Thai central bank to adjust forex rules to cope with volatility

[snoop1130]

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 is considering adjusting the foreign exchange regulatory framework to help the economy better cope with volatility, officials said on Tuesday, as the baht hit a more than 13-month low against the U.S. dollar.

 

The adjustments include reducing foreign exchange limitations, facilitating hedging and removing a requirement of supporting documents for normal transactions, the central said.

 

The central bank is considering that normal transactions of more than $200,000 may not need supporting documents, director Pawinee Jitmongkolsa-mer told a briefing.

 

"Current rules are not balanced and not in line with the country's fundamentals at the moment," she said, adding the new rules were expected to be implemented by the end of the year.

 

Earlier measures introduced late last year to encourage capital outflows appear to have been quite successful, with Thai investments overseas hitting a record $17.8 billion between the final quarter of 2020 and May, Pawinee said, adding such investments amounted on average to $3.1 billion per year during 2010-2019.

 

While Thailand has seen fund outflows from the stock market, there have been net inflows into bonds, senior director Chayawadee Chai-Anant told the briefing. "But there are no worrying signs yet and we are monitoring it," she said.

 

The baht eased to 32.03 per dollar at 0450 GMT, a more than 13-month low. It has depreciated 6.4% against the greenback so far this year, becoming Asia's second-worst performing currency.

 

Besides external factors, the baht has depreciated more than regional currencies against the dollar, pressured by a spike in coronavirus infections at home, Pawinee said.

 

-- © Copyright Reuters 2021-06-29

 

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[ThailandRyan]

Tinkering again. Please stop manipulating the markets to benefit the baht folks.

[Lingba]

keep your bloody paws off of forex and let the baht truly fall where it should be

[tomazbodner]

24 minutes ago, Lingba said:

keep your bloody paws off of forex and let the baht truly fall where it should be

There are always winners and losers. When baht goes down, you win, and some Thai buying stuff from abroad loses. When baht goes up, that Thai wins and you lose. There are far more Thais with voting rights in Thailand than foreigners without it. Who do you think Thai politicians care more about?

[mancub]

26 minutes ago, tomazbodner said:

There are always winners and losers. When baht goes down, you win, and some Thai buying stuff from abroad loses. When baht goes up, that Thai wins and you lose. There are far more Thais with voting rights in Thailand than foreigners without it. Who do you think Thai politicians care more about?

Thais with voting rights, but no choices eh ?

[Mickeymaus]

Cannot help myself. But the movements of the THB in respect of the USD always remind me of the CHF and the EUR. 

[tomazbodner]

1 hour ago, mancub said:

Thais with voting rights, but no choices eh ?

There are choices, it's just about how votes get counted and what's included and what's not. I wasn't talking about US, btw, in case you thought I did.

[Puccini]

6 hours ago, ThailandRyan said:

Tinkering again. Please stop manipulating the markets to benefit the baht folks.

Who are the Baht folks? The Thai people in general? The Thai exporters?

[Soikhaonoiken]

Who are those guys who as always insisted that the BoT never manipulate the Baht when it weakens,....... Well here is your proof... 

[jethro69]

6 hours ago, tomazbodner said:

Who do you think Thai politicians care more about?

Nobody but themselves.????

[RichardColeman]

8 hours ago, ThailandRyan said:

Tinkering again. Please stop manipulating the markets to benefit the baht folks.

I always thought that currency went up on demand for it. But I cannot for the life of me see why the baht is still so high, the economy is down 20% due to tourism and not a mass tourist in sight for the forseeable future. If it does not tank now, it never will, and I dread to think what a surge it will put on when the tourists come back.

[fgmr]

8 hours ago, ThailandRyan said:

Tinkering again. Please stop manipulating the markets to benefit the baht folks.

But isn't that a requirement of Central Banks?

[fgmr]

32 minutes ago, RichardColeman said:

I always thought that currency went up on demand for it. But I cannot for the life of me see why the baht is still so high, the economy is down 20% due to tourism and not a mass tourist in sight for the forseeable future. If it does not tank now, it never will, and I dread to think what a surge it will put on when the tourists come back.

the baht has been over priced since

2015

[sammieuk1]

Expect the overseas investments in Swiss banks are holding up just nicely under this government more to come when the sand gets brushed off the box ????

[meechai]

9 hours ago, tomazbodner said:

There are always winners and losers. When baht goes down, you win, and some Thai buying stuff from abroad loses. When baht goes up, that Thai wins and you lose. There are far more Thais with voting rights in Thailand than foreigners without it. Who do you think Thai politicians care more about?

 

You have that slightly correct but also wrong because...

 

YES: The there are a few Thai's out of the 70 million that prefer/appreciate their baht strong to buy Coach bags,Prada foreign made toys etc

 

BUT: A strong baht kills export...ability for the majority of Thai's

The can no longer earn because their products have been priced out of competitively priced markets.

 

Which is why the truth is most countries like their currency not too strong...but competitive...they even use to say it was a race to the bottom

 

Because in the long run...even the rich Thai's that like the better buying power off shore of a strong Baht....Make their Baht by selling/mostly exporting

a Thai product or service.

Which is why they had Baht in the first place to buy those foreign things

 

So who do you think the "majority" of Thai politicians care more about?

The Majority of voters or the Minority of voters?

[ThailandRyan]

5 hours ago, Puccini said:

Who are the Baht folks? The Thai people in general? The Thai exporters?

Should have been a comma after the baht,  folks.  But then you knew what I meant.

[Gsxrnz]

FX dealers are justified in referring to the country as "Teflon Thailand".

[herfiehandbag]

1 hour ago, meechai said:

 

You have that slightly correct but also wrong because...

