Baht Likely To Strengthen To 32 Baht Per Us Dollar

[george]

BT32 per US$ likely by year-end

SINGAPORE: -- The baht will gradually strengthen to 32 per US dollar this year, but the policy interest rate will stay pegged at 1.25 per cent until next year, analysts predict.

Callum Henderson, head of foreign-exchange strategy at Standard Chartered Bank (Singapore), said the dollar would continue to weaken against major currencies and Asian currencies in the long term.

However, it could rebound in the first half of the year due to market repositioning. Dollars would flow into the region again after repositioning, so most Asian currencies are expected to strengthen, but the pace of Asian currency appreciation |could be slowed by official intervention.

Meanwhile the Chinese yuan may strengthen at the end of the second quarter once the sustainability of its export recovery is confirmed.

Usara Wilaipich, senior economist of Standard Chartered Bank (Thai), said that during the past year, the yuan was nearly pegged. Meanwhile, China had pressure from the European Central Bank, which shouldered the impact from the weakening of both the dollar and the yuan.

Besides, the Chinese economy started to pick up quickly. That means China might have to tighten its monetary policy in order to slow down the economic pick-up and allow its currency to rise against the dollar in the second half.

"To strengthen the currency is one way to tighten monetary policy. When the yuan is stronger, the other Asian currencies will be stronger as well," she said.

From such a view, she believes the baht will weaken to 33.50 per dollar in the first half of the year, and then strengthen to 32 by year-end.

Standard Chartered Bank (Thai) forecasts that the Bank of Thailand will not hike its policy rate this year, but it might increase it during the first half of next year in order to support the economic recovery.

Meanwhile, inflationary pressure is not that much of a concern, as headline inflation will rise on cost-push - not demand-pull - forces, while core inflation is still low.

If an interest rate hike cannot be helped, and if the oil price increased and boosted inflation, then fiscal policy is the preferred channel to ease the problem in the form of money support, rather than monetary policy by increasing the policy interest rate.

Gerard Lyons, chief economist and head of global research at Standard Chartered Bank (UK), said Asian countries would increase their policy interest rates before the US and other Western countries. This is especially true for China, India and Indonesia, which rely less on exports.

The economies of these three countries will recover before other countries in the region, so they will lift interest rates first, followed by countries heavily dependent on exports including Thailand, he said.

However, these countries will still raise rates before the US and Europe, which will still need to maintain liquidity in the their economies.

-- The Nation 2010-01-14

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[screamingeagle]

How will that effect Sterling???

[churchill]

I think Asian currencies in general including the Baht will strenghten against the euro/$ and Sterling - and The BOT will try to slow the rise

[d0om4gloom]

How will that effect Sterling???

I wouldn't pay too much attention to it. Anything could happen in the next 6 months so gambling on a weak dollar/strong baht at the end of the year is crazy.

Considering the dollar has just broken out of its long term declining trend of last year I'd say the odds are higher that we'll see a strengthening dollar for the rest of the year. There's no room for the Euro to get any stronger and in any case it has the pressure cooker of the 4 southern counties to contend with. Sterling is already weak and shows little sign of recovering, further downside is quite possible although we're more likely to see it move against individual currencies as its the Dollar/Euro & Dollar/Yen which are dictating the trends these days. Yen is now seen as the weakest of the 4 so quite how the article concludes the dollar will weaken against a basket of currencies is beyond me. If the Yuan was allowed to appreciate normally we'd see fireworks fly throughout asia but just isn't going to happen.

[ratcatcher]

Could it not be said that the U.S.dollar has weakened against the baht?

The Canadian and Australian dollars have strengthened against the baht over the last month.

[swifty5x5]

Could it not be said that the U.S.dollar has weakened against the baht?

The Canadian and Australian dollars have strengthened against the baht over the last month.

Yes.

[animatic]

More bad news. Just ducky.

[SeanMoran]

Could it not be said that the U.S.dollar has weakened against the baht?

The Canadian and Australian dollars have strengthened against the baht over the last month.

Yes.

Yes. Although it will cost me 33% of my income, however, the best thing overall for this global economy will be the day that one AUD buys 20 THB like it did in 1997, and not 30.6 like it does now.

I'd gladly trade that 33% for an end to one possible cause of the xenophobic attitudes of some Thais toward me, along with the mechanism for the other reasons my face isn't the nicest thing some shop owners want to see walk in the door, besides the money.

[cmdream]

This is nuts, been watching the BT vs $ here on TV for more than a week ! The $/Bt exchange rate has been below 32 for a long time . If it hits 30 I'm on my way out of here, already lost 20% since 2006. That with price increases ??? Chok dee.

