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Global Financial System ‘In Great Imbalance’: BoT


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Global financial system ‘in great imbalance,’: BoT

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BANGKOK, May 25 – Bank of Thailand (BoT) Governor Prasarn Trairatvorakul on Tuesday said the global financial system is in great imbalance as seen by the currency fluctuations.

Mr Prasarn said the baht is more volatile at present due to rapid change in external economic factors, particularly the persistent public debt problem in the European Union and fragile economic recovery in the United States.

“We rarely intervene in the baht movement when the currency weakens because [Thailand] counts on exports to earn foreign exchange,” he said. “What we must do now is to ease the volatility of the baht to ensure it does not fluctuate too heavily,” he said.

The US economy represented around 20 per cent of the gross domestic product (GDP) of the globe when it experienced the economic recession.

About 80 per cent of countries worldwide use the US dollar for trading. Simultaneously, China whose economy has expanded rapidly, has a small money supply in the market.

The current situation has many countries continuing to experience the volatility of the US dollar, which looks set to continue to weaken. However, no other currencies can replace the dollar for the time being.

“At present, all countries have been negatively affected by the US economic woes and currency volatility. Thailand is no exception,” the BoT chief said. “Strengthening the baht last year caused [the Bank of Thailand] to lose currency exchange from intervening in the baht movement to ensure its stability.” (MCOT online news)

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-- TNA 2011-05-25

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“Strengthening the baht last year caused [the Bank of Thailand] to lose currency exchange from intervening in the baht movement to ensure its stability.”

lotsa sh*t! but from whom? misinterpretation what Khun Prasarn said?

Thai Reserves 31 Dec 2009 = $ 138.4 Billion

Thai Reserves 31 Dec 2010 = $ 176.1 Billion

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"Strengthening the baht last year caused [the Bank of Thailand] to lose currency exchange from intervening in the baht movement to ensure its stability."

lotsa sh*t! but from whom? misinterpretation what Khun Prasarn said?

Thai Reserves 31 Dec 2009 = $ 138.4 Billion

Thai Reserves 31 Dec 2010 = $ 176.1 Billion

Presumably they meant that measured in THB they made a loss due to the exchange rate.

Obviously they didn't lose any currency exchange, on the contrary they have found quite a bit more.rolleyes.gif

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"Strengthening the baht last year caused [the Bank of Thailand] to lose currency exchange from intervening in the baht movement to ensure its stability."

lotsa sh*t! but from whom? misinterpretation what Khun Prasarn said?

Thai Reserves 31 Dec 2009 = $ 138.4 Billion

Thai Reserves 31 Dec 2010 = $ 176.1 Billion

Those dollar reserve figures don't reflect any market inverventions where they purchased dollars at times when the baht was stronger than they would like and subsequently sold them back when their was demand for the dollar in the markets. Even those bare figures show an increase of 37.7 billion dollars - which I think shows they did do what the article said - intervene to limit the strenghening of the baht against the dollar.

Edited by inthepink
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