Thailand Mulls New Measures To Ease Baht Hike

[webfact]

CURRENCY

Thailand mulls new measures to ease baht hike

By The Nation

Policy-makers yesterday signalled the launch of new measures to counter the baht appreciation as well as help affected businesses, as the currency moves towards the pre-devaluation level.

Prime Minister Abhisit Vejjajiva said in an interview in the US that Thailand may do more to relax limits on money outflows and boost support for exporters most affected by the strengthening currency.

Without being specific, Finance Minister Korn Chatikavanij said before leaving for the World Bank/International Monetary Fund conference in Washington DC that a decision would be made next week about the steps the government should take to ease the impact. Both the PM and Korn admitted that the baht is on an appreciation course.

"In Washington, I will sit down and talk with the BOT governor about the baht appreciation as it has now exceeded the 30 level," Korn said. "The baht is more valuable to all but poses a problem to exporters. While the BOT is in charge of foreign exchange rates, the Finance Ministry is obliged to help exporters," he said.

The baht yesterday climbed 0.2 per cent to 29.88 per dollar as of 4.02pm in Bangkok and earlier touched 29.84, the strongest level since July 1997, according to data compiled by Bloomberg.

Anticipation that the US Federal Open Market Committee may announce the second round of quantitative easing, which would further boost liquidity in global markets, have led investors to seek better returns in countries with strong economic fundamentals like Thailand.

Exporters have appealed to the government for help, as some of them - particularly those who do not benefit from the cheaper import of raw materials - are witnessing a drop in revenue once the dollar income is converted into baht. The Bank of Thailand and the Finance Ministry, in September and this month, launched seven measures aimed at spurring outflows.

PM's secretary Ampon Kittiampon, as a member of the MPC, attributed the inflows to the expectation that the Thai economy would continue its positive performance. Not surprised with the current trend, he said this shows the correlation between interest rate, foreign exchange rate, capital flows and economic fundamentals.

With a better-than-expected economy, Thailand needs to raise the interest rate to keep inflation in check. But higher rates will draw greater inflows. The fiscal and monetary policies must be synchronised to appropriately address the inflows in the short and long term, to balance economic growth and inflation.

"It's the duty of governments and central banks to pursue fiscal and monetary policies that will prevent their currencies from appreciating further as that could cause damage," he said.

Many Asian countries have imposed measures to rein in the appreciation of their currency. However, they are aware that this could only slow down the pace of appreciation due to the weak dollar policy. The Japanese yen yesterday rose to a fresh 15-year high at 82.22 against the dollar despite intervention.

Praipol Khumsap, a Thammasat lecturer who is a member of the Monetary Policy Committee, said the central bank has done its best in intervening in the market. The policy rate and the foreign exchange rate will be the main issues that will be discussed at the MPC meeting on October 20. Earlier, inflation was a priority as robust economic growth, which could peak at 7.8 per cent this year, could spur inflation.

Pornthep Jubandhu, Siam Commercial Bank's economist, noted that most economists believe the MPC may delay the policy rate hike in this round, as the baht had passed the 30 level. Earlier, most believed the rate would be hiked by 0.25 percentage point.

Frederico Gil Sander, the World Bank economist responsible for Thailand, said Thailand's priority now is how to handle inflation and boost the domestic economy. He said that for now, the interest rate policy is irrelevant to rein in inflows.

-- The Nation 2010-10-08

[asiawatcher]

It is not so much as the Baht getting stronger - it is the US dollar getting weaker commensurate with its fiscal management or lack thereof. If you gauge the Baht with other currencies such as the AUD - this has come from 22 Baht to 29 as at today. So by these pages some journalist would suggest the Aussie economy has strengthened by 30%. If that were true Australia would be in deep yoghurt. No one would trade with it as it would cost them too much money to buy goods and services. The fact of the matter is the AUD has strengthened marginally and the Baht has not kept up to Australia's performance.