[bankruatsteve]

This is nuts, been watching the BT vs $ here on TV for more than a week ! The $/Bt exchange rate has been below 32 for a long time . If it hits 30 I'm on my way out of here, already lost 20% since 2006. That with price increases ??? Chok dee.

Huh? The banks (and other exchanges) have been over 33 for months. Only recently dropping below that - and just barely.

In regards to other currencies... I thought the baht is pegged to the UDS and all other currencies exchange to the baht relative to how they exchange to the USD. Is that correct?

[el jefe]

This is nuts, been watching the BT vs $ here on TV for more than a week ! The $/Bt exchange rate has been below 32 for a long time . If it hits 30 I'm on my way out of here, already lost 20% since 2006. That with price increases ??? Chok dee.

Huh? The banks (and other exchanges) have been over 33 for months. Only recently dropping below that - and just barely.

In regards to other currencies... I thought the baht is pegged to the UDS and all other currencies exchange to the baht relative to how they exchange to the USD. Is that correct?

Basically, yes.

And anyone who is getting less than 32 baht to the dollar should have left a long time ago.

[khundon]

Could it not be said that the U.S.dollar has weakened against the baht?

The Canadian and Australian dollars have strengthened against the baht over the last month.

Australia in particular, has not been as badly hit by the recession as most other countries, so it (AUS$) is expected to be quicker to gain as the rest of the World comes out of recession.

[willyumcr]

This is nuts, been watching the BT vs $ here on TV for more than a week ! The $/Bt exchange rate has been below 32 for a long time . If it hits 30 I'm on my way out of here, already lost 20% since 2006. That with price increases ??? Chok dee.

I changed yesterday 1/14 using USA ATM card. 20,000 baht + 150 baht fee = 20,150 baht. I was charged total $610.60 by my bank (Charles Schwab). Bottom line was 33.00 baht to the dollar. Also I am rembursed by bank for the 150 baht fee at end of month.

[khunjake]

I think Asian currencies in general including the Baht will strenghten against the euro/$ and Sterling - and The BOT will try to slow the rise

This is exactly what I have said for many months now on this board.

The East in In, The West is Out...

[chiang mai]

It's a couple of things:

Thai Baht is strengthening because of increased capital inflows whereas GBP has strengthened slightly against USD because of improved economic data and recent noises from the BOE that rates may rise sooner rather than later - unfortunately the rate of strengthening by THB is greater than that of GBP hence I expect GBP/THB to remain on its current track.

[tropo]

Could it not be said that the U.S.dollar has weakened against the baht?

The Canadian and Australian dollars have strengthened against the baht over the last month.

The Australian dollar has strengthened against the baht over the last year (since February).

[bankruatsteve]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

[chiang mai]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

Currencies, for Forex purposes, are paired and THB isn't part of any pair because it's largely an inconsequential currency, as far as Forex trading is concerned. The value of THB is determined mostly by its relationship to USD (it was pegged prior to 1997) - things are changing however in recent times and the value of THB is now gauged by BOT to equal the midpoint of a basket of regional currencies. But to answer the earlier point, many larger currencies have fallen against USD of late so it's really a question of USD weakening rather than other currencies strengthening - it's a question of context.

[SeanMoran]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

Currencies, for Forex purposes, are paired and THB isn't part of any pair because it's largely an inconsequential currency, as far as Forex trading is concerned. The value of THB is determined mostly by its relationship to USD (it was pegged prior to 1997) - things are changing however in recent times and the value of THB is now gauged by BOT to equal the midpoint of a basket of regional currencies. But to answer the earlier point, many larger currencies have fallen against USD of late so it's really a question of USD weakening rather than other currencies strengthening - it's a question of context.

Too right, and it's a bloody pitful sight to see people moaning about the THB falling to only 32. It's not the THB that's falling. you cowboys! It's that other currency that you might be loathe to speak of, but it shows between the lines when you try to write it backwards. Best just not even bother writing about it if it's too painful to put rightly.

[RawaiRumpRaider]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

Currencies, for Forex purposes, are paired and THB isn't part of any pair because it's largely an inconsequential currency, as far as Forex trading is concerned. The value of THB is determined mostly by its relationship to USD (it was pegged prior to 1997) - things are changing however in recent times and the value of THB is now gauged by BOT to equal the midpoint of a basket of regional currencies. But to answer the earlier point, many larger currencies have fallen against USD of late so it's really a question of USD weakening rather than other currencies strengthening - it's a question of context.

