Thai Govt Tells Bank To Keep Monitor Soaring Baht

[webfact]

Thai govt tells bank to keep monitor soaring baht

BANGKOK (AFP) -- Thailand on Thursday ordered the central bank to keep a close eye on the baht and "prepare measures" after the currency soared to a 29-month high against the US dollar, the finance minister said.

Premier Abhisit Vejjajiva called a special meeting with top economic officials, including the governor of the Bank of Thailand, after the baht hit its highest peak since April 2008.

The unit reached 31.16-18 baht to one dollar at one point in Wednesday morning trade, having climbed about 5.00-6.00 percent this year.

"There is concern over currency speculation. We have ordered the Bank of Thailand to examine and prepare measures for it," Finance Minister Korn Chatikavanij told reporters, without specifying what the measures were.

But he added that the Bank of Thailand said the currency's strength was mostly based on the positive balance of trade -- reflecting robust exports -- rather than speculation.

Following the meeting, central bank governor Tarisa Watanagase said Thailand's currency appreciation was in line with other countries in the region.

"The measures we have now are enough to deal with the current strength of the Thai baht. However, we have to keep a close eye on it," she said.

Fitch ratings said Wednesday that Thailand's economic performance had "proved surprisingly robust to global and domestic turbulence in 2010".

Andrew Colquhoun, head of Fitch Asia Pacific sovereigns, said resilient economies in the face of the global downturn and market expectations of rising interest rates have seen currencies soar in the region.

This has also attracted foreign investors searching for returns as central banks in the West keep rates at rock bottom.

Colquhoun said this has caused fears that inflows of overseas funds could interfere with economic oversight.

"Money is looking for some yield and there is a concern that that may complicate monetary management," he said.

Last month Thailand raised its benchmark interest rate by 25 basis points -- for a second consecutive month -- to 1.75 percent after an unexpectedly strong performance by its economy. The July hike was the first in almost two years.

Thailand may also have seen a rebound from the negative sentiment caused by deadly street protests in April and May, he added.

The kingdom was rocked by two months of mass opposition protests, which paralysed parts of Bangkok and sparked clashes with security forces that left 91 people dead, ending with an army crackdown on May 19.

-- (c) Copyright AFP 2010-09-02

[manutoo]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

[Tracechain]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

Yea, the ole green buck ain't what it used to be.

[JimmyGreaves]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

Yea, the ole green buck ain't what it used to be.

Sterling also is up the kyber pass!

[ysaan]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

the baht is up also against all other asian currencies. Actually, the THB is the currency which has risen more in the world so far in this 2010, despite having amongst the lowest interest rates in Asia.

I wonder how much it will rise if the interest rate will go up.

[asiawatcher]

I wish it would stop - my business is cancelling daily!

[Griffin09]

[the currency's strength was mostly based on the positive balance of trade -- reflecting robust exports -- rather than speculation.] Even though my export business is suffering because we now have to charge the customers more based on a US$ FOB? Robust exports? What great spin the gov't has!

[ysaan]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

the baht is up also against all other asian currencies. Actually, the THB is the currency which has been the third strongest in the world so far in this 2010, despite having amongst the lowest interest rates in Asia.

I wonder how much it will rise if the interest rate will go up.

[HarrydePotter]

If you want to keep your Euro fortune, buy Baht's :-) and sell them later.... of course ... it may even grow...

[laocowboy2]

I wish it would stop - my business is cancelling daily!

I am afraid that there is still some way to go yet, at leat in the short term. Currency rates tend to overshoot (up or down) once momentum develops - and it has in this case. With exports doing so well, there is no urgent macroeconomic need for the BoT to try to slow the move down yet. Microeconomics is another matter - some sectors are going to be hurt, especially tourism and those where their competitors have a falling currency (e.g. Vietnam).

[AdmiralKen]

Great - so now we have a rising Baht, just to complement a HORRIBLE low season and reduced tourism.

Can they think of any other ways to *%$@# us ?

When the next rebellion starts we may all have to take up rice farming.

Edited September 2, 2010 by 2slicesshort

[givenall]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

I already hear a lot that Thailand is becoming expensive to visit, so if these goes on the tourist may go other places where they can get more value for their currencies

[laocowboy2]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

I already hear a lot that Thailand is becoming expensive to visit, so if these goes on the tourist may go other places where they can get more value for their currencies

It is what happens. Brits used to go to the South of France and the Italian Riviera for holidays - much too expensive now. Ditto Greece losing out to Turkey and Red Sea Egypt. Fact of life is that as a country develops, alternatives to tourism etc arise and the currency and/or costs rise. Five years from now it may be hols in Myanmar.