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a levelling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

[marquess]

It is not so much as the Baht getting stronger - it is the US dollar getting weaker commensurate with its fiscal management or lack thereof. If you gauge the Baht with other currencies such as the AUD - this has come from 22 Baht to 29 as at today. So by these pages some journalist would suggest the Aussie economy has strengthened by 30%. If that were true Australia would be in deep yoghurt. No one would trade with it as it would cost them too much money to buy goods and services. The fact of the matter is the AUD has strengthened marginally and the Baht has not kept up to Australia's performance.

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a levelling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

Good post, I recall back in 2000/01 when the Baht was at 22 to the Aussie $ and 17/18 to the NZ$, both of these currencies have gone up and not gone down again. Whilst Thailand's economy might be growing, I see no fundamental shifts in its emphasis to suggest that the Baht appreciation is based upon its own merits, or will be as sustainable was in the long term as the Australian and NZ situation.

[Thaddeus]

If 'Mulling' was an Olympic event, Thailand would get Gold, Silver and Bronze every time.

Unfortunately, in the real world, when it comes to actually doing something about any given situation, Thailand is still doing up its laces and mulling.

[chantorn]

It is not so much as the Baht getting stronger - it is the US dollar getting weaker commensurate with its fiscal management or lack thereof. If you gauge the Baht with other currencies such as the AUD - this has come from 22 Baht to 29 as at today. So by these pages some journalist would suggest the Aussie economy has strengthened by 30%. If that were true Australia would be in deep yoghurt. No one would trade with it as it would cost them too much money to buy goods and services. The fact of the matter is the AUD has strengthened marginally and the Baht has not kept up to Australia's performance.

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a levelling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

Good post, I recall back in 2000/01 when the Baht was at 22 to the Aussie $ and 17/18 to the NZ$, both of these currencies have gone up and not gone down again. Whilst Thailand's economy might be growing, I see no fundamental shifts in its emphasis to suggest that the Baht appreciation is based upon its own merits, or will be as sustainable was in the long term as the Australian and NZ situation.

Fully agree

[Pib]

If 'Mulling' was an Olympic event, Thailand would get Gold, Silver and Bronze every time.

Unfortunately, in the real world, when it comes to actually doing something about any given situation, Thailand is still doing up its laces and mulling.

Spot on. Thailand is rated No. 1 in the world for mulling.

[Lifer]

It is not so much as the Baht getting stronger - it is the US dollar getting weaker commensurate with its fiscal management or lack thereof. If you gauge the Baht with other currencies such as the AUD - this has come from 22 Baht to 29 as at today. So by these pages some journalist would suggest the Aussie economy has strengthened by 30%. If that were true Australia would be in deep yoghurt. No one would trade with it as it would cost them too much money to buy goods and services. The fact of the matter is the AUD has strengthened marginally and the Baht has not kept up to Australia's performance.

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a leveling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

So far we have not heard anything about all the foreigners legally receiving Thai extensions to visas based on marriage or retirement. What is the Thai country going to do to lighten the burden to applicants at immigration trying to qualify with the exchange rate so bad.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

Good post, I recall back in 2000/01 when the Baht was at 22 to the Aussie $ and 17/18 to the NZ$, both of these currencies have gone up and not gone down again. Whilst Thailand's economy might be growing, I see no fundamental shifts in its emphasis to suggest that the Baht appreciation is based upon its own merits, or will be as sustainable was in the long term as the Australian and NZ situation.

Fully agree

[rotary]

It is not so much as the Baht getting stronger - it is the US dollar getting weaker commensurate with its fiscal management or lack thereof. If you gauge the Baht with other currencies such as the AUD - this has come from 22 Baht to 29 as at today. So by these pages some journalist would suggest the Aussie economy has strengthened by 30%. If that were true Australia would be in deep yoghurt. No one would trade with it as it would cost them too much money to buy goods and services. The fact of the matter is the AUD has strengthened marginally and the Baht has not kept up to Australia's performance.

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a leveling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

So far we have not heard anything about all the foreigners legally receiving Thai extensions to visas based on marriage or retirement. What is the Thai country going to do to lighten the burden to applicants at immigration trying to qualify with the exchange rate so bad.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

Good post, I recall back in 2000/01 when the Baht was at 22 to the Aussie $ and 17/18 to the NZ$, both of these currencies have gone up and not gone down again. Whilst Thailand's economy might be growing, I see no fundamental shifts in its emphasis to suggest that the Baht appreciation is based upon its own merits, or will be as sustainable was in the long term as the Australian and NZ situation.