Too right, and it's a bloody pitful sight to see people moaning about the THB falling to only 32. It's not the THB that's falling. you cowboys! It's that other currency that you might be loathe to speak of, but it shows between the lines when you try to write it backwards. Best just not even bother writing about it if it's too painful to put rightly.

Lambroghinis at Siam Paragon.. It is the Bank Of Thailand taking care of their rich Dem pals in Bangkok..

When H.E. Pol LCol Dr. Thaksin S. returns to power we will see the baht go back to 36 or 36.5 right away so the poor can have jobs in the export, manufacturing and touism industry. Look, the Baht is killing Tourism! As any Issan Darling trying to make a living thbe oldfashion way!

[ratcatcher]

Lambroghinis at Siam Paragon.. It is the Bank Of Thailand taking care of their rich Dem pals in Bangkok..

When H.E. Pol LCol Dr. Thaksin S. returns to power we will see the baht go back to 36 or 36.5 right away so the poor can have jobs in the export, manufacturing and touism industry. Look, the Baht is killing Tourism! As any Issan Darling trying to make a living thbe oldfashion way!

In your dreams mate. The tourism industry will improve when the world economy improves. See posts above for why.

HEPOLLCOLDR.Thaksin can only return to the Bangkok Hilton where he will be luxuriously catered for.

I wonder how many Lamborghinis and Ferraris Oak and his family have between them?

[chiang mai]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

Currencies, for Forex purposes, are paired and THB isn't part of any pair because it's largely an inconsequential currency, as far as Forex trading is concerned. The value of THB is determined mostly by its relationship to USD (it was pegged prior to 1997) - things are changing however in recent times and the value of THB is now gauged by BOT to equal the midpoint of a basket of regional currencies. But to answer the earlier point, many larger currencies have fallen against USD of late so it's really a question of USD weakening rather than other currencies strengthening - it's a question of context.

Too right, and it's a bloody pitful sight to see people moaning about the THB falling to only 32. It's not the THB that's falling. you cowboys! It's that other currency that you might be loathe to speak of, but it shows between the lines when you try to write it backwards. Best just not even bother writing about it if it's too painful to put rightly.

Lambroghinis at Siam Paragon.. It is the Bank Of Thailand taking care of their rich Dem pals in Bangkok..

I sense another conspiracy theory, American by any chance?

[SeanMoran]

As the global economy moves back towards equality of exchange between the THB and the USD, the quality will improve and be glad that the majority of the el-cheapo ratbags will have to holiday in Mexico next season.

It's just karma. We get back what we give out. The future looks good for Thailand after the last 13 or 14 years. Other places in the world might learn a lesson from 2008 too, but I don't overestimate the intelligence of some nations who might suddenly have found thenselves down on their luck. I'm not even a Thai citizen but I will never forget the hurt they gave me, and now it's good that it might be over, but there's a part of me wants those bastards to take what they gave out, fair and square.

Childish I know, but I didn't start this madness. I didn't ask for it. They can live with what they wrought on us, and live in the interesting times - In God We Trust!

[el jefe]

Lambroghinis at Siam Paragon.. It is the Bank Of Thailand taking care of their rich Dem pals in Bangkok..

When H.E. Pol LCol Dr. Thaksin S. returns to power we will see the baht go back to 36 or 36.5 right away so the poor can have jobs in the export, manufacturing and touism industry. Look, the Baht is killing Tourism! As any Issan Darling trying to make a living thbe oldfashion way!

They closed RRR's other thread. If he posts his economic theories again this thread will be moved to the "Jokes" sub-forum.

[Abrak]

Again, unless I'm mistaken... no currency is stong or weak to the baht except USD. IE: if the Assie $ is stronger to the baht lately, then it must be stronger to USD. B/C the only currency that floats to the baht is USD. All others are relative to their float to the USD. Am I wrong?

Well actually I do think you are basically wrong although you might argue I am being pedantic.

The baht has a 'dirty' float against the US$ but it is really trying to peg itself to the Chinese Yuan, which has a fairly fixed peg to the US$. Ultimately Thailand is not trying to maintain its competitiveness against the USA but China which is its major export competitor both directly and indirectly by which I mean through the likes of Korea, Malaysia, Taiwan etc who are doing the same.

China's peg is easily fixed because it has capital controls which exempt it from market forces.

Thailand does not... although it is keeping its currency from appreciating by massive CB intervention which have seen Thailand's forex reserves outstrip China's as a percent of GDP. The pressure for Bt to appreciate is partly a speculative play on a belief that the Yuan will be allowed to appreciate in order to dampen domestic inflationary income and price pressure.

Sterilization by the BoT now amounts to almost 20% of the monetary base.