 2006.

She said the central bank was considering lifting the 30 per cent capital reserve requirement put in place last December, in an effort to stem speculation on the baht, as the measure had not proved effective, reported the Thai News Agency.

On Thursday the baht was trading at 34.56-34.58 against the dollar compared to Wednesday's closing at 34.60-to-34.64.

Economists worry that Thailand's strong currency will eventually impact on the country's exports, making them less competitive.

The export sector has become the economy's main engine of growth this year, while investments and consumer spending have both declined.

[backflip]

Yea!

[Mid]

The export sector has become the economy's main engine of growth this year, while investments and consumer spending have both declined.

really ,

there's plenty here who would argue with that ......................

[wolfmanjack]

exports in the handicraft industry are already down more than 50%. I have spoken with 6 different shippers and they all say shipments were down last year and are down more than 50% this year from last.

[cclub75]

Obviously, there is high confusion and some melted brains inside the BOT.

Yesterday, Tarisa said "maybe", "we are considering".

Today, her assistant says "no way".

When are they going to dump Tarisa ? She is hurting a lot the -small- reputation that the BOT -still- have.

It's a shame.

BoT not removing 30% withholding on inflows

The Bank of Thailand (BoT) reiterated Friday it has no plan to remove the 30 percent reserve requirement on certain inflows in the near future.

According to BoT Assistant Governor Nitaya Pibulratanagit, the central bank will not end the 30 percent reserve requirement anytime soon, as the central bank is still concerned about current inflows into the Thai stock market. The 30 percent reserve requirement still have some psychological impact, to keep the baht from appreciating even further.

The Nation

http://www.nationmultimedia.com/breakingne...newsid=30033968

[ray23]

One thing you can say about the government it certainly is adaptable from day to day. Now I understand why thbaht went down a bit against the dolar today. It was heading for more then the normal gains the last few days. Then abruptly changed

Of course I haven't looked at since noon so that may have changed by now.

[JimsKnight]

About bloody time the baht restrictions were lifted. Weakening that pesky baht should of been priority no1 for the BOT.

[ray23]

They were just kidding

BoT not removing 30% withholding on inflows

The Bank of Thailand (BoT) reiterated Friday it has no plan to remove the 30 percent reserve requirement on certain inflows in the near future.

According to BoT Assistant Governor Nitaya Pibulratanagit, the central bank will not end the 30 percent reserve requirement anytime soon, as the central bank is still concerned about current inflows into the Thai stock market. The 30 percent reserve requirement still have some psychological impact, to keep the baht from appreciating even further.

The Nation

[calibanjr.]

exports in the handicraft industry are already down more than 50%. I have spoken with 6 different shippers and they all say shipments were down last year and are down more than 50% this year from last.

I've heard the same around the exporters in Chiang Mai, of which I'm one. More than a few are either looking at or pipe-dreaming about relocating. Baht being one issue, more important are the current "government" and randomly fluctuating export rules/policies, and the usual gripes about visa/WP/paperwork bull****, which puts me in the looking at relocation demographic.

[Thaipwriter]

they should give up on this becuase its clear they dont know what they are doing

[Edonista]

The export sector has become the economy's main engine of growth this year, while investments and consumer spending have both declined.

really ,

there's plenty here who would argue with that ......................

But the final part of sentence is right for sure

[Edonista]

They were just kidding

BoT not removing 30% withholding on inflows

The Bank of Thailand (BoT) reiterated Friday it has no plan to remove the 30 percent reserve requirement on certain inflows in the near future.

According to BoT Assistant Governor Nitaya Pibulratanagit, the central bank will not end the 30 percent reserve requirement anytime soon, as the central bank is still concerned about current inflows into the Thai stock market. The 30 percent reserve requirement still have some psychological impact, to keep the baht from appreciating even further.

The Nation

Unbelievable. Stock market is down for three years in a row , trading volume halved since the bloodbaht of 19 Dec , and they are worried about current inflows into it ?

I thought the role of Central Bank was to keep an eye on inflation, not to get sure that whatever farang still investing in thai stocks loses his money.

The way Bot is running monetary policy in this country resembles the way Mugabe is ruling Zimbabwe.