 

YES: The there are a few Thai's out of the 70 million that prefer/appreciate their baht strong to buy Coach bags,Prada foreign made toys etc

 

BUT: A strong baht kills export...ability for the majority of Thai's

The can no longer earn because their products have been priced out of competitively priced markets.

 

Which is why the truth is most countries like their currency not too strong...but competitive...they even use to say it was a race to the bottom

 

Because in the long run...even the rich Thai's that like the better buying power off shore of a strong Baht....Make their Baht by selling/mostly exporting

a Thai product or service.

Which is why they had Baht in the first place to buy those foreign things

 

So who do you think the "majority" of Thai politicians care more about?

The Majority of voters or the Minority of voters?

Your arguments make sense for  " normal" economic governance.

 

However, if the government is almost entirely beholden to a very small but extremely wealthy group, and the vast majority of that groups wealth, and their wealth creating assets and investments ( in particular property) are outside he country the rules are perhaps, turned on their head?

[hotchilli]

14 hours ago, snoop1130 said:

"Current rules are not balanced and not in line with the country's fundamentals at the moment," she said, adding the new rules were expected to be implemented by the end of the year.

Lur.

[tomazbodner]

3 hours ago, meechai said:

 

You have that slightly correct but also wrong because...

 

YES: The there are a few Thai's out of the 70 million that prefer/appreciate their baht strong to buy Coach bags,Prada foreign made toys etc

 

BUT: A strong baht kills export...ability for the majority of Thai's

The can no longer earn because their products have been priced out of competitively priced markets.

 

Which is why the truth is most countries like their currency not too strong...but competitive...they even use to say it was a race to the bottom

 

Because in the long run...even the rich Thai's that like the better buying power off shore of a strong Baht....Make their Baht by selling/mostly exporting

a Thai product or service.

Which is why they had Baht in the first place to buy those foreign things

 

So who do you think the "majority" of Thai politicians care more about?

The Majority of voters or the Minority of voters?

True. But I would dare to say over half the country would not understand the part after BUT: and never think about the reasons mentioned. Admittedly, many of those are oblivious to what's happening outside their hometown...

[itsari]

The Thai baht is slipping out of the range  they want for exports and the rich individuals with foreign loans  . It will hurt wealthy individuals if the Thai baht reaches 35 baht to the US dollar . Loan costs will increase for them . There are controls in place to restrict foreign loans in Thailand . But rules are not followed often here .

[Caldera]

Looking good today! Sink, baby, sink.

[KarenBravo]

8 hours ago, Soikhaonoiken said:

Who are those guys who as always insisted that the BoT never manipulate the Baht when it weakens,....... Well here is your proof... 

 

What has making the Baht and (other currencies) more easily tradable and cutting red-tape got to do with "manipulation of the Thai Baht"?

[itsari]

2 minutes ago, KarenBravo said:

 

What has making the Baht and (other currencies) more easily tradable and cutting red-tape got to do with "manipulation of the Thai Baht"?

Agree what you say , yet it could  make life  easier for buying the Thai baht when or if support is needed .

[KarenBravo]

3 minutes ago, itsari said:

Agree what you say , yet it could  make life  easier for buying the Thai baht when or if support is needed .

 

Countries learned an important lesson in 1993 and 1997.

In 1993 the Pound Sterling was ejected from Europe's Exchange Rate Mechanism, despite defending the currency vigorously.

In 1997, corporate investors saw that the Baht was well over-bought and started to sell. The Baht crashed despite the government wiping out it's foreign reserves trying to defend it.

 

The lesson learned is that Forex markets are way bigger than any single country.

[chilli42]

15 hours ago, tomazbodner said:

There are always winners and losers. When baht goes down, you win, and some Thai buying stuff from abroad loses. When baht goes up, that Thai wins and you lose. There are far more Thais with voting rights in Thailand than foreigners without it. Who do you think Thai politicians care more about?

A depreciating currency ultimately imports inflation.  I would guess inflation would be most unwelcome u under the current economic circumstances in Thailand.  Is there any country that does not try to manipulate the currency in some way for political ends?

[itsari]

2 hours ago, KarenBravo said:

 

Countries learned an important lesson in 1993 and 1997.

In 1993 the Pound Sterling was ejected from Europe's Exchange Rate Mechanism, despite defending the currency vigorously.

In 1997, corporate investors saw that the Baht was well over-bought and started to sell. The Baht crashed despite the government wiping out it's foreign reserves trying to defend it.

 

The lesson learned is that Forex markets are way bigger than any single country.

The Thai baht was not floating in 97 . They never had enough foreign reserves at that time either  . Now that situation is the opposite on both points . 

When or if the situation arises that it becomes difficult to raise money then they must sell foreign reserves . Then things may change dramatically. .

[KarenBravo]

1 hour ago, itsari said:

The Thai baht was not floating in 97 . They never had enough foreign reserves at that time either  . Now that situation is the opposite on both points . 

When or if the situation arises that it becomes difficult to raise money then they must sell foreign reserves . Then things may change dramatically. .

 

Seems it was floated in 1997.

 

https://corporatefinanceinstitute.com/resources/knowledge/finance/asian-financial-crisis/

[Puccini]

On 6/30/2021 at 12:57 AM, ThailandRyan said:

Should have been a comma after the baht,  folks.  But then you knew what I meant.

To be honest, I did not know what you meant. I am not very good at guessing what people mean when they write it differently from what they mean. This may have to do with the fact that I learnt English as a foreign language. At first I thought it might be an idiom (I love idioms) but could find nothing on it.

 

Anyway, no harm done, and your explanation reminded me of a panda joke I once read.