Bot Intervenes In Currency Market

[LaoPo]

Thai central bank intervenes in currency market after baht hits 10-year high

The Associated Press

Published: July 10, 2007

BANGKOK, Thailand: The Bank of Thailand intervened in the currency market Tuesday to restrain the rise of the baht after it touched a 10-year high, Gov. Tarisa Watanagase said.

The baht closed Tuesday at 33.48 to the dollar, just off an early high of 33.47, its highest level since September 1997. The baht had closed at 33.78 Monday.

Tarisa said the baht's recent strength has been due mostly to portfolio investments, but its rise Tuesday was due to misunderstandings about new rules allowing certain nonresidents to tap onshore baht liquidity.

"The baht today was pressured by exporters' panic selling (of dollars) which caused an abnormal move in the baht. Exporters should not panic," Tarisa said at a briefing for reporters.

The Bank of Thailand said Monday it would create a one-month window starting July 16 for foreign businesses and banks to borrow baht within the country to roll over hedged offshore positions.

The baht trades at a higher level outside Thailand because some foreign investors want to avoid a 30 percent withholding requirement imposed in December on many types of inflows. The central bank imposed those capital controls to stem the baht's appreciation.

So far this year, the baht has risen 7 percent against the dollar, compared with appreciation by regional peers between around 1 percent and 10 percent, Tarisa said.

Upward pressure on the baht is likely to ease because portfolio inflows can't go on forever, and dollar buying by importers is expected to rise in the coming months, Tarisa said earlier Tuesday in a live interview on a local business news radio program.

"At a certain point where stock prices have risen enough, such flows will surely slow down," she said.

Thailand's stock market has risen to its highest in more than 10 years.

LaoPo

[lazeeboy]

Thai central bank intervenes in currency market after baht hits 10-year high

The Associated Press

Published: July 10, 2007

BANGKOK, Thailand: The Bank of Thailand intervened in the currency market Tuesday to restrain the rise of the baht after it touched a 10-year high, Gov. Tarisa Watanagase said.

The baht closed Tuesday at 33.48 to the dollar, just off an early high of 33.47, its highest level since September 1997. The baht had closed at 33.78 Monday.

Tarisa said the baht's recent strength has been due mostly to portfolio investments, but its rise Tuesday was due to misunderstandings about new rules allowing certain nonresidents to tap onshore baht liquidity.

"The baht today was pressured by exporters' panic selling (of dollars) which caused an abnormal move in the baht. Exporters should not panic," Tarisa said at a briefing for reporters.

The Bank of Thailand said Monday it would create a one-month window starting July 16 for foreign businesses and banks to borrow baht within the country to roll over hedged offshore positions.

The baht trades at a higher level outside Thailand because some foreign investors want to avoid a 30 percent withholding requirement imposed in December on many types of inflows. The central bank imposed those capital controls to stem the baht's appreciation.

So far this year, the baht has risen 7 percent against the dollar, compared with appreciation by regional peers between around 1 percent and 10 percent, Tarisa said.

Upward pressure on the baht is likely to ease because portfolio inflows can't go on forever, and dollar buying by importers is expected to rise in the coming months, Tarisa said earlier Tuesday in a live interview on a local business news radio program.

"At a certain point where stock prices have risen enough, such flows will surely slow down," she said.

Thailand's stock market has risen to its highest in more than 10 years.

LaoPo

what goes up must come down ,and it wont stay up long

[DFCarlson]

The Bank of Thailand said Monday it would create a one-month window starting July 16 for foreign businesses and banks to borrow baht within the country to roll over hedged offshore positions.

I am not an expert in these matters... what is the mechanism by which the action of the BOT is expected to halt or reverse the appreciation of the baht?

That they have set a one-month window seems to imply that something else will be done at the end of the month. Does this seem logical?

Can anyone elighten me please?

[jumbojimbo]

Basically the Thais are panicking. The baht has risen so fast that it's looking very much like it did when the Asian Crisis started in Thailand 10 years ago. A good friend of mine works at the Thai stock exchange (and he really knows what he's talking about) and he's advising everybody "Buy dollars sell baht" as he thinks it's going to plummet down to over 40 to the dollar in the next few weeks.

The baht is waaaay overvalued especially as the Thai economy is in the toilet and with the upcoming 'elections' (yeah right!) the baht is going to be a disaster pretty soon. I've just followed my friend's advice and wired three quarters of my savings here back to the US. Great exchange rate and I definitely wanted to do it before it crashes. Would advise the rest of you do the same.

[Naam]

Basically the Thais are panicking. The baht has risen so fast that it's looking very much like it did when the Asian Crisis started in Thailand 10 years ago. A good friend of mine works at the Thai stock exchange (and he really knows what he's talking about) and he's advising everybody "Buy dollars sell baht" as he thinks it's going to plummet down to over 40 to the dollar in the next few weeks.

The baht is waaaay overvalued especially as the Thai economy is in the toilet and with the upcoming 'elections' (yeah right!) the baht is going to be a disaster pretty soon. I've just followed my friend's advice and wired three quarters of my savings here back to the US. Great exchange rate and I definitely wanted to do it before it crashes. Would advise the rest of you do the same.

it is always good to have friends who are prophets

[Naam]

Basically the Thais are panicking. The baht has risen so fast that it's looking very much like it did when the Asian Crisis started in Thailand 10 years ago.

the Baht was rising when the asian crisis started???

[britmaveric]

[Carmine6]

The Bank of Thailand said Monday it would create a one-month window starting July 16 for foreign businesses and banks to borrow baht within the country to roll over hedged offshore positions.

I am not an expert in these matters... what is the mechanism by which the action of the BOT is expected to halt or reverse the appreciation of the baht?

That they have set a one-month window seems to imply that something else will be done at the end of the month. Does this seem logical?

Can anyone elighten me please?

Hm, you're assuming an expert could explain this. I hope someone can.

What I think they are trying to do is let foreign businesses and banks borrow locally so they do not have to bring in outside funds to do whatever they're doing. But the 1 month period and the hedged offshore position sound way too specific not to be a special request for a certain industry or company.