Weaker Baht Won't Help Exports Now: Thai Central Bank

[george]

Weaker baht won't help exports now: Thai central bank

BANGKOK: -- The weakening of the Thai baht has not contributed to export growth amid the current economic uncertainties, according to the latest Bank of Thailand (BoT) report.

Deputy Prime Minister Korbsak Sabhavasu said Prime Minister Abhisit Vejjajiva had instructed the central bank to consider how much exports would grow due to the present baht depreciation.

The bank reported in the fourth quarter last year that the baht had weakened by 2.1 per cent while exports had dropped by 8.5 per cent.

The Thai central bank study showed no positive relationship on export growth or potential deriving from a weaker currency.

The Philippine peso had depreciated 2.9 per cent and their exports had dropped by 22.5 per cent; Singapore's dollar declined by 3.9 per cent and exports fell by 3.9 per cent, as with the Taiwan dollar, which weakened by 3.6 per cent while exports shrank by 24.7 per cent.

Malaysia's ringgit had weakened by 0.1 per cent and exports continued dropping by 13 per cent; Hong Kong's dollar remained steady, but exports contracted by 4.3 per cent; Indonesia's rupiah and Korea's won had dropped by 14.4 and 9.9 per cent, while exports had fallen by 17 and 6 per cent respectively.

The above-mentioned currency and export figures showed that under the present unusual economic conditions the weakening of the currency would not help boost the growth of exports significantly.

He said the government affirmed that the supervision of the currency rests with the Bank of Thailand and expressed confidence in its course of action in not attempting to make any intervention into the baht's movement.

-- TNA 2009-02-19

Related link:

Thai Baht Exchange Rates

[neverdie]

Ohhh goodie another thread about the thai baht....at this rate we could start up a whole new forum

[Pierrot]

Thailand (traditional style, present government) is a "landlord economy". What does it mean? They own the land and leave on the income generated by renting it. It has always been like this and all the recent events have been about preserving this way of life. Why do you think Thailand doesn’t allow foreigners to own land ? All the “real” economy is in the hands of the Chinese and the Japanese, but as long as they pay their rent on time …

If you understand that, what the point of a weak Baht? It just makes the Benz more expensive, only foreigners can be so stupid !

[Thai at Heart]

I think that is a sign of intent not to consider devaluing the baht as a matter of policy.

I read an interesting article by Korn about 3 years ago where he wrote how his company (large international bank that he was working for) had predicted the crash of 97 to no avail and no one had paid his corporate reports any attention. He then continued to write how he worried about the explosion of low value export companies taking advantage of the lower value of the baht, whilst the government perpetually under-invested in education thus preventing the country to switch to higher value exports or services. He bemoaned the logical fact that to compete with China was pointless in the long run.

That article alone was enough to convince me that he didn't see any pressing need to manipulate the value of the baht down to save low added value exporters.

Edited February 19, 2009 by Thai at Heart

[Pierrot]

...He then continued to write how he worried about the explosion of low value export companies taking advantage of the lower value of the baht, whilst the government perpetually under-invested in education thus preventing the country to switch to higher value exports or services. He bemoaned the logical fact that to compete with China was pointless in the long run.

A good starting point will be to list the goods and services Thailand export. Real Thai exports, not products manufactured by foreigners in Thailand.

[Thai at Heart]

...He then continued to write how he worried about the explosion of low value export companies taking advantage of the lower value of the baht, whilst the government perpetually under-invested in education thus preventing the country to switch to higher value exports or services. He bemoaned the logical fact that to compete with China was pointless in the long run.

A good starting point will be to list the goods and services Thailand export. Real Thai exports, not products manufactured by foreigners in Thailand.

Hey it isn't just foreigners who jumped on the export wagon. Thousands of Thai exporting companies; and let us not forget the 51:49 rule that covers most of them, prospered after the 97 currency.

I am sure the employees don't care either who owns the companies, and looking at the severance that GM has agreed for it's employees I trust that all companies will be as generous. As for real Thai exports, do you mean Toyota pickups, Seagate hard drives or rice? You should be thankful they have opened up here, these so called foreign companies employ millions of people. God forbid they leave and choose to never return.

http://hicomrade.wordpress.com/2007/07/14/...parel-industry/

[Pierrot]

I am sure the employees don't care either who owns the companies, and looking at the severance that GM has agreed for it's employees I trust that all companies will be as generous. As for real Thai exports, do you mean Toyota pickups, Seagate hard drives or rice? You should be thankful they have opened up here, these so called foreign companies employ millions of people. God forbid they leave and choose to never return.

