BOT Revokes Capital Control Measure From Monday

[george]

BOT revokes capital control measure

BANGKOK: -- The Bank of Thailand eventually decides to scrap the 30 per cent capital reserve requirement, effective on Monday.

The measure has been in place since December 18, 2006.

Ahead of the press conference at 4pm, Amara Sriphayak, senior director of the bank's domestic economy department, on Friday said that many factors support the removal.

"There are many factors supporting the removal of the capital controls but we need to wait and see how to remove them and when," she said.

-- The Nation 2008-02-29

From this morning:

Baht hits new high as market readies for capital controls end

BANGKOK, Feb 29 (TNA) – The Thai baht hit a new high again in Thursday's trading session because there is an expectation in the market that the central bank will scrap the 30 per cent reserve requirement, according to Bank of Thailand Governor Tarisa Watanagase.

She said the baht strengthened and broke through 31.99 to the US dollar compared with a range of 32.085-32.105 to the dollar on Wednesday, it's strongest level in 10 and a half years.

Mrs. Tarisa attributed the continued baht rise to the market expectation that BoT would call off the reserve withholding measure.

However, she said, the local currency had strengthened in conjunction with other regional markets.

The previous government imposed currency controls in December 2006 in an attempt to halt the baht's rapid rise against the dollar. The measure caused the biggest single-day drop in the Thai stock market in late 2006, with losses worth 203 billion dollars. Relaxations have since been made to the currency rules.

Mrs. Tarisa said should anyone want to know whether the central bank had intervened in the baht movement for now, they could see data on the country's international reserve through the website of the bank.

She reiterated the bank's supervision and management policies would remain unchanged.

Regarding a comment by the Securities and Exchange Commission (SEC) that the BoT is indecisive and uncertain in the scrapping of the capital controls, she said it is a difference of perspectives.

However, she reasserted that what the central bank would do must benefit all parties.

-- TNA 2008-02-29

Related link:

Thai Baht Exchange Rates:

http://baht.thaivisa.com

[animatic]

Oh joy, as the baht to the dollar hit the worst place in years,

THEN they decide to let it go free as the wind.

Just the announcement makes me lose money.

New government, same 'logic'.

Same, same, but less.

Edited February 29, 2008 by animatic

[BigSnake]

Might as well it doing little or nothing to slow down this old strong Baht.

[sangfroid]

Thaksin's first piece of advice to the Bank of Thailand?

[SiriusBlack1]

Is this not more of a dollar weakness story? The baht sank today against JPY.

[SWW]

Might as well it doing little or nothing to slow down this old strong Baht.

But having said that - the BoT cannot be held responsible for the Federal Reserve knocking the interest rates down!

Lowering a currency's interest rate lowers the currency's exchange rates against other currencies, since its value grows more slowly compared to those other currencies. So as well as the THB being strong (which I am not denying that it is), the USD's value will naturally fall over time, as people who hold large amounts of USD sell them and buy something else. Another currency maybe, but usually gold. You should see what has been happening to the gold price over the last few months.

So if you currently hold dollars yourself, perhaps a trip to chinatown is called for ...

Scott

[laocowboy2]

I am afraid that this was inevitable. With the USD so weak, we are going to see most Asian currencies appreciate against it. I rather think however that it is going to put a number of Thai exporters under some strain.

Trade flows are one thing but the real determinant in the short term will be capital flows, both into the SET and in the form of FDI. As Thais have until recently not been easily able to invest outside, the flows have tended to be rather one way either in when the international funds are bullish on Thailand/emerging markets generally and out again when they decide to lighten their emerging markets loading.

One little recognised fact this time around is that there is a lot of GCC money looking for a home in Asia, particularly in the real estate sector. With the US and European real estate markets softening, expect Dubai, Qatar, Abu Dhabi etc to start buying commercial property either directly or buying into the property companies themselves.

The strong THB is here to stay.

[maxcrc]

Is this not more of a dollar weakness story? The baht sank today against JPY.

The baht has gained virtually against all currencies in the world.

In just 6 MINUTES look at that:

http://www.scb.co.th/html/exchange/29022008_164200.htm

http://www.scb.co.th/html/exchange/29022008_164800.htm

The euro DROPPED almost 1 baht from 16:42 to 16:48. Never seen anything like this in my life.

There is no currency in the world which is rising as fast as the baht.

I notice you when the euro was 51 bahtr 1 ,the dollar was by no means as weak as now (dollar was below 1.40 for 1 euro).

Now with the $ at 1.52 for 1 euro , euro is at 47.02 baht for 1, it means euro has dropped brutally against the baht too, despite its strenght against the dollar and NAFTA/ALCA currencies.

In the SCB page you can check the rates of yen to baht in the past months and you can see how yen , won ,etc are significatly lower against the baht.

The baht rising is brutal, Bloomberg and The Economist is the past has ranked the baht as the fastest appreciating currency in the world.