[BigSnake]

Hope this old Baht weaken a bit soon, my dollars just don't go very far these days. TIT!!

[Clipped]

i hope the baht gets stronger.....so when i send it out i get a better rate

pre 1997 crisis levels, the baht was 25 baht to the dollar...bring it on, come back!

[VegasVic]

i hope the baht gets stronger.....so when i send it out i get a better rate

pre 1997 crisis levels, the baht was 25 baht to the dollar...bring it on, come back!

Thats the attitude champ! Lets get that baht down to 25 and bring an absolute depression to the Thai export sector (not to mention tourisim and long term investment) and the economy as a whole, just so you can make a few dollars. By the way take a look at what 25 baht bought back in 97 and what it buys now, back then the 32sqm coffins in Pattaya were about 350K or so and now they are around 1.5 million. I guess the only solace is that the TB will see 45 vs. the US dollar long before it ever sees 25 again!

[Clipped]

i hope the baht gets stronger.....so when i send it out i get a better rate

pre 1997 crisis levels, the baht was 25 baht to the dollar...bring it on, come back!

Thats the attitude champ! Lets get that baht down to 25 and bring an absolute depression to the Thai export sector (not to mention tourisim and long term investment) and the economy as a whole, just so you can make a few dollars. By the way take a look at what 25 baht bought back in 97 and what it buys now, back then the 32sqm coffins in Pattaya were about 350K or so and now they are around 1.5 million. I guess the only solace is that the TB will see 45 vs. the US dollar long before it ever sees 25 again!

actually a strong baht is better for long term investment for foreigners investing in thailand-when they cash out and deposit funds abroad they will get more...initial investment will cost more, but there will be a break even point....then after that their profits will be higher....thais will now also have a better opurtunity to invest abroad...

the cost for industrial materials which have to be imported to manufacture a finished product will also fall, allowing thai companies to purchase in higher bulk quantities being more competitive in certain sectors...

cost to send students abroad will also fall, giving the country a bigger brain bank.

the pattaya phenomenon is driven mainly by specualtion to provide housing for foreigners....foriegners arent the primary force behind the real estate market.

the tourism sector will not be heavily affected by the strengthening currency, everthing here is so cheap already, its negligible for tourist staying for less than a week.

they wll simply choose lower cost accomodations which are widely available , with the same level of ammenities.

so you say , importers may go to countries like vietnam, indonesia, cambodia to get their goods instead....heres a hint, thai companies are already there running the show.

the country doesnt revolve around agricultural products alone....

for example fresh cut orchids have such a ridiculously high profit margin for importers its ridiculous.... 75 cents cost...$39.25 gross profit per bunch (retail)...1 bunch consist of 20 stems....i guess paying $1.25 is really going to kill their profits...

for handmade goods there are already cheaper countries than thailand, but with lower quality which is what drives people back to thailand.

[Naam]

the Baht appreciation offshore has stopped and spread between onshore and offshore has started to narrow.

[ray23]

Intersting first time I have seen an analogy of the baht at 25 to one being better for the country. I don't have a clue. May be very corrrect. But, I know one thing it will not be good for me unless I want to sell all my assets and leave that was not the plan.

[Bruce1]

Local currency controls were never going to make a difference against the weight of international money movements, its a tiny fish trying to swim upstream. Vain and futile. They should forget about playing at amateur currency market managers - they're out of their depth IMO.

They should concentrate on controlling inflation and attracting investors by making their lives easier to invest here, not harder.

They might also ask why the domestic economy isn't doing well, compared with exports. Instead of obsessing about nasty foreigners, they should be asking why more Thais aren't getting wealthier. If they could assist the domestic economy everyone would be a lot happier.

I don't mean handing out subsidies either. I mean stuff to make it easier to establish and operate businesses, and a legal reform to make business people feel more secure. There's no way I'd invest money in a business here under the current situation - I just wouldn't feel comfortable in the situation.

Do schools here teach business management, bookkeeping, marketing, sales, entrepreneurship and so on? If not, they should. Thais love to start markets, so why not give them the skills to be the best shopkeepers in Asia?