Fully agree

And the US$ may go much lower and their tax and spend crazy agenda goes on. The US$ is in bad trouble it appears

[Fletcher]

Recent declines are more to do with Quantitative Easing than tax-and-spend. The US Federal Reserve (which despite the name is in fact a privately owned bank) is now the 2nd largest holder of US Treasury debt recently overtaking Japan and soon to overtake China. Whats more the Fed owns the majority of long term Treasury debt i.e greater than 10 years duration. So each new issuance of Treasury debt (roughly 100BUSD/month currently) is largely ending up on the Fed's balance sheet as there are already almost no other buyers out there.

How long can this illusion last is the big question. Whether only a few more months or whether it can be extended for a few more years, the end result is not going to be pretty.

The Fed, the Bank of England and all privately owned central banks need to be abolished, and the issuance of debt backed currency needs to be ended permanently and replaced with constitutional money, with interest rates and gold prices set solely by the market.

This is the most important issue facing us at present, and will also reveal the lie that is democrat vs republican, conservative vs liberal etc etc.

To understand how the privately held CB's have been stealing from everyone watch Bill Still's Secret of Oz video available on Youtube.

and to understand Gold's importance as an investment vehicle for the next few years familiarize yourself with fofoa.blogspot.com

[Utley]

But n the other hand, the US is in fiscal crisis due to its banking and fiscal management by the Fed and others. It has been in debt for trillions of dollars (literally) for decades and right now there is no way out. Their currency will not buy what it used to and there has to be a levelling. The hiccup could throw the USD to 25 Baht (my prediction) but Thailand cannot really stop that or fend off the fall. If the US were to devalue that far, China, Russia and Europe would become the major's and the US will be left to flounder.

When countries live on credit and social security there is not much you can do when continuing to tax business and PAYE salary earners to pay for the mismanagement. It is a death spiral and about time.

The Fed doesn't create the debt, Congress does with the approval of the President. The Fed merely does it's job by funding the debt while trying to control inflation in the process.

It is Congress that controls the purse strings!

[rufanuf]

Unfortunately the levels of response to new threads on Thai Visa, clearly illustrates the problem with the world today, and why Western Governments are able to enslave their whole populations without nobody noticing, using financial smoke and mirros that takes money out of the average working mans pocket month after month, year after year. Look how many people read and responded to the post about a man getting his penis chopped off, versus how many response this post got in the same time frame....look how many people would rather watch a football match than figure out why they are not making progress towards financial indendence (their goverments ripping them off with stealth taxes and devaluing the money in their pockets whilst they watch grown men kick a ball around a field! No wonder we are in the sh*t!).

Some say thailand is a corrupt nation...i wonder if people will be saying that when the average Thai rice farmers monthly salary denominated in baht starts buying thousands of US dollars or english pounds????....Cos thats where were heading which is why I lost faith in the corrupt western governance years ago.

Edited October 9, 2010 by rufanuf

[Fletcher]

Unfortunately the levels of response to new threads on Thai Visa, clearly illustrates the problem with the world today, and why Western Governments are able to enslave their whole populations without nobody noticing, using financial smoke and mirros that takes money out of the average working mans pocket month after month, year after year. Look how many people read and responded to the post about a man getting his penis chopped off, versus how many response this post got in the same time frame....look how many people would rather watch a football match than figure out why they are not making progress towards financial indendence (their goverments ripping them off with stealth taxes and devaluing the money in their pockets whilst they watch grown men kick a ball around a field! No wonder we are in the sh*t!).

Some say thailand is a corrupt nation...i wonder if people will be saying that when the average Thai rice farmers monthly salary denominated in baht starts buying thousands of US dollars or english pounds????....Cos thats where were heading which is why I lost faith in the corrupt western governance years ago.

Very true.

Anyone notice that Thailand bought 10 tons of gold in the last couple of months??