[EddyB]

If you want to keep your Euro fortune, buy Baht's :-) and sell them later.... of course ... it may even grow...

too late.. last december you could buy 50 baht for one euro

[chantorn]

I am very happy, because I am Thai. My currency finally appreciate for the first time.

[tonititan]

I am very happy, because I am Thai. My currency finally appreciate for the first time.

Yes, me too. Personally, this is a good thing for me on the short term, because I get paid in baht and send money home every month to pay bills. The stronger the baht gets, the more USD I get from my salary.

I do feel for the people who are affected, but no matter what the baht is at, certain people are going to be negatively affected.

[swerver]

If you want to keep your Euro fortune, buy Baht's :-) and sell them later.... of course ... it may even grow...

See if this passes the ThaiVisa commissar!

If you change your Euros to Thai Baht that is the end of your Euros.

You cannot at a later date change the Thai Bahts back to Euros.

[HarrydePotter]

If you want to keep your Euro fortune, buy Baht's :-) and sell them later.... of course ... it may even grow...

See if this passes the ThaiVisa commissar!

If you change your Euros to Thai Baht that is the end of your Euros.

You cannot at a later date change the Thai Bahts back to Euros.

That's new to, according to my internet banking (SCB) capabilities it is possible, though only 300,000 a day...

[RickG]

There's little the central bank can do to stop speculative capital flows.

The Swiss National Bank spent $3 billion trying to weaken the Swiss Franc, to no effect.

This week the Franc hit an all time high against the Euro.

The Japanese central bank created more bank liquidity on Monday in an attempt to weaken the Yen, but it continues to strengthen.

Thailand's economy is hot, and the central bank is responding by increasing interest rates, with the goal of reducing inflation.

Another 0.25% hike is expected in the next month or so, which will probably result in a stronger Baht, as speculative capital is attracted to the higher interest rate.

Edited September 2, 2010 by RickG

[bitterbatter]

The is strong likelihood that the dollar will continue to sink. Come October their could be some shocking news about the US economy. I've heard rumors that some major industrialists are making a play and want to devalue the dollar dramatically by separating the dollar and yuan values soon, but China wants to wait five years. These people are playing the same game with world economics looking to devalue and buy things on the cheap. Expect this trend to continue.

[mahtin]

Cue Naam.

[Englander]

I am very happy, because I am Thai. My currency finally appreciate for the first time.

Ok can you tell me what youve bought that is now cheaper with your strong Baht, fuel is the only thing i am aware of. Does it really fill you with joy buying fuel?

Many imported food products have gone up in price and not one has fallen from what ive seen, designer clothing is not cheaper and is 3 times the price of England, cars are 2-3 times the price for a European brand car and havent gone down in value, flights are no cheaper. Yet not one Thai questions WHY!

Come on i want 1 Thai to enlighten me as to why life is better for the average person with a strong baht.

PS its good for the super rich who can buy foreign companies at a better price thats about it

[Puccini]

With all this terrorist mayhem and continued bombing in Thailand, the Baht keeps getting stronger and stronger. It seems unbelievable. Does Thailand continue to have a positive balance of payments, does it have annual budget surpluses, whilst other countries have always larger deficits?

[Pib]

I feel better now that the govt is going to monitor the exchange rate. Of course, that just means they will watch it go up and down, and then come up with positive spin as to why it went up and down. Until the brown stuff hits the fan (not saying it will), the BOT/govt won't do much of anything other than put out political spin on the currency.

[MaiThaiMai]

In short, Thai Gov will do nothing : it's the USD, and EUR, which are sinking.

I already hear a lot that Thailand is becoming expensive to visit, so if these goes on the tourist may go other places where they can get more value for their currencies

I just booked retirement trip closer to S America equator where the USD actually reporting a 5% gain where I'm going, booked today when I saw thaivsa's mid-rate exhange page show the baht FALL to 29.96, going below 30vsUSD was enough for me to say f-it so I am. If LOS was a bit more lax on there financial requirement of tying up spending money to make 800,000 total say 50,000/mo or 500-600,000 total proof of income I WOULD NOT HAVE CONCERNED ABOUT EXCHANGE AT ALL and been in LOS in June (and still there), but screw it, MAYBE I see LOS in couple years as I think I've already seen enough ... .. . I get the feeling Thai gov doesn't really want expats or tourist for long stay, just expats come dump loads on 1 and two week vacations...like I say, screw it, I take my money to a country that wants it, I not have to worry about bombings either bla-bla-bla