Baht Rise A Sign Of Confidence

[webfact]

Baht rise 'a sign of confidence'
SARUN KIJVASIN
THE NATION



BANGKOK: -- Bank of Thailand Governor Prasarn Trairatvorakul yesterday calmed nerves over Tuesday's sudden spurt in the baht, saying it reflected growing investor confidence in the country's economic fundamentals.

The rapid appreciation was likely due to currency purchases by foreign investors after the country's credit rating was revised upwards and the central bank indicated that its 2013 growth forecast would likely be revised upwards, he said.

On March 8, Fitch Ratings upgraded Thailand's Long-Term Foreign Currency Issuer Default Rating to "BBB+" from "BBB" with a stable outlook.

Last week, the central bank said strong momentum could warrant an upward tick in its prediction of economic growth for this year from 4.9 per cent to at least 5 per cent.

Over this week, Narongchai Akarasanee, a member of the Monetary Policy Committee, signalled the possibility of an urgent meeting of the MPC before the next one scheduled on April 3 following the sharp rise of the baht against the US dollar. Although the baht surged swiftly on the morning of March 12, some buying of dollars began in the afternoon, leading to some weakening in the baht.

"There came out an upgrade of credit ratings and the economy expanded satisfactorily, while neighbouring countries will have elections with conflicts. Despite the strengthening of the baht, it moves in two directions," Prasarn said.

However, operators should be careful about the volatility of the baht.

There was no need to change the exchange rate policy, given the satisfactory results of the current method. The central bank is regularly monitoring movements in the exchange rate to see if they are in line with the economic direction.

The central bank has been reporting to the MPC as usual on the baht situation and there was no need for a special meeting now.

On March 12, capital flowing into Thailand was not much and net capital inflow was very small.

"We are not bothering about a particular issue. Now, we try to implement policies, particularly about the market mechanism, for a balance, while the exchange rate framework is moderately flexible," he said.

Although some observer may believe the baht's ascendancy is the result of foreign funds' investment in the Finance Ministry's inflation-linked bonds, that may not be possible because it was just an interest in purchasing the bonds. There was no real payment, he added.

Sira Klongvicha, chief investment officer at Krungsri Asset Management, said that the United States' extremely low interest continues with quantitative easing until there is a clear sign of recovery, driving capital to flow into emerging markets, particularly in Asia.

He said that Krungsri Total Return Bond (KF-TRB), which has a policy to invest in PIMCO Total Return Bond Fund Class E Acc (USD), was expected to yield a return of about 3-5 per cent per annum.

"The policy rate [one-day repurchase rate] is expected to remain at 2.75 per cent until the end of 2013 due to the poor economic situation abroad. Emerging markets have not hiked their rates yet. If only Thailand hikes the rate, that could have an adverse impact on the country and encourage capital inflow. Therefore, the Bank of Thailand may try to maintain this balance," Sira said.

He suggested fixed income fund investment with a maturity of no more than one year.


-- The Nation 2013-03-14

[laurentbkk]

be careful , a Thai Bath ,too strong will be a problem for Export and Tourism , which are the 2 major currency income for the country.

[sscsamui]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

[Naam]

waiting patiently for more yada yada yakety-yak warning comments and advice

[steelepulse]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

[Naam]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

but don't hold your breath!

[thenervoussurgeon]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

And i am waiting for pigs to fly. in fact i notice some imports from Britain have gone up in price ,how this?

Edited March 14, 2013 by thenervoussurgeon

[midas]

In comparison to the strength of the Thai baht I thought this presentation on ABC TV the other night about the concerns that the Indonesian Rupiah may be falling too quickly and too much was quite an interesting contrast…..

Particularly as one of the problems they cite in Indonesia is their huge bill for importation of oil. And yet I would have thought the conditions would not be dramatically different in Thailand ( particularly with the Thai government promoting more cars on the road ) where they also subsidise the cost of this to the public?