Another thing they could do would be to boost technical training. All the emphasis is put on universities, yet a lot of people don't need a degree to work. They need technical skills. I note Australia has just earmarked a big bucket of money to pour into trades training, which creates a more skilled workforce and results in employment for a lot of people. This could be a big factor to help more of the 47% of people employed in agriculture at pittance wages to shift into more rewarding trades. Its worked in plenty of other places, why not here? And having skilled trades people would attract more inveswtors, so it all helps.

They also ought to scrap the list of protected industries and open up the dormant fields to outside knowhow, which might be able to do a better job of growing those industries. I mean, why should hairdressing, for example, be a protected industry? How stupid!

But then, what do I know, I'm just a dumb farang!

Edited May 14, 2007 by Bruce1

[bendix]

But how do you know the moves havent worked? As Dr Naam mentions, the baht's surge has peaked and, indeed, is retreating. Offshore rates have strengthened around 2.5-3% since their peak against the US$, and significantly more against the Aussie.

[samran]

Local currency controls were never going to make a difference against the weight of international money movements, its a tiny fish trying to swim upstream. Vain and futile. They should forget about playing at amateur currency market managers - they're out of their depth IMO.

They should concentrate on controlling inflation and attracting investors by making their lives easier to invest here, not harder.

They might also ask why the domestic economy isn't doing well, compared with exports. Instead of obsessing about nasty foreigners, they should be asking why more Thais aren't getting wealthier. If they could assist the domestic economy everyone would be a lot happier.

I don't mean handing out subsidies either. I mean stuff to make it easier to establish and operate businesses, and a legal reform to make business people feel more secure. There's no way I'd invest money in a business here under the current situation - I just wouldn't feel comfortable in the situation.

Do schools here teach business management, bookkeeping, marketing, sales, entrepreneurship and so on? If not, they should. Thais love to start markets, so why not give them the skills to be the best shopkeepers in Asia?

Another thing they could do would be to boost technical training. All the emphasis is put on universities, yet a lot of people don't need a degree to work. They need technical skills. I note Australia has just earmarked a big bucket of money to pour into trades training, which creates a more skilled workforce and results in employment for a lot of people. This could be a big factor to help more of the 47% of people employed in agriculture at pittance wages to shift into more rewarding trades. Its worked in plenty of other places, why not here? And having skilled trades people would attract more inveswtors, so it all helps.

They also ought to scrap the list of protected industries and open up the dormant fields to outside knowhow, which might be able to do a better job of growing those industries. I mean, why should hairdressing, for example, be a protected industry? How stupid!

But then, what do I know, I'm just a dumb farang!

you are right, but it took Australia roughly from 1970 to get to where it is today. Things take time.

As for technical skills in OZ, we disinvested in that sector for 20 odd years, and are only starting to reinvest in it now. No one is perfect!

A good read is the 'End of Certainty' by Paul Kelly, outlines the changes, how they happened and when.

[Naam]

But then, what do I know, I'm just a dumb farang!

welcome to the club. now i am not alone

[VegasVic]

i hope the baht gets stronger.....so when i send it out i get a better rate

pre 1997 crisis levels, the baht was 25 baht to the dollar...bring it on, come back!

Thats the attitude champ! Lets get that baht down to 25 and bring an absolute depression to the Thai export sector (not to mention tourisim and long term investment) and the economy as a whole, just so you can make a few dollars. By the way take a look at what 25 baht bought back in 97 and what it buys now, back then the 32sqm coffins in Pattaya were about 350K or so and now they are around 1.5 million. I guess the only solace is that the TB will see 45 vs. the US dollar long before it ever sees 25 again!

actually a strong baht is better for long term investment for foreigners investing in thailand-when they cash out and deposit funds abroad they will get more...initial investment will cost more, but there will be a break even point....then after that their profits will be higher....thais will now also have a better opurtunity to invest abroad...

the cost for industrial materials which have to be imported to manufacture a finished product will also fall, allowing thai companies to purchase in higher bulk quantities being more competitive in certain sectors...

cost to send students abroad will also fall, giving the country a bigger brain bank.

