Us Dollar Appreciation Just Temporary, Says Krc

[george]

US dollar appreciation just temporary, says KRC

BANGKOK: -- The appreciation of the US dollar will continue only temporarily because there remain several negative factors that could undermine the United States’ economy, according to KASIKORN Research Center.

In an analysis report on stronger dollar in mid-March, the leading think tank said the greenback had continuously weakened against other major currencies since 2003. The appreciation of the dollar at present is just a consolidation.

The dollar had currently strengthened upon the expected interest hike by the Federal Reserve and negative news about the Japanese economy.

KRC projected the greenback would turn to depreciate once the US interest rates go up closely to the target level set by Fed for this year.

As well, the chronic deficit in the current account and the global fuel price hike would press the dollar to depreciate.

Given these factors, KRC forecast the baht would stay at around 38.30 to the US dollar at the end of this year. The mean of the baht value for the whole year would be 38.6 to the dollar compared with 40.24 last year.

The expected strengthening of the baht would enable the government to contain inflation rates effectively.

However, the country might lose competitiveness in terms of exports with the countries whose currencies are still linked with the US dollar such as China.

KRC stated the baht was anticipated to move in the same direction with other regional currencies. Under the circumstance, the country’s export competitiveness would not be adversely affected in the near future.

Still, it conceded the competitiveness might lose momentum as long as the dollar was likely to depreciate continuously and China still linked its currency with the dollar.

--TNA 2005-04-01

[britmaveric]

Wishful thinking! I see back peddling from the supposed think tank once rate gets to around 42.

[marquess]

The real crux of the matter is that the Dollar has declined horribly against most major currencies, and so too has the Baht over the last few years. 25% against the Ozzie, 30% against the Kiwi and nearly 40% against the pound. Thus measuring the Bahts value against that of the Dollar, shouldn't really be the benchmark anymore.

[dclaryjr]

[. Thus measuring the Bahts value against that of the Dollar, shouldn't really be the benchmark anymore.[/color][/i]

<{POST_SNAPBACK}>

When you're using $$ to pay a mortgage in baht, it's the only benchmark I care about at the moment!

Side note--this is a quote from The Daily Pfennig newsletter:

In another story from Asia, Thailand announced it will 'manage' the baht to keep the nation's goods attractive to overseas buyers according to central bank Governor Pridiyathorn Devakula. The Bank of Thailand wants to stop the baht from rising in an effort to keep Thai products cheap overseas. "A comfortable level is one where your products are still competitive," Pridiyathorn said. "We simply limit the short-term volatility" in the currency. The central bank has been trying to 'defend' a value of around 39 baht against the dollar. Unfortunately the Thai central bank doesn't have the deep pockets of Japan, so any intervention will likely be met with limited success. If the markets believe, which I think they do, that the currency should be higher, the Thai Central Bank will not be able to keep it from appreciating.