Thailand Could Face Double-digit Inflation In 2008

[george]

Thai central bank chief concerned over rising inflation

BANGKOK:-- Bank of Thailand Governor Tarisa Watanagase on Friday voiced concerns regarding declining returns on savings and faster spending --rather than saving -- by consumers who in anticipation of higher inflation are buying now, stating that such action can push inflation to the double-digit level this year.

"Psychologically, if people think that the inflation rate will increase sharply, they will accelerate their spending. So, it is likely the inflation will surge to a double-digit level this year," she said.

Regarding a proposed reduction of the policy interest rate to stimulate the economy, she said such an action is impossible because the interest cut would boost the spending and so fuel the inflation rise.

"Reducing interest will encourage spending, which leads to a higher inflation rate. So, we can see almost all countries instead opting to raise interest rates," she said.

"In the United States, the Federal Reserve had previously cut key interest rates in a bid to stimulate the ailing economy, which was almost in recession at that time. Now, it begins to see a need to consider the interest hike to rein in higher inflationary pressures."

Mrs. Tarisa said the central bank is a sole agency responsible to oversee inflation. Accordingly, the bank must do its best to control inflation to boost consumer confidence. Otherwise, the inflation will surge incessantly.

The Commerce Ministry stated earlier that the consumer price index in May surged 7.6 per cent from the same month last year and 2.1 per cent from the previous month due to people's spending on education at the opening of new semester and higher transport costs upon the oil price hike.

-- TNA 2008-06-13

[cclub75]

Regular bullshit from Miss Tarisa.

Like Bernanke, she discovers that there is an inflation problem, that cutting interest rates would be bad, so that it would be good to increase rates...

So do it !

By the way : Foreclosures Rose 48% in May as U.S. Bank Repossessions More Than Doubled (Bloomberg).

This is exactly why... what said Bernanke is also pure bullshit.

The FED can't increase its rates (substantially).

Checkmate.

Secondary effects : when the "market" will understand this... you can say adios to the "rebound" of the USD.

Direction : toilets.

Edited June 13, 2008 by cclub75

[plachon]

This illustrates one of the fundamental differences in the mindset of the Thai people, from say the Japanese and other Asian nations where there is far more caution and financial prudence when times get tough and there's a financial turnaround. I always argued that Thailand never learned the lessons of the 97 crash, despite loads of articles in the local press claiming it had in the few years after and that there would never be runaway spending like the mid-90's period again. Guess some lessons need to be learned time and again to sink in.

[HardenedSoul]

Let's hope so cos I'm heavily invested in precious metals. Gold would tank if he hiked . . . and he might just surprise a few folks . .

[TEFLMike]

Today's rate any one please in GBP? Lost the link :-(

[Trichiliocosm]

HE is actually a SHE...

[joskydive]

Today's rate any one please in GBP? Lost the link :-(

GBP Pound Sterling 64.4828 THB

[BEENTHEREDONETHAT]

In all fairness it is a hel_l of a task to balance the dollar or the baht to prevent either inflation of recession. Not a job I would want to tackle. It seems to me like whatever they do right now will be wrong. Good luck to her.

[tipsy]

Today's rate any one please in GBP? Lost the link :-(

Google?

[marshbags]

This illustrates one of the fundamental differences in the mindset of the Thai people, from say the Japanese and other Asian nations where there is far more caution and financial prudence when times get tough and there's a financial turnaround. I always argued that Thailand never learned the lessons of the 97 crash, despite loads of articles in the local press claiming it had in the few years after and that there would never be runaway spending like the mid-90's period again. Guess some lessons need to be learned time and again to sink in.

While the experts will argue this is not the same, is not be of a comparable nature ect. ect.

Based on the experience of life and not charts and in this case meaningless statistics i offer my thoughts on the subject as pre 97

I and others where saying well before the crash of 97 ( months ) that there would have to be a devaluation of sorts or a rapid depreciation of the Baht.