the pattaya phenomenon is driven mainly by specualtion to provide housing for foreigners....foriegners arent the primary force behind the real estate market.

the tourism sector will not be heavily affected by the strengthening currency, everthing here is so cheap already, its negligible for tourist staying for less than a week.

they wll simply choose lower cost accomodations which are widely available , with the same level of ammenities.

so you say , importers may go to countries like vietnam, indonesia, cambodia to get their goods instead....heres a hint, thai companies are already there running the show.

the country doesnt revolve around agricultural products alone....

for example fresh cut orchids have such a ridiculously high profit margin for importers its ridiculous.... 75 cents cost...$39.25 gross profit per bunch (retail)...1 bunch consist of 20 stems....i guess paying $1.25 is really going to kill their profits...

for handmade goods there are already cheaper countries than thailand, but with lower quality which is what drives people back to thailand.

WOW, now that is one heck of a spin job! By any chance have you ever been a spokesperson for any political campaign? I can remember one of my economics professors telling me once that liars can figure but figures don't lie, he certainly was a wise old man. Lets see now, where should I start with your house of cards, OK how about Thais investing abroad. Yes for the Thai elite (less than 5% of the population) the strong baht will allow them to go further in their offshore investments, so I guess they will get richer but the other 95% of Thais will just have to pay the price (loss of jobs, fewer tourist dollars and more difficult to sell their products abroad). Now we move on to cost of raw materials and you do have a point here albeit a marginal one. If the Thai exporter does import lets say 60% of the raw materials that make up his finished product then yes his finished product is slightly cheaper to produce than it was 1 1/2 years ago, the catch here Einstien is that in order to sell that product abroad competitivly with the baht as strong as it is, this exporter must cut prices in excess of the savings he made on importing the raw materials the end result is a lower profit margin and the loss of jobs here in thailand which is what is currently happening. Now that was the best case scenario for exporters, most exporters do not import 60% of their raw materials from overseas and in the case of agriculture the number is closer to 0%, these sectors are getting crucified by the strong baht!!! The cost to send students abroad to study will indeed fall, but then again its only those 5% of Thais that will benefit from this, those same Thai elite that are reaping the benefits from a stronger baht by taking advantage from investing abroad(and thereby not investing that money in their own country!) as you wisely explained. I will grant you that Pattaya , Phuket and Ko Samui are speculative real estate markets that have been forming a bubble for a while now, the Thai baht is also in a speculative market (currency trading) that is forming a bubble , but you fail (or refuse) to see this. Here are the hard cold facts my friend: Housing developers across the country are lowering their prices 10-20% and the houses are still not selling, the Thai export sector is getting hurt badly (except for I guess those orchid growers?) , unemployment is rising and along with it domestic spending is falling (rather rapidly). The BK Post has been sugar coating the situation for a while but even they are now begining to report the undeniable fact that the Thai economy is not in very good shape and in fact is getting worse. All you have to do is open your eyes and look around, read the BK Post and The Nation on a regular basis or better yet go to Pattaya, Phuket, Hua Hin, Ko Samui, and Chiang Mai and ask the taxi drivers, the merchants, the guesthouse and hotel operators, the retuarant and bar owners(and bar girls), the construction workers and realestate developers, the realtors and they will tell you just how bad the economy is and how the tourist dollars are down this year. Of course if you really want to see the devestating effect of your strong baht then travel through an area that doesn't have the tourist dollar to fall back on, like Issan where in any given village there are family members who were sending home money from their job in BK or Chonburi but have been laid off and are now back on the farm and their only means of income is agriculture which has been devestated by the strong baht and many of them are trying to sell their land and homes but there are no buyers, it is a truely sad situation. So please, go on and tell me more about how the strong baht is a good thing and while you are at it maybe you can spin a story about how global warming is a good thing as well.

[Jimjim]

I would think it would be bad for tourism if the baht got to 25 to the dollar. Not the end of tourism, but perhaps a small dent? It would also be bad for expat retirees.

On the contrary, I would think it would be great for expats making baht working in Thailand, as long as the cost of living didn't rise too much as well.

[Bruce1]

A good read is the 'End of Certainty' by Paul Kelly, outlines the changes, how they happened and when.

