Rapidly Stronger Baht Worries Thai Central Bank Governor, Finance Minister

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Rapidly stronger baht worries Thai central bank governor, finance minister

By English News

BANGKOK, Jan 17 – Bank of Thailand (BoT) Governor Prasarn Trairatvorakul expressed concern today at the rapidly appreciating Thai currency during the past two days but refused to commit regarding whether an intervention in the currency markets is underway.

He said the stronger Thai baht compared to US dollar is a consequence of short-term foreign investment in Thai bonds and the stock market through financial institutions – a signal of profit-taking by foreign investors.

The BoT governor warned foreign exchange investors to be extra cautious, giving assurances that the central bank is armed with measures to stem the baht appreciation which will be implemented when necessary.

The Thai currency is not that strong at the moment, he said. He refused to disclose if the bank will intervene, but said that Thai currency should move in tandem with the fundamentals and market mechanisms unless it has a negative impact on the country.

“There is cost in every intervention. We are closely monitoring the situation. It gains strength quite rapidly in the last two days,” he said. “We have the mechanism but I’m not saying that we won’t use it. We will if it’s good for the Thai currency.”

He indicated that the Thai baht's movement, though significantly strong, is in the same direction as Asian and regional currencies, adding that it is natural that a currency is alternately strong and weak.

“The strengthening of Thai baht was less than regional currencies last year but it is much stronger (compared to regional currencies) since early this year. It reflects investors’ indifference to foreign risk factors,” he said.

Calling on the private sector to be prepared for possible fluctuations arisen from changing risk factors, Mr Prasarn said BoT officials regularly meet with the Federation of Thai Industries and Thai Chamber of Commerce given Thai exporters’ unequal capabilities in adjusting to the situation.

The BoT governor said the stronger Thai baht has been a boon to heavy machinery imports for infrastructure development while foreign investments have increased with a value of US$20 billion in direct investment and US$8-9 billion through investment portfolios.

Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong admitted that the rapid strengthening of the baht, at the daily rate of Bt.20, is not a positive sign and does not reflect the genuine economic situation.

He called on state agencies responsible for the country’s economy to ensure that the Thai currency does not gain strength to an extent of impacting Thailand’s export sector. (MCOT online news)

-- TNA 2013-01-17

[patekatek]

I would venture a guess that a large number of expats living in Thailand based on the 800,000 baht retirement visa may be hoping for an increase in their social security or other retirement income in order to qualify for their visa extensions. Almost a $1,000 increase in the dollars necessary to purchase 800,000 baht in just a few short weeks. I wouldn't be surprised to see an exchange of 25 baht to the dollar in the future. I am only basing this on my own personal pessimism and lack of trust in the good old greenback.

[cooked]

I myself cannot understand why my beloved Swiss Frank is down to 32 now against 34 a month or two ago.

http://finance.yahoo.com/q/bc?s=CHFTHB=X&t=1y&l=off&z=m&q=l&c=

Something is being written between the lines that we can't read yet, I can't imagine why the Thai Baht should be stronger than the Swiss Frank, as Switzerland has too much foreign investment, making it too strong.

Something brewing, I fear. Or hope.

[Payboy]

How does this affect the price of rice now ?

Edited January 17, 2013 by Payboy

[cooked]

That's the question to worry about if you are in need of a decent worry. One more year of rice subsidies as they are now and things go to hell, so if Mr. T doesn't make it back before then , he won't never git back.

[thenervoussurgeon]

I know very little about the financial state of the baht ,but i did hear from a reliable source that his company believes that Thailand wii devalue the baht ,i personally havn"t a clue so dont castigate me.

[Naam]

I myself cannot understand why my beloved Swiss Frank is down to 32 now against 34 a month or two ago.

http://finance.yahoo...=off&z=m&q=l&c=

Something is being written between the lines that we can't read yet, I can't imagine why the Thai Baht should be stronger than the Swiss Frank, as Switzerland has too much foreign investment, making it too strong.

Something brewing, I fear. Or hope.

your beloved Swiss Frank strenghtened vs. most currencies because of the global crisis that started in 2008 when cash poured into Switzerland and its currency because both were considered save havens. these were not investments from foreign sources but just "hot cash" that can move in minutes or even seconds.

CHF strengthened to a point that the Swiss National Bank had to invervene with billions and billions, starting 1½ years ago, to stop additional strengthening (at one point CHF reached parity with the €UR). now hot cash is flowing out of CHF into greener pastures seeking yield and weakening the artificial strength of the Frank. that's what is brewing and that's what you should fear if you are dependent on CHF income and expenses in Thai Baht.