Debt and overspending was well out of control, just like it is now.

On top of this there is now the oil scenario to take into account.

I stand by previous thoughts on the present situation and expect the baht, along with other Asian currencies to take a dive and it has for my two penneth been coming for awhile.

I,m O.K. as i get my finances from back home and do not live beyond my means, the locals as indeed do many Thai live consistantly beyond their means, and continue to get easy loans to create yet more debt that are facilitated by the institutions

They do so without any intentions or any hope in hel_l of paying it back and payback is about to happen yet again for Thailand.

In simple terms responsible house keepers do not overspend and the powers that be need to bite the bullet and start a re education programme for all, including themselves on basic "good common sense housekeeping "

New houses, new cars and pick ups, motor bikes mobiles ect ect even now with no work are future prospects..<deleted> is going on ??????

As for business ect. who will pick up the tag again for their greed and irresponsibility, same as before i tend to think, while they walk away and start the same sh*t all over again.

IMHO as always

marshbags

P.S.

O.K. i,m not Thai, but lots of my hard working friends are ( and for a pittance i might add and still keep their debt manageable ) not like the don,t give a sod brigade.

Edited June 13, 2008 by marshbags

[cocopops]

Just backing up the currency intervention with some verbal reenforcement I think. Difficult to see the BOT having the guts to raise interest rates now, even if they should. Would be like throwing oil on this political fire everybody seems worked up about.

BTDT: The mistake made in America was believing in recession-free capitalism. With the benefit of hindsight it looks like they should have taken the pain back in 2001. What Benanke could do now is announce that he intends to raise rates 25 points per month for the next 9-12 months. Reign the oil bubble in, give banks a sense of urgency with regards to righting their balance sheets. Forget avoiding recession, concentrate on avoiding long-term damage like that which has crippled Japan.

Edited June 13, 2008 by cocopops

[ray23]

Inflation and a rising dollar that she wants to curtail. Got her work cut out for her, 108 on the Yen today. Thailand barely budged, this is going to get very expensive. A stroger dollar puts pressure oon oil costs, sorry that is what we need to control. That is whaere the real infaltion comes form. Not how many orders of Som Tom someone purchases.

[marshbags]

This illustrates one of the fundamental differences in the mindset of the Thai people, from say the Japanese and other Asian nations where there is far more caution and financial prudence when times get tough and there's a financial turnaround. I always argued that Thailand never learned the lessons of the 97 crash, despite loads of articles in the local press claiming it had in the few years after and that there would never be runaway spending like the mid-90's period again. Guess some lessons need to be learned time and again to sink in.

Don,t forget the self appointed finacial experts who i recon are in denial as well.

It,s been there for all to see for some time now, even before the oil crisis.

marshbags

[capt_canada42]

Today's rate any one please in GBP? Lost the link :-(

GBP Pound Sterling 64.4828 THB

The over valued English Pound what a joke no wonders people don't buy English products, and they wonder why there economy isn't strong brilliant .

[Galong]

HE is actually a SHE...

A lot of 'em are

[ray23]

Would somebody please buy this lady a copy of the Bangkok Post or at least show where the web site is Consumer confidence has been down for months. She is riding the wrong pony.

I swear this goverment never ha meetings the departments are as still running asking care of thier own turf with no regard to the total picture. Now you might be able to put out small fires that way but not a forrest fire like this.

This article is in breaking new at the Post today. I'm not putting anyone down but at the very least you would think this is emabrrassing

"Consumer confidence down again in May

The consumer confidence index in May declined in all categories for the second consecutive month, according to the University of Thai Chamber of Commerce (UTCC).

Concerns mounted over the continued oil price surge, impacts of the sub-prime lending crisis in the United States, a growing trade deficit, and political turmoil.

Thanawat Palavichai, director of the UTCC Economic and Business Forecasting Centre, said the index on opinions about the political situation dropped to 59.3, the lowest in five months.