I believe you got me wrong. I agree most of the Thai people employed in export oriented industries are employed by foreigners (as you mentioned Toyota, Seagate ,...).

What I was saying is "true" Thai companies have little interest in export and therefore couldn't care much of a weak Baht

[Thai at Heart]

I am sure the employees don't care either who owns the companies, and looking at the severance that GM has agreed for it's employees I trust that all companies will be as generous. As for real Thai exports, do you mean Toyota pickups, Seagate hard drives or rice? You should be thankful they have opened up here, these so called foreign companies employ millions of people. God forbid they leave and choose to never return.

I believe you got me wrong. I agree most of the Thai people employed in export oriented industries are employed by foreigners (as you mentioned Toyota, Seagate ,...).

What I was saying is "true" Thai companies have little interest in export and therefore couldn't care much of a weak Baht

Would that include Siam Cement Group with it's massive amount of exports or CP with it's agribusiness to Europe? There are thousands of true thai companies with their fingers significantly in the export pie.

[Pierrot]

I am sure the employees don't care either who owns the companies, and looking at the severance that GM has agreed for it's employees I trust that all companies will be as generous. As for real Thai exports, do you mean Toyota pickups, Seagate hard drives or rice? You should be thankful they have opened up here, these so called foreign companies employ millions of people. God forbid they leave and choose to never return.

I believe you got me wrong. I agree most of the Thai people employed in export oriented industries are employed by foreigners (as you mentioned Toyota, Seagate ,...).

What I was saying is "true" Thai companies have little interest in export and therefore couldn't care much of a weak Baht

Would that include Siam Cement Group with it's massive amount of exports or CP with it's agribusiness to Europe? There are thousands of true thai companies with their fingers significantly in the export pie.

I believe a number of the companies you mention don't support this government and therefore can't expect too much support from it. Most of the supporters of the present government are civil servants, academics or employees, with little knowledge of international business.

[Thai at Heart]

I am sure the employees don't care either who owns the companies, and looking at the severance that GM has agreed for it's employees I trust that all companies will be as generous. As for real Thai exports, do you mean Toyota pickups, Seagate hard drives or rice? You should be thankful they have opened up here, these so called foreign companies employ millions of people. God forbid they leave and choose to never return.

I believe you got me wrong. I agree most of the Thai people employed in export oriented industries are employed by foreigners (as you mentioned Toyota, Seagate ,...).

What I was saying is "true" Thai companies have little interest in export and therefore couldn't care much of a weak Baht

Would that include Siam Cement Group with it's massive amount of exports or CP with it's agribusiness to Europe? There are thousands of true thai companies with their fingers significantly in the export pie.

I believe a number of the companies you mention don't support this government and therefore can't expect too much support from it. Most of the supporters of the present government are civil servants, academics or employees, with little knowledge of international business.

I don't know where you get the idea that corporations haven't been supporting the current government. Since it isn't written on paper any of their political affiliations, it is hearsay. Although there have been many reported donations to said current government, so debts will have to be repaid with policy. I think if Siam Cement went to the top of the government and claimed that a strong baht would bring them down, the policy would change in a minute. They employ thousands if not hundreds of thousands directly or indirectly.

I think the government is consulting these major corps and probably private banks to get their input on the situation and whether they can survive or whether a devaluation might put them at risk of default on their foreign currency loans vis a vis 1997. In addition, as the finance ministry points out, will a 10% drop in the value of the baht bring a big boost to exports? Doubtful, there are no customers, but might it cause corporate default?

Safe to say that many of the large Thai corporations have cross shareholdings in many major international companies devoted in either part or large percentage to export. There appears to be a consistent policy to not let the baht value fall through the floor.

These decisions are not taken lightly and with a large amount of business in Thailand tied to exports be them completely Thai or with majority or minority shareholding there has to be a strategic reason why, unless we believe that the BOT isn't intervening and the fundamentals of Thailand are stronger than all its regional competitors.

[Seneque]

The Thai central bank study showed no positive relationship on export growth or potential deriving from a weaker currency

Sorry about that mr. & mrs. central bank ... but if there is no import content into your export ... a weaker currency will DEFINITELY be a positive factor ...