There will no doubt be more Aussies flocking to Bali again for their vacations

http://www.abc.net.au/news/2013-03-12/indonesias-rupiah-rapidly-falling/4569024

Edited March 14, 2013 by midas

[FunFon]

IMO the currency of any country that has had a decent history of managing its financial system more competently than the US, UK and Eurozone will see major gains in its value against those basket-cases in the coming years and most likely decades.

Norway, Switzerland and other non-Euro northern nations, Singapore, Australia would be where I personally would be parking any liquidity if I had it, happy with maybe 3-4% returns for those requiring security. (WAGing here, input from those more knowledgeable than I most welcome)

Not going to touch the gold argument here as an "investment", but a batch of coins buried under the attack dog's kennel wouldn't go astray anywhere in the world as a "Plan Z" in case it all really goes fubar - yes low odds IMO (but my estimate's probably higher than yours) but major downside risk there, not just to financial security but life and limb for most urban dwellers.

Now putting all that aside, I think it will be foolish for any government to set its monetary policies against a fundamental long-term trend like that just to try to stimulate export trade, the 800 lb gorilla can do that but not tiny Thailand.

Better to use common sense, allow outside investors to get decent returns, keep sensible spending/borrowing practices in place (at least sensible compared to our idiotic leaders) and ride out the ongoing volatilities in the common-sense boat.

[FunFon]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

but don't hold your breath!

-

True, energy costs and of course supply/demand and other fundamentals, none of these are pointing to prices coming down for those few goods still manufactured in the west that anyone cares about.

Certainly not branded food and drink items that will continue to grow in popularity as the citizens of large formerly-less-developed countries start to be able to afford them more than we can.

Edited March 14, 2013 by FunFon

[retell]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

love yr picture Steelpulse

but think that will never happen offcourse

again the bank still knows how to calculate exchange rates so this month again a bit less Baht for my euro's that come to my account

[Swiss1960]

Norway, Switzerland and other non-Euro northern nations, Singapore, Australia would be where I personally would be parking any liquidity if I had it, happy with maybe 3-4% returns for those requiring security. (WAGing here, input from those more knowledgeable than I most welcome).

I would not put too many bets on Switzerland... we are heavily dependent on the European and US economy and the Swiss National Bank had to invest Billions into keeping the Swiss Franc over 1.20 to the Euro, otherwise our economy would have gone down the hill completely. Look at the CHF-THB exchange rate, it is closely following the EUR-THB / GBP-THB exchange rates on their way down, no matter the current strength of our (still growing) economy

Also, a possible US-Europe free trade agreement (currently in preparation) could give a devastating blow to our export industry...

[how241]

be careful , a Thai Bath ,too strong will be a problem for Export and Tourism , which are the 2 major currency income for the country.

+1

[Denizen]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

Cheap farang tourists who spend little are not what Thailand needs. The cheap tourists will be replaced by Chinese and Eastern European nationals who aren't as parsimonious as the UK (especially) and Western European farangs.

Bring it on!

[Denizen]

In comparison to the strength of the Thai baht I thought this presentation on ABC TV the other night about the concerns that the Indonesian Rupiah may be falling too quickly and too much was quite an interesting contrast…..

Particularly as one of the problems they cite in Indonesia is their huge bill for importation of oil. And yet I would have thought the conditions would not be dramatically different in Thailand ( particularly with the Thai government promoting more cars on the road ) where they also subsidise the cost of this to the public?

There will no doubt be more Aussies flocking to Bali again for their vacations

http://www.abc.net.au/news/2013-03-12/indonesias-rupiah-rapidly-falling/4569024

If you want to live like an expat the costs are similar in most Asian countries. If you want to go cheap you have to live like a local.

[Denizen]

be careful , a Thai Bath ,too strong will be a problem for Export and Tourism , which are the 2 major currency income for the country.