It demonstrated that the public began to worry about the political crisis in the wake of the ongoing demonstration by the anti-government People's Alliance for Democracy.

This, coupled with concerns over the oil price crisis, rising trade deficit, and impact of the sub-prime lending woes, brought down confidence indexes on the overall economy, job opportunities, and future incomes to 71.8, 71.8, and 92.8 from 73,72.7, and 94 respectively in April.

It resulted in a fall in the consumer confidence index, current and future confidence indexes to 78.8, 71.1, and 79.2 from 79.9, 72.1, and 80.5 respectively in April.

Currently, he said, no positive factors are seen to encourage or restore investor confidence. So, it is necessary for the government to more quickly find solutions to a range of problems and come up with measures to stimulate the economy and the people's purchasing power through large-scale investment projects.

Mr Thanawat conceded that surging oil prices and the higher cost of living might push up the country's inflation rate to stay at a range of 8-9 per cent or reach double-digit level.

Should the oil price exceed US$150 per barrel and the political turmoil continue unabated, the economy would grow less than 7 per cent.

However, the centre projected the economy this year would grow 5.1 per cent, the core inflation would stay at no more than 3.5 per cent, and the baht would weaken to no more than 33-34 to the US dollar.

He said it is difficult to see the inflation rate soaring to double-digit levels because he believed the oil exporting and importing countries would be able to cooperate to control oil prices.

Mr Thanawat said he believed the oil price crisis and inflation hike would ease in the second half of this year. (TNA)"

[Tonyzill]

The price of Oil will hit $150. This will hit every nation. The insustrial boom in Thailand will be hit hard as will the rural farmers. The Thais that have a bit of money now will not be able to help themselves buying up poperty etc as they only think about now not log term it just is not in the culture or nature. Inflation is destined to go up. The only plus side is that when bringing in currency you will get more but that wil be offset by rising prices which is also inevitable. There will be a lot of un happy Thais by the end of this year as well as a lot poorer.

[Old Man River]

Regular bullshit from Miss Tarisa.

Since it sounds like you have all the answers, what do you think the BOT should do to stave off inflation in Thailand?

[jasonr3255]

All this talk of rising inflation, will that inevitably make the baht weaker against say the £, giving us say around 70baht to the pound as per 61/65 what we have been accustomed to over the past 2 yrs. Or will the rising inflationbin the UK keep it floating at the same mark..? Can a financial guru clear this question up for me ?

[nasa]

HE is actually a SHE...

Rates as of 2008-06-12 19:09:49 UTC (GMT). Base currency is THB.

Currency Unit THB per Unit Units per THB

================================ =================== ===================

USD United States Dollars 33.1978681901 0.0301224161

EUR Euro 51.1917764797 0.0195343875

GBP United Kingdom Pounds 64.6455713348 0.0154689638

CAD Canada Dollars 32.4720629903 0.0307957028

AUD Australia Dollars 31.0171396468 0.0322402392

JPY Japan Yen 0.3076716179 3.2502185503

[OzMan_Bkk]

Let's look at this statement. Just who are these people spending more ? Certainly not rice farmers who are sruggling against the tide. Certainly not people on a wage. They spend all of it in the best of times. When inflation bites they just buy less for the same money. So just who is driving up inflation ? Oil costs on transportation is a large part of it.

And what is the Central Bank doing propping up the Baht. They have stepped in to keep it low against the USD. It is around 33:1 at the moment. Realistically it should be at least 36:1, perhaps more. At least exporters are being looked after.

[marshbags]

The price of Oil will hit $150. This will hit every nation. The insustrial boom in Thailand will be hit hard as will the rural farmers. The Thais that have a bit of money Guess who they are, anybody!!! now will not be able to help themselves buying up poperty etc as they only think about now not log term it just is not in the culture or nature. Inflation is destined to go up. The only plus side is that when bringing in currency you will get more but that wil be offset by rising prices which is also inevitable. There will be a lot of un happy Thais by the end of this year as well as a lot poorer.