However i think this new comment from the central bank (and there seems to be more and more these days) is a clear sign that they won't allow the baht to depreciate ... only time will tell if it was a good or a bad choice ...

[Pierrot]

I don't know where you get the idea that corporations haven't been supporting the current government. Since it isn't written on paper any of their political affiliations, it is hearsay. Although there have been many reported donations to said current government, so debts will have to be repaid with policy. I think if Siam Cement went to the top of the government and claimed that a strong baht would bring them down, the policy would change in a minute. They employ thousands if not hundreds of thousands directly or indirectly.

I think the government is consulting these major corps and probably private banks to get their input on the situation and whether they can survive or whether a devaluation might put them at risk of default on their foreign currency loans vis a vis 1997. In addition, as the finance ministry points out, will a 10% drop in the value of the baht bring a big boost to exports? Doubtful, there are no customers, but might it cause corporate default?

Safe to say that many of the large Thai corporations have cross shareholdings in many major international companies devoted in either part or large percentage to export. There appears to be a consistent policy to not let the baht value fall through the floor.

These decisions are not taken lightly and with a large amount of business in Thailand tied to exports be them completely Thai or with majority or minority shareholding there has to be a strategic reason why, unless we believe that the BOT isn't intervening and the fundamentals of Thailand are stronger than all its regional competitors.

First I have to agree with you, it is definitively hearsay.

Then you have two kinds of “international” corporation in Thailand, local companies with foreign investors (the majority) or local companies active abroad (not that many). Unfortunately we can’t go too much into details but just let say that “international” players, be it foreign companies investing in Thailand or local companies investing abroad, are not so happy with the current government.

With the exception of Japanese companies of course, but only time will tell us what it did cost to Thailand to have Japan let Abhisit claim that Thaksin have been banned from Japan.

Edited February 19, 2009 by Pierrot

[Lix]

Thailand (traditional style, present government) is a "landlord economy". What does it mean? They own the land and leave on the income generated by renting it. It has always been like this and all the recent events have been about preserving this way of life. Why do you think Thailand doesn't allow foreigners to own land ? All the "real" economy is in the hands of the Chinese and the Japanese, but as long as they pay their rent on time …

If you understand that, what the point of a weak Baht? It just makes the Benz more expensive, only foreigners can be so stupid !

Hi Pierrot, sorry could you elaborate on that post please. Can Chinese and Japanese own land in Thailand then? And do they own the majority of it? Or am i completely missing the point here? Are you saying the gov want a strong baht because it generates more money from the Japanese and Chinese foreign investment ?

Thank you

[Thai at Heart]

I don't know where you get the idea that corporations haven't been supporting the current government. Since it isn't written on paper any of their political affiliations, it is hearsay. Although there have been many reported donations to said current government, so debts will have to be repaid with policy. I think if Siam Cement went to the top of the government and claimed that a strong baht would bring them down, the policy would change in a minute. They employ thousands if not hundreds of thousands directly or indirectly.

I think the government is consulting these major corps and probably private banks to get their input on the situation and whether they can survive or whether a devaluation might put them at risk of default on their foreign currency loans vis a vis 1997. In addition, as the finance ministry points out, will a 10% drop in the value of the baht bring a big boost to exports? Doubtful, there are no customers, but might it cause corporate default?

Safe to say that many of the large Thai corporations have cross shareholdings in many major international companies devoted in either part or large percentage to export. There appears to be a consistent policy to not let the baht value fall through the floor.

These decisions are not taken lightly and with a large amount of business in Thailand tied to exports be them completely Thai or with majority or minority shareholding there has to be a strategic reason why, unless we believe that the BOT isn't intervening and the fundamentals of Thailand are stronger than all its regional competitors.

First I have to agree with you, it is definitively hearsay.

Then you have two kinds of “international” corporation in Thailand, local companies with foreign investors (the majority) or local companies active abroad (not that many). Unfortunately we can’t go too much into details but just let say that “international” players, be it foreign companies investing in Thailand or local companies investing abroad, are not so happy with the current government.

With the exception of Japanese companies of course, but only time will tell us what it did cost to Thailand to have Japan let Abhisit claim that Thaksin have been banned from Japan.