+1

I don't think a Thai "Bath" [sic] is on the priority list for UK farangs. However the GBP is currently being given a bath.

Edited March 14, 2013 by Denizen

[mania]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

Given who the majority of tourist are

maybe not really much of a concern ?

GBP just barely made the top 10

USD & EURO did not

Also This,

A study of tourism 'leakage' in Thailand estimated that 70% of all money spent by tourists ended up leaving Thailand (via foreign-owned tour operators, airlines, hotels, imported drinks and food, etc.). Estimates for other Third World countries range from 80% in the Caribbean to 40% in India.

http://www.unep.org/resourceefficiency/Business/SectoralActivities/Tourism/FactsandFiguresaboutTourism/ImpactsofTourism/EconomicImpactsofTourism/NegativeEconomicImpactsofTourism/tabid/78784/Default.aspx

Edited March 14, 2013 by mania

[Denizen]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

Given who the majority of tourist are

maybe not really much of a concern ?

GBP just barely made the top 10

USD & EURO did not

tourism Thailand.jpg

Also This,

>>>A study of tourism 'leakage' in Thailand estimated that 70% of all money spent by tourists ended up leaving Thailand (via foreign-owned tour operators, airlines, hotels, imported drinks and food, etc.). Estimates for other Third World countries range from 80% in the Caribbean to 40% in India.

http://www.unep.org/resourceefficiency/Business/SectoralActivities/Tourism/FactsandFiguresaboutTourism/ImpactsofTourism/EconomicImpactsofTourism/NegativeEconomicImpactsofTourism/tabid/78784/Default.aspx

The wealthiest 10% of UK farangs probably spend more in total than the other 90% in total.

In regard to leakage, a lot of it probably flowed out through the urinals.

Edited March 14, 2013 by Denizen

[cooked]

Norway, Switzerland and other non-Euro northern nations, Singapore, Australia would be where I personally would be parking any liquidity if I had it, happy with maybe 3-4% returns for those requiring security. (WAGing here, input from those more knowledgeable than I most welcome).

I would not put too many bets on Switzerland... we are heavily dependent on the European and US economy and the Swiss National Bank had to invest Billions into keeping the Swiss Franc over 1.20 to the Euro, otherwise our economy would have gone down the hill completely. Look at the CHF-THB exchange rate, it is closely following the EUR-THB / GBP-THB exchange rates on their way down, no matter the current strength of our (still growing) economy

Also, a possible US-Europe free trade agreement (currently in preparation) could give a devastating blow to our export industry...

Yes indeed . I would never have thought that the Thai baht would climb so strongly against the Swiss Frank. Gone down from over 34 in May last (and 41 in August 2011) year to barely 31 today, I am worried, if it goes under 28.5 I have to leave if I want to stay legal. In the long term things are ok, but for the next year or to I am watching how the brilliant rice pledging scheme takes its toll on the Thai national budget.

[mania]

The wealthiest 10% of UK farangs probably spend more than the other 90%.

If you mean 10% of the richest UK falangs

Or roughly 87,000 according to the chart for 2012

Is spending more than the 8 million + Asians alone that visited Thailand in 2012,

I would be amazed at the wealth of that 10% of UK Falangs your speaking

of let alone if compared to the total 90% of that list as you mentioned.

Edited March 14, 2013 by mania

[watcharacters]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

.

Are you thinking it's a good thing for you that the baht is valued in such a way so as to make Thailand too expensive for many Western expats?

You post doesn't make that clear for me.

[Asiantravel]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

Cheap farang tourists who spend little are not what Thailand needs. The cheap tourists will be replaced by Chinese and Eastern European nationals who aren't as parsimonious as the UK (especially) and Western European farangs.

Bring it on!

Do you have hard evidence that Chinese in Thailand are big spenders? And who exactly do you mean by East European nationals? If you mean Russians and you are suggesting that they are big spenders then clearly you haven't heard the Thais complain about their frugality