Even now the institutions encourage the big time debtors to take on yet more debt...

Never a hope or any intentions to pay it back, and well they know it, i might add.

Houses, cars, pickups, motor bikes, changing 3 month old mobiles for newer models ect. ect.

Then you have the phoney titled / known Puyai who borrow to build condominums, finance dodgy deals, buy imported mega priced cars ect.ect. knowing full well they will never be forced to pay it all back, walk away from their responsiblities and just start up again with the monies they,ve secreted away and DNGAF as a consequence.

In particular who picks up the bill long term, the local hard working members of society who work hard and live responsibly.

In taxes that are deducted from their pittance of a wage as a good example for one.

NPL,s come to mind big time from 10 / 11 years ago and beyond.

!997 type financial problems and continued irresponsibility have always been there, are now snowballing and this is before you take the oil int the equation.

Good house keeping is not and never has been a part of their philosophy, and never will be while someone else has to pick up the predictable negative consequences of it all.

marshbags

Edited June 13, 2008 by marshbags

[HardenedSoul]

Let's hope so cos I'm heavily invested in precious metals. Gold would tank if he hiked . . . and he might just surprise a few folks . .

[Old Man River]

Realistically it should be at least 36:1, perhaps more.

While you may ultimately be right, I would be interested to know why you think the THB/USD should be 36:1 right now?

[Oliver Reed]

Today's rate any one please in GBP? Lost the link :-(

GBP Pound Sterling 64.4828 THB

The over valued English Pound what a joke no wonders people don't buy English products, and they wonder why there economy isn't strong brilliant .

Tell me of a country thats not feeling the pinch at the moment oh great economic guru captain canada...british products?? there arent any because we out source most of our manufacturing industry these days, just like so many other G8 countries do...over valued currency? i dont think so, give us back our 70 baht to the pound, then i can buy my bangkok condo for a tidy saving

[fafifoernik]

All rates:

http://www.scb.co.th/exchange/bk-txtexchange.htm

[SamuiJens]

Today's rate any one please in GBP? Lost the link :-(

GBP Pound Sterling 64.4828 THB

The over valued English Pound what a joke no wonders people don't buy English products, and they wonder why there economy isn't strong brilliant .

Tell me of a country thats not feeling the pinch at the moment oh great economic guru captain canada...british products?? there arent any because we out source most of our manufacturing industry these days, just like so many other G8 countries do...over valued currency? i dont think so, give us back our 70 baht to the pound, then i can buy my bangkok condo for a tidy saving

Saudia Arabia, I would guess and the other oil rich neigbors!

[Naam]

Let's look at this statement. Just who are these people spending more ? Certainly not rice farmers who are sruggling against the tide. Certainly not people on a wage. They spend all of it in the best of times. When inflation bites they just buy less for the same money. So just who is driving up inflation ? Oil costs on transportation is a large part of it.

And what is the Central Bank doing propping up the Baht. They have stepped in to keep it low against the USD. It is around 33:1 at the moment. Realistically it should be at least 36:1, perhaps more. At least exporters are being looked after.

:D

[Old Man River]

Since higher inflation etc. is energy related I found this article about oil prices to be interesting:

http://www.atimes.com/atimes/Japan/JF12Dh01.html

[lucjoker]

did you see the base ball bat-armed demonstrators in BKK?

Pictures in todays newspapers!

If this leads to a bloody coup,war between the two political groups,than all the shops

will be closed exept the noodle-shops.

Since the banks will close one of the first,you will not be able to

take your money out !

So i got all my money out of my bank ,this is no worry any more.

if the situation becomes stable ,real stable,than i will put it back in the bank.

half of my money i changed in eu.So no matter what the bath does,i will not loose

a lot?