There are thousands of completely Thai (Chinese Thai, Indian Thai and Thai Thai) owned company's heavily reliant on export business from Ikea furniture to Nike socks to Fishing Nets to Foodstuffs that go beyond the major blue chips such as Siam Cement or CP. The reason the rice exporters have a disproportionate pull in the public domain is because they are perceived as entirely domestic. I don't underestimate the power of domestically owned export businesses for a minute. The Japanese do have significant investment here, but I would imagine that the completely owned domestic businesses make up a very significant value of all international exports.

To the next poster, land distribution in Thailand is absolutely pitiful and profitable working land be it farming or commercial is heavily in the hand of naturalised Thai Chinese.

Edited February 19, 2009 by Thai at Heart

[Pierrot]

... There are thousands of completely Thai (Chinese Thai, Indian Thai and Thai Thai) owned company's heavily reliant on export business from Ikea furniture to Nike socks to Fishing Nets to Foodstuffs that go beyond the major blue chips such as Siam Cement or CP. ...

Agree. But what is their political weight ?

[ozzieman05]

All I know is the wife parents own a shop in their village in Issan

And they say business is down nearly 70% as the people in the village do not have the money to spend

Where does their money come from

From Family members who work in tourist areas

The say the Farang are just not spending.

These are the hard facts, not the BS that comes from reports

[Pierrot]

All I know is the wife parents own a shop in their village in Issan

And they say business is down nearly 70% as the people in the village do not have the money to spend

Where does their money come from

From Family members who work in tourist areas

The say the Farang are just not spending.

These are the hard facts, not the BS that comes from reports

Sorry to hear that but as long as it doesn't affect the life of the Bangkok elite who support this government, who care ?

[Old Man River]

Then you have two kinds of “international” corporation in Thailand, local companies with foreign investors (the majority) or local companies active abroad (not that many). Unfortunately we can’t go too much into details but just let say that “international” players, be it foreign companies investing in Thailand or local companies investing abroad, are not so happy with the current government.

You make these comments based on what? You comment that "we" can't go too much into details. Who is this we?

[Pierrot]

Then you have two kinds of "international" corporation in Thailand, local companies with foreign investors (the majority) or local companies active abroad (not that many). Unfortunately we can't go too much into details but just let say that "international" players, be it foreign companies investing in Thailand or local companies investing abroad, are not so happy with the current government.

You make these comments based on what? You comment that "we" can't go too much into details. Who is this we?

"We" is "I". Polite form ....

[Ricardo]

Weaker baht won't help exports now: Thai central bank

BANGKOK: -- The weakening of the Thai baht has not contributed to export growth amid the current economic uncertainties, according to the latest Bank of Thailand (BoT) report.

Deputy Prime Minister Korbsak Sabhavasu said Prime Minister Abhisit Vejjajiva had instructed the central bank to consider how much exports would grow due to the present baht depreciation.

The bank reported in the fourth quarter last year that the baht had weakened by 2.1 per cent while exports had dropped by 8.5 per cent.

The Thai central bank study showed no positive relationship on export growth or potential deriving from a weaker currency.

-- TNA 2009-02-19

Related link:

Thai Baht Exchange Rates

But had the Baht weakened more than a couple of percent, presumably against the dollar, would exports have fallen more or less than they did ? Perhaps the BoT are aware of a global economic crisis, leading to many countries having falling imports, and might also consider this a factor ? Or not, as they appear to.

When exports are falling anyway, due to falling demand from other countries, a weaker Baht has to help keep Thai exports competitive, and reduce the fall in exports. Or perhaps the BoT really does believe, that a stronger Baht will assist exports to recover, which would be an expensive mistake.

[Heng]

Our export concerns only employ less than a dozen people and the weaker Baht most definitely is helping our profit margin. Volume is about the same... so no, it's not really helping in that aspect, but who cares?

[Old Man River]

Then you have two kinds of "international" corporation in Thailand, local companies with foreign investors (the majority) or local companies active abroad (not that many). Unfortunately we can't go too much into details but just let say that "international" players, be it foreign companies investing in Thailand or local companies investing abroad, are not so happy with the current government.

You make these comments based on what? You comment that "we" can't go too much into details. Who is this we?

"We" is "I". Polite form ....

OK, "we" is you only.