CHF is on the way towards a more justified exchange rate vs. most currencies as it was pre-crisis 2008.

the graph below (CHF €UR) will give you an idea what i am talking about.

[cooked]

Hmm, not quite a simple as that, why should Switzerland invest in the Thai Baht? Switzerland is going to come to the end of its self inflicted tether sooner or later. They keep the Frank artificially low so that her exports remain affordable. I lived in a frontier village and well remember that weekend when the Frank (now at 32) shot up to 41. The supermarkets in France were filled with Swiss customers, including myself, to the detriment of Swiss markets.

The Swiss banks are embarrassed by the huge amounts of foreign currencies that they have and don't know what to do with, but I am sure that they will find a solution. (!)

[davejones]

So at what $ or £ rate to the baht will you consider (or have to) leave Thailand. £1 was around 46 baht when I first came here almost 3 years ago, so it's still above that. But I have enough money here to last me a couple of years, so the exchange rate wont affect me for a while yet. Bound to be affecting some people who are already a bit stretched though. Time to start earning a little extra money just in case.

[cooked]

For myself personally, the income qualification for marriage extension would become critical if the Swiss Frank went below 28 (32 at present). I would have to extract invested capital from Switzerland to compensate and this is my self insurance (health) nest egg. Sounds like a potentially interesting new thread actually.

[Locationthailand]

If it were just the USD to Baht rate I could understand it as the US is more then technically bankrupt. Euro is not far behind so maybe that accounts for the apparent strength when in fact the Baht hasn't done anything, it is just not under as much pressure but maybe that was why Barry was in town, trying to get Yingluck to increase her already over-spending to force the Baht into a weaker position. And you can bet that had Dubai's backing.

[jamescollister]

Strong Baht is a killer for me Rubber is sold in US dollars, strong Baht weak US means less Baht per kilo. Wages and costs don't go down in Baht, but returns go down. Won't send me broke, but it hurts to the tune of #10,000 US a year in profit. Not a big producer,, but low prices and a high Baht hurt. Jim

[Gonsalviz]

They should do what America is doing. Spend like crazy and print money faster. that should weaken the Baht sufficiently.

[Naam]

Hmm, not quite a simple as that, why should Switzerland invest in the Thai Baht? Switzerland is going to come to the end of its self inflicted tether sooner or later. They keep the Frank artificially low so that her exports remain affordable. I lived in a frontier village and well remember that weekend when the Frank (now at 32) shot up to 41. The supermarkets in France were filled with Swiss customers, including myself, to the detriment of Swiss markets.

The Swiss banks are embarrassed by the huge amounts of foreign currencies that they have and don't know what to do with, but I am sure that they will find a solution. (!)

well... you still don't get it.

-nobody has suggested that Switzerland should invest in Thai Baht.

-the Swiss Frank was and still is artificially high. that's why the SNB is trying to weaken it. read my explanation in posting #7

-Swiss banks are embarrassed... =

[cooked]

Hang on their mate. The Swiss banks are investing in foreign currencies in order to keep the Frank artificially low, Thailand is an important trade partner for them.

Embarrassed was used hencely:

em·bar·rass

Verb

The second meaning, see? The Swiss central bank isn't only investing in green pastures, they are buying government bonds all over the place. As I said before (I didn't explain, as you do, I stated), the Euro plummeted to the value of one Frank a year or so ago, resulting in a huge buying spree abroad by the Swiss. The banks intervened quickly, not by spending money indiscriminately but by buying Euro bonds and the Euro quickly went back to 1.20.

• Cause (someone) to feel awkward, self-conscious, or ashamed.
  
• Be caused financial difficulties.
  

[Naam]

The Swiss banks are investing in foreign currencies...

that rules out any additional rational discussion with you. i know of better things on which to waste my time

[retell]

they are worried what about the foreingers that get their money from outside thailand get even less Thb for their currency and visa regulations stay the same

[anon467367354]

I guess the only solution is to increase your income. Understandably not every one is qualified to go out there and get a job nor may have the interest in teaching which is about the only thing a foreigner can do here. The fact is, everybody here knows how to use the Internet and that in my experience is the best and most reliable source of income. Think outside the box, being dependent on a check coming from somewhere else is the same as welfare in my opinion even if you earned it in the past. For us expats to live here, we need to become more self sufficient and create a bumper to where these things don't affect us. Just talking about it won't solve anything, doing something about it will.