Read it. Good book. You're right, it will take time to achieve, but they need to make a start sooner rather than later.

As for housing, as the point was made, outside the foreign-fuelled speculative areas, housing prices are falling. Thats actually bad for Thais since it means those who own homes are seeing the value of their investments fall, while investors have no incentive to make new investments in housing, so the supply will eventually fall below demand and rents will rise.

[highchol]

A good read is the 'End of Certainty' by Paul Kelly, outlines the changes, how they happened and when.

Read it. Good book. You're right, it will take time to achieve, but they need to make a start sooner rather than later.

As for housing, as the point was made, outside the foreign-fuelled speculative areas, housing prices are falling. Thats actually bad for Thais since it means those who own homes are seeing the value of their investments fall, while investors have no incentive to make new investments in housing, so the supply will eventually fall below demand and rents will rise.

Is a home an investment or a place to live?

To the vast majority ( owner occupiers ) I would assert its the latter in which case falling house values will not trouble them at all.

[Bruce1]

I'm an Aussie, we're used to making money out of housing price rises. My house in Brisbane has gone up almost 50% in 3 years, according to my bank (which is conservative). That's tax-free money. If Thailand had a good burst of housing inflation it would make a lot of people wealthier and create a lot of trades jobs as people upgraded to newer houses. Be very good for the domestic economy, which is in the doldrums. If housing was a better investment more renters here would buy, which would be a good thing.

[highchol]

I'm an Aussie, we're used to making money out of housing price rises. My house in Brisbane has gone up almost 50% in 3 years, according to my bank (which is conservative). That's tax-free money. If Thailand had a good burst of housing inflation it would make a lot of people wealthier and create a lot of trades jobs as people upgraded to newer houses. Be very good for the domestic economy, which is in the doldrums. If housing was a better investment more renters here would buy, which would be a good thing.

So if you sell it and cash in, take your 50% profit and move to say Thailand... great and good luck.

If you sell it and buy another is Brisbane theres a good chance that your new hones price will have gone up 50% also.

Wheres the make?

[Old Man River]

BoT not removing 30% withholding on inflows

The Bank of Thailand (BoT) reiterated Friday it has no plan to remove the 30 percent reserve requirement on certain inflows in the near future.

According to BoT Assistant Governor Nitaya Pibulratanagit, the central bank will not end the 30 percent reserve requirement anytime soon, as the central bank is still concerned about current inflows into the Thai stock market. The 30 percent reserve requirement still have some psychological impact, to keep the baht from appreciating even further.

The Nation

http://www.nationmultimedia.com/breakingne...newsid=30033968

I asked this question in another thread, but perhaps it it more appropriate here.

Capital controls were aimed at the debt markets. On the first day they mistakenly covered the equity markets, but that was changed the next day. Since the debt and equity markets are completely different and the capital controls weren't meant for the equity markets, then why does Asst. Gov. Nitaya think the 30% RR has any psychological impact on inflows into the Thai stock market???

[shochu]

Whether intentional or not - the baht control and many other steps - whether misteps or not - I believe will in the end put LOS in a much better postion. This is not to say that LOS will not suffer in the short term.

WHY?

Because we are in the middle of the biggest paper money inflation in world history and those that rise the most will fall the hardest. Everyone is chasing something they can beat inflation with right now. Wherever they can send their paper assets to mop up some bubbles - they do. There is so much money chasing so few investments that there is a building boom like never ever before. And it will hit a wall soon.

What LOS has done is dampen things before they get out of control. When things hit the wall and fall LOS will be in a better position because things here are not inflated as much as elsewhere.

How do I see investments here - in particular condos? GOOD

Why? Because like any investment - if it is a place to live - it is always a good investment. Only you can decide what value it is to you. And, as the world begins to level out - LOS condo's are in relative terms for what you get - a good deal even in todays prices. Sure the prices will probably fall - but they will rise too. If you are a speculator - I would say stay out. If you are in for the long haul - you will be fine.

I think what LOS did was - essentially tell the hot money - to bugger off - and many other countries in the region secretly applauded them.

Also,

Samran - many thanks for the lead - about jumping through the hoops!