You base your comments that the majority of foreign investors or local companies investing abroad don't like the current government on what? Let me hazard a guess. Maybe it is just the opinion of "we".

[Old Man River]

Weaker baht won't help exports now: Thai central bank

BANGKOK: -- The weakening of the Thai baht has not contributed to export growth amid the current economic uncertainties, according to the latest Bank of Thailand (BoT) report.

Deputy Prime Minister Korbsak Sabhavasu said Prime Minister Abhisit Vejjajiva had instructed the central bank to consider how much exports would grow due to the present baht depreciation.

The bank reported in the fourth quarter last year that the baht had weakened by 2.1 per cent while exports had dropped by 8.5 per cent.

The Thai central bank study showed no positive relationship on export growth or potential deriving from a weaker currency.

-- TNA 2009-02-19

Related link:

Thai Baht Exchange Rates

But had the Baht weakened more than a couple of percent, presumably against the dollar, would exports have fallen more or less than they did ? Perhaps the BoT are aware of a global economic crisis, leading to many countries having falling imports, and might also consider this a factor ? Or not, as they appear to.

When exports are falling anyway, due to falling demand from other countries, a weaker Baht has to help keep Thai exports competitive, and reduce the fall in exports. Or perhaps the BoT really does believe, that a stronger Baht will assist exports to recover, which would be an expensive mistake.

I don't think the BOT is saying that a stronger THB will assist exports to recover as that makes zero sense and every time I have talked with their officers they make sense, whether I agree with them or not.

At the end of the day, Thai exports depend on the demand for their products abroad and the THB exchange rate vis a vis competing countries' exchange rates against the currency exports are denominated in. While import content impacts profit margins, nothing I can see points to a strong currency helping exports.

Perhaps Thai Crisis has already done the analysis (I haven't), but my guess is that the exchange rates of Thailand's competition is no weaker than their own. With the government's mega projects coming up, a strong currency at least keeps down the costs for the capital equipment that will be imported.

[Pierrot]

Will a weaker Baht help the economy?

You're a rice buyer, you need 500 ton of rice. A cheaper Baht won't make you buy more, you will just pay cheaper.

Now you're a tourist, you have a budget of $1,000. The more Baht you have for your dollars, the more you will spend, in Baht term of course, but that's what's important for the local economy.

So you may agree that a weaker Baht won't (in the short term) help exports, but it sure will help the local tourist-based economy.

[Pierrot]

You base your comments that the majority of foreign investors or local companies investing abroad don't like the current government on what? Let me hazard a guess. Maybe it is just the opinion of "we".

My comments are based on a quick, non scientific, survey of Thai business owners I know.

For foreign investors, things are even more clear, for the time being Thailand is a "no go" area.

[Old Man River]

Will a weaker Baht help the economy?

You're a rice buyer, you need 500 ton of rice. A cheaper Baht won't make you buy more, you will just pay cheaper.

Now you're a tourist, you have a budget of $1,000. The more Baht you have for your dollars, the more you will spend, in Baht term of course, but that's what's important for the local economy.

So you may agree that a weaker Baht won't (in the short term) help exports, but it sure will help the local tourist-based economy.

I agree on your comments on tourism, although let's face it, if the global economy doesn't turn around soon, exchange rates will have little impact on tourism as international travel will be a luxury few can afford.

On the rice (assumes same grades), while a particular buyer may not buy more because of an exchange rate, the exchange rate would impact who the importer buys from.

[Old Man River]

You base your comments that the majority of foreign investors or local companies investing abroad don't like the current government on what? Let me hazard a guess. Maybe it is just the opinion of "we".

My comments are based on a quick, non scientific, survey of Thai business owners I know.

For foreign investors, things are even more clear, for the time being Thailand is a "no go" area.

Are you talking about FDI? If you are, the biggest impact on investors, anywhere, is the economy. In general, investment has tanked and right now, almost everywhere is a no go area. For the record, FDI was relatively weak under the past government as well. It has nothing to do with the current government, which is looked on as an improvement.

[Pierrot]

Are you talking about FDI? If you are, the biggest impact on investors, anywhere, is the economy. In general, investment has tanked and right now, almost everywhere is a no go area. For the record, FDI was relatively weak under the past government as well. It has nothing to do with the current government, which is looked on as an improvement.