[MrRealDeal]

Anyone not planning on the inflation rising faster then any raise they might get in the west and the bht not eating away at the Dollar over time , isn't planning very well.

[MrRealDeal]

I guess the only solution is to increase your income. Understandably not every one is qualified to go out there and get a job nor may have the interest in teaching which is about the only thing a foreigner can do here. The fact is, everybody here knows how to use the Internet and that in my experience is the best and most reliable source of income. Think outside the box, being dependent on a check coming from somewhere else is the same as welfare in my opinion even if you earned it in the past. For us expats to live here, we need to become more self sufficient and create a bumper to where these things don't affect us. Just talking about it won't solve anything, doing something about it will.

Relying a check you earned is the same as welfare ..... thats a new concept for me ! lol

[rayw]

Remember that a stronger Baht should mean imported items such as petrol should become cheaper but only if the market is not corrupted by profiteering extreme right wing capitalists who are wrecking out world. Gone are the long lost days of decent fair capitalism, where we all got a fairer share of the cake, I am sorry to say. 99% of us just get poorer whilst the rich cream in more and more and we let it happen !!!!!!! Personally would rather live under extreme Socialism in this sic world and I hate that extreme too. We really truly all need decent fair capitalism and socialism working together with proper centre based Governments of the people who are not slaves to any paymaster lobbyists.

Time I think to sell any excess Baht you have while it is strong and buy them back when the Baht moves back to its proper value soon, I hope. Doesn't bother me as I have only regular pension income and very little cash capital thankfully. I do not want the risk of holding cash either at home or in the bank thank you very much, sure you can make money trading in it but you can and often do also lose money too. Just remember for every winner there has to be a loser and no matter how careful you are that could be you.

You have to remember that theoretically if a currency becomes stronger then that leads to falling inflation and maybe even deflation in an honest non corrupt society. If it does not do that then somebody is cheating at all of our expense of course, which is very likely it seems.

Edited January 18, 2013 by rayw

[MrRealDeal]

That complete nonsense "for every winner their is a loser" I buy investment X for 10 hold it until 20 ..... sell it to you, you hold it until 30 and sell it to the next guy .........

I short a stock and make money , I borrowed your shares to do it but you never sold them and wait for a profit , we both made money. ect ect ect

[tijnebijn]

they are worried what about the foreingers that get their money from outside thailand get even less Thb for their currency and visa regulations stay the same

I agree and have sympathy for all , my solution at the moment is when not making income enough required for extension , fly oversees

and do that randomly , stay on multiples as it once started for me , personally not in this situation , but guess its possible , you never know how life on itself goes ,

and even more not how the markets go , its un- controlable , nothing we can do about it , but just breathe and make yourself ready for any situation , although I must admit I do not

have a lot to keep aside , I also do not have much expenses ,

For one poster commenting on hoping for increases of pensions etc , in my homecountry (netherlands) they are cutting personal pensions up to 10% this year and the next , pensioners have a hard time , which is criminal .

Higher pensions won't happen as austerity in the West kicks in , income requirements can become complicated for many , keeping some more cash aside and while doing that get used to spending less ( and receiving ) , your expat stay can be the same with a bit less without getting into trouble at immigration ( dual income requirement , money pension compensated with money in the bank ) . (I am a non pensioner but know several pensioners doing just that ), I'm just saying .

Not sure how other countries are doing , lower end retired people will get it harder not easier , unless Tom Yam Kung returns , but don't see it happen soon , Thailand rocks at the moment and the forseeable future , 800k baht can very well be 40k dollars in 10-15 years easily , thats development , but hey we dont have life forever , scrap buy as we can't take wealth with us to the ' other side ' anyway .

[anon467367354]

I guess the only solution is to increase your income. Understandably not every one is qualified to go out there and get a job nor may have the interest in teaching which is about the only thing a foreigner can do here. The fact is, everybody here knows how to use the Internet and that in my experience is the best and most reliable source of income. Think outside the box, being dependent on a check coming from somewhere else is the same as welfare in my opinion even if you earned it in the past. For us expats to live here, we need to become more self sufficient and create a bumper to where these things don't affect us. Just talking about it won't solve anything, doing something about it will.

Relying a check you earned is the same as welfare ..... thats a new concept for me ! lol

it kind of is. sort of like all your eggs in one basket. you depend on that check and if SS, it comes from the government. "you didn't build that"

[Mudcrab]

That complete nonsense "for every winner their is a loser" I buy investment X for 10 hold it until 20 ..... sell it to you, you hold it until 30 and sell it to the next guy .........