Fundamentals can be strong ok, but for a country with political turmoils, capital controls, no friendly towards foreigner investment and a mere 5% growth a year, this appreciation looks surely exaggerated.

Edited February 29, 2008 by maxcrc

[terryp]

This is a nightmare., Thailand is becoming far too expensive

[JimmyGreaves]

This is a nightmare., Thailand is becoming far too expensive

Agreed!

[Langsuan Man]

Is this not more of a dollar weakness story? The baht sank today against JPY.

I agree, the Baht is not strong the USD is just weak not only from the lowering of interest rates but from the worthless paper that the USG expects the Chinese, Europeans and Japanese to purchase to pay for the reckless spending binge that the USG is currently on.

If we, as individuals, were as reckless with our money as the US government is with our money every one would be facing bankruptcy.

LSM

[Two Roads]

Quietly but steadily the hedge funds are reducing their short dollar positions and going long.

Dollar should strengthen on 2008 vs. Euro and Pound but jury still out vs. Baht.

[Gravelrash]

This is a nightmare., Thailand is becoming far too expensive

Perhaps if you are in US dollars. If making money here or using say Australian dollars then all is either status quo or party time. So all those offerring advice on Thailands measures to manage its currency, are these genuine economic concerns for the good of the country or just worrying about ones personal exchange rate?

The US dollar is even sliding against obscure currencies with minute populations. So who has stuffed up, Thailand and the rest of the world. or GWB and the USA?

[jimjel]

This is a nightmare., Thailand is becoming far too expensive

Perhaps if you are in US dollars. If making money here or using say Australian dollars then all is either status quo or party time. So all those offerring advice on Thailands measures to manage its currency, are these genuine economic concerns for the good of the country or just worrying about ones personal exchange rate?

The US dollar is even sliding against obscure currencies with minute populations. So who has stuffed up, Thailand and the rest of the world. or GWB and the USA?

The USA has screwed up the world, thnaks to Bush and his crazies.

[marquess]

If the Baht goes up, then it should mean cheaper oil! But of course any gains will end up in someones pocket, but not the consumers.[

[terryp]

I don’t think it’s going to help with Thai exports (job losses etc)…..so we will all be affected in the long run; even if you are paid in Baht, this is not good.

Wait till all the funds pull out the money when profits slow ..Then Thailand will be in deep cr@p

[GallopingMajor]

AND shortly before the financial crisis, the baht was around 25 to the dollar. I bought a condo at that price using imported dollars at that rate. I felt a bit silly a year later when the baht hit 50 to the dollar. And now here we are back hovering close to 25. What goes round, comes round.

[sriracha john]

The US currency dropped to 29.92 against the Thai Baht

- Bloomberg

[farang2002]

This is a nightmare., Thailand is becoming far too expensive

I agree! I'm spending more and more time in Vietnam and Indonesia where I get more mileage from my sorry dollar.

[jimjel]

This is a nightmare., Thailand is becoming far too expensive

I agree! I'm spending more and more time in Vietnam and Indonesia where I get more mileage from my sorry dollar.

This puppy is going to check out China

[marshbags]

http://www.bangkokbank.com/Bangkok+Bank/We...es/FX+Rates.htm

Currency Exchange Rate Date : 29 February 2008

Update : 5 Effective From : 16:50 [unit : Baht per 1 unit of foreign currency]

Currency Description Bank Note Buying Rates Selling Rates, Bill-DD-TT

USD1 USD : 1 30.27 31.80

USD5 USD : 5-20 30.61 31.80

USD50 USD : 50-100 31.03 31.86 31.20 31.30 31.70

GBP United Kingdom 61.13 63.23 61.80750 61.97250 62.99000

EUR Euro Zone 47.15 48.48 47.35250 47.46500 48.27750

Get the complete list from the url at the top and a much clearer layout as per list.

I cannot remember the last time the exchange rate was updated as late as this.

If ever ??

Obviously it has anticipated the strengthening, unlike the way they normal close shop on a Friday ???????

Which is generally much earlier than this. especially when the exchange rate moves in favour of our currencies and we have to wait over the weekend to possibly ( if there hasn,t been a shift the other way, in that time ) get more baht for our currencies.

I,ve mentioned on several occasions at the exchange booths that it was ex amount at 14.30 , or around this time, only to be told it is to late to update any late adjustments.

I,ll make a point of going to see what the rate is tomorrow morning and see how it fits in / what it is and compare timing, ect.

Happy days are not here again in more ways than this one............................

marshbags my ?????? !!!!!!!!!!!!

Edited February 29, 2008 by marshbags

[Ricardo]

If the BoT want to weaken the baht, why not just remove all controls, on the movement of money in & out of the country, and let the Baht simply float ? There must be money, wanting to leave Thailand, which is currently (to some extent) constrained from doing so.

Meanwhile at least this short-term measure has now been removed, making life a little simpler, roll-on the rest of the PPP-led government's measures to reduce the pain, and weaken the Baht !

[joefromdc]

Uh-huh.

Lots of economists read thaivisa.com.

I have to quote (I think) former US President Harry Truman.

"If you took all the economist in the world and lined them up from here to the moon, they'd all point in different directions..."

But please continue the discussion....

j.

[OKF]

I cannot quite understand all the discussion here. The Euro for the last 2 years is fluctuating between 43 and 49. The dollar gets weaker. It is not a particulary strong Baht it is a WEAK dollar which just mirrors the situation in the US, a system that was deemed to go down the drain when you look at it closer. So you better get used to it because it will not improve anymore eben if the cowboy leaves anybody new will make same or other mistakes (e.g. stop freetrade etc.)...

[aznyron]

Is this not more of a dollar weakness story? The baht sank today against JPY.

The baht has gained virtually against all currencies in the world.

In just 6 MINUTES look at that:

http://www.scb.co.th/html/exchange/29022008_164200.htm

http://www.scb.co.th/html/exchange/29022008_164800.htm

The euro DROPPED almost 1 baht from 16:42 to 16:48. Never seen anything like this in my life.

There is no currency in the world which is rising as fast as the baht.

I notice you when the euro was 51 bahtr 1 ,the dollar was by no means as weak as now (dollar was below 1.40 for 1 euro).

Now with the $ at 1.52 for 1 euro , euro is at 47.02 baht for 1, it means euro has dropped brutally against the baht too, despite its strenght against the dollar and NAFTA/ALCA currencies.

In the SCB page you can check the rates of yen to baht in the past months and you can see how yen , won ,etc are significatly lower against the baht.

The baht rising is brutal, Bloomberg and The Economist is the past has ranked the baht as the fastest appreciating currency in the world.

Fundamentals can be strong ok, but for a country with political turmoils, capital controls, no friendly towards foreigner investment and a mere 5% growth a year, this appreciation looks surely exaggerated.

I am with you 100% I smell a rat in the wood pile

[terryp]

These newbie’s with their stupid comments obviously don’t know that the Thai baht is the World fastest growing currency…why are you talking about the $...it is NOT only the $ that’s getting stuffed by the Baht

Remember Taxin has come home to collect his $1.8 billion ...possibly he want's it in Baht LOL

[andyc2006]

Quietly but steadily the hedge funds are reducing their short dollar positions and going long.

Dollar should strengthen on 2008 vs. Euro and Pound but jury still out vs. Baht.

Yes, of course, the hedge funds have never botched their currency positions.

And my college roommate at Long-Term Capital Management _chose_ to move his career as a quant from LTCM to another company.

It had nothing to do with the company's currency hedges imploding, bringing down the company and nearly the entire world's economy.

Anyway, that was a "whole" decade ago... surely this is a new paradigm, right?

Tell me, as the US continues to drop interest rates, and spend more than it produces, and import more goods than it exports, how exactly is the dollar going

to strengthen?

To conclude that the dollar will strengthen in light of that evidence is to conclude that although the US is taking actions to weaken its currency, all

the other countries on Earth are taking even more severe currency-weakening actions!

It's possible, I've heard it stated as fact, but I don't believe it. Yeah, other countries will take a hit when we do (we're > 50% of the world's GDP, after all), but we're going to take one of the biggest hits.

[aznyron]

my gut feeling tells me we will see a baht drop after the thai new year my reason is many companies will pull out of thailand mainly Japan and it will hurt the economics of Thailand which will weaken the baht from my understanding all the exporters from Thailand get paid in USD which of course will close many factories due to the strong baht like most of us who live here lost far to much money in the exchange rate now I don't give a <deleted>/ck about thailand baht the sooner it crashes & burns the happier I will be

[andyc2006]

Uh-huh.

Lots of economists read thaivisa.com.

I have to quote (I think) former US President Harry Truman.

"If you took all the economist in the world and lined them up from here to the moon, they'd all point in different directions..."

But please continue the discussion....

j.

I don't need to be a weather man to know which way the wind is blowing.

I don't follow the Baht against currencies other than the dollar, so the whole "the baht is strong" vs. "the dollar is weak" argument... I don't know which posters are correct about the baht relative to other currencies.

But I can tell you with certainty that the dollar is the weakest it has ever been: http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax

Given that the US Govt's "solution" to the problems which arose from extending too much bad credit is to... extend more credit... please, tell me how the dollar is going to strengthen, when the govt treats the symptoms with more of the causes.

Right now, the ticket is one-way. Only a change in behavior will change the results.

[OKF]

yes TERRYP you will know it all which does not stop me to post some more STUPID COMMENTS

Why do I talk about the dollar, because it seems to be the big issue in this thread (should you have read trough it).

The dollar is weak against all major currencies in this world and I would not treat the Baht as a major currency but of course against the baht it is weak as well. The reasons for that are found in the USA and the dilemma the USA has caused politically and economically. Just wait another 6 month until all the truth comes out about all the loans US banks have given to people that cannot pay the monthly rates plus all the bonds they have sold anywhere in the world which are not worth a penny. That will drive it down even further.