Improvement compare to what ? Since the coup, it's probably the best government but the standard is so low that it has no meaning. Definitively no better (as business is concerned) than the Thaksin government.. And how long will it last ? Taking everything into account, I’m not the only one to take a “wait and see” position.

Edited February 19, 2009 by Pierrot

[bonobo]

The statement by the Thai Central Bank misses the point.  A weaker baht will have a positive influence on exports, period.  Now it may be that the positive influence may only be lessening a downard trend.  The trend will still be in the negative, that is, a drop in exports, but the drop may not be quite as severe.

[Thai at Heart]

ECONOMY & TRADE

Exports decline 26.5% in January

Import drop suggests worse yet to come

http://www.bangkokpost.com/business/econom...26-5-in-january

The value of Thailand's exports fell in January by the most in 18 years as the deepening global recession curbed demand for Thai and Asian products. Shipments for the month were worth US$10.49 billion, down 26.5% from a year earlier, said Siripol Yodmuangcharoen, the permanent secretary for the Commerce Ministry.

The January contraction followed a 14.55% year-on-year decline in December and a 20.47% slide in November. The contraction was the biggest since January 1991.

Exports were down sharply almost in all sectors with agricultural and agro-industrial shipments dropping 25.6% to $1.66 billion and industrial goods falling 24.5% to $7.2 billion.

Thai shipments also fell to all market destinations. The decline was 28.2% to traditional key markets such as the United States, Japan and Europe, and 26.4% to secondary markets including Hong Kong, Taiwan and South Korea.

Even exports to emerging markets seen as having better potential were off 30.6%.

According to Mr Siripol, imports also fell in almost all sectors, with energy down 53.4% in value, capital goods down 29.5%, raw materials down 41.9%, consumer products down 17.9%, vehicles and transport down 18.7%.

Imports as a result contracted 37.6% to $9.12 billion after a 6.52% decline in December, which had been the first drop since May 2002.

''Thailand is not the only country that saw exports fall in January,'' said Mr Siripol.

''Shipments of other countries also contracted accordingly. Exports from China, for instance, contracted 17.4%, Japan was down 46.1%, Singapore 37.8%, Vietnam 24.2% and Taiwan 40%. We can't say whether our exports have reached bottom.''

In the face of declining exports in January, Mr Siripol said the government might have to revise its export projection for the year, set earlier at 3% growth to $183.17 billion.

Ministry officials will meet with Thai Trade Center executives and commercial counsellors on Feb 25 and 26 to re-evaluate strategies for this year.

''We are afraid Thai exports will fall further as imports, notably raw materials and capital goods [for production], are shrinking,'' said Mr Siripol.

As well, export prices in almost every category have been falling in line with easing oil prices and production costs, noted Rachane Potjanasuntorn, the director-general of the Export Promotion Department.

Aat Pisanwanich, director of the Centre for International Trade Studies of the University of the Thai Chamber of Commerce (UTCC), said that given the January figures, Thailand's exports were expected to contract by up to 6% this year.

He said a double-digit contraction was even possible if the world economy does not start to show signs of recovery in the third and fourth quarters of the year.

''What the government needs to do right now is to conduct scenario planning analysis to evaluate the impact on Thailand's export performance if the world is still in a downturn like this, and examine how much the baht's weakness could help boost exports,'' he said.

''We have also to take into account whether the 'Buy American' bill which forbids the use of foreign labour and requires investors to set up companies in the United States would affect Thai exports, and in the worst case, what the government should do to curb that impact.''

Narongchai Akrasanee, the Export-Import Bank chairman, urged the government to make more use of free trade agreements under the Asean framework.

''Despite the declining purchasing power of Japanese customers, Japan is still promising for Thai goods as we can capitalise on the Japan-Thailand Economic Partnership Agreement (JTEPA) to boost exports,'' he said.

''New markets such as Africa and the Middle East and the markets where Thailand has already agreed on free trade agreements, such as India,and Australia, also deserve export interest.

Somchai Sujjapongse, the director-general of the Fiscal Policy Office, said that the weak export results were roughly in line with other countries in the region.

He added that the FPO had previously forecast that economic growth in the first quarter would fall ''significantly'' if not for the government's economic stimulus programme, due in part to high base effects. Growth in the first quarter of 2008 was 6%.

There are no customers pure and simple. If they won't buy at 35 to the USD is it likely they will buy at 40?