I short a stock and make money , I borrowed your shares to do it but you never sold them and wait for a profit , we both made money. ect ect ect

Wasn't this strategy one of the underlying fundamentals that caused the GFC.......house prices going on an ever increasing spiral upwards....until someone realised that this was never going to work indefinately and the housing market collapsed and the rest of the dominoes fell?

[market trader]

they are worried what about the foreingers that get their money from outside thailand get even less Thb for their currency and visa regulations stay the same

I agree and have sympathy for all , my solution at the moment is when not making income enough required for extension , fly oversees

and do that randomly , stay on multiples as it once started for me , personally not in this situation , but guess its possible , you never know how life on itself goes ,

and even more not how the markets go , its un- controlable , nothing we can do about it , but just breathe and make yourself ready for any situation , although I must admit I do not

have a lot to keep aside , I also do not have much expenses ,

For one poster commenting on hoping for increases of pensions etc , in my homecountry (netherlands) they are cutting personal pensions up to 10% this year and the next , pensioners have a hard time , which is criminal .

Higher pensions won't happen as austerity in the West kicks in , income requirements can become complicated for many , keeping some more cash aside and while doing that get used to spending less ( and receiving ) , your expat stay can be the same with a bit less without getting into trouble at immigration ( dual income requirement , money pension compensated with money in the bank ) . (I am a non pensioner but know several pensioners doing just that ), I'm just saying .

Not sure how other countries are doing , lower end retired people will get it harder not easier , unless Tom Yam Kung returns , but don't see it happen soon , Thailand rocks at the moment and the forseeable future , 800k baht can very well be 40k dollars in 10-15 years easily , thats development , but hey we dont have life forever , scrap buy as we can't take wealth with us to the ' other side ' anyway .

If 800k bahts becomes 40k dollars it will be bye bye Thailand for me, because that will mean I can live much cheaper in the USA or Canada or Australia than I can in Thailand.

[khunken]

That complete nonsense "for every winner their is a loser" I buy investment X for 10 hold it until 20 ..... sell it to you, you hold it until 30 and sell it to the next guy .........

I short a stock and make money , I borrowed your shares to do it but you never sold them and wait for a profit , we both made money. ect ect ect

You're post defies logic. The person you borrowed the stock from has lost because you made a profit from the drop in value. I'm a trader & for every winner (usually the broker) there is a loser. Trading on any exchange is a zero sum game.

To the topic:

Most of the Baht & other regional currency gain is down to a drop in the dollar. Even the Euro has gained. US dollar holders are always going to find ways to earn a bit more than US treasury rates, so they will buy higher yielding currencies. With rates in Europe at rock bottom (& high risk in some cases), Asia excluding Japan is where they are finding them. It's short-term money which the BOT doesn't like so they are warning foreign investors to piss off with their short-term money.

[Soi Dog]

The Baht isn't getting stronger - the Dollar is getting weaker and as long as Obama ignores the debt and deficit it will only get worse. And his union buddies will be loving every minute of it.

[kennalder]

Remember that a stronger Baht should mean imported items such as petrol should become cheaper but only if the market is not corrupted by profiteering extreme right wing capitalists who are wrecking out world. Gone are the long lost days of decent fair capitalism, where we all got a fairer share of the cake, I am sorry to say. 99% of us just get poorer whilst the rich cream in more and more and we let it happen !!!!!!! Personally would rather live under extreme Socialism in this sic world and I hate that extreme too. We really truly all need decent fair capitalism and socialism working together with proper centre based Governments of the people who are not slaves to any paymaster lobbyists.

Time I think to sell any excess Baht you have while it is strong and buy them back when the Baht moves back to its proper value soon, I hope. Doesn't bother me as I have only regular pension income and very little cash capital thankfully. I do not want the risk of holding cash either at home or in the bank thank you very much, sure you can make money trading in it but you can and often do also lose money too. Just remember for every winner there has to be a loser and no matter how careful you are that could be you.

You have to remember that theoretically if a currency becomes stronger then that leads to falling inflation and maybe even deflation in an honest non corrupt society. If it does not do that then somebody is cheating at all of our expense of course, which is very likely it seems.

Time I think to sell any excess Baht you have while it is strong and buy them back when the Baht moves back to its proper value soon

...sure you can make money trading in it but you can and often do also lose money too

So which is it? Sell baht because you think it is too high, or be wise and not trade currencies.

[Huayrat]

5000 baht a month worse off than 3 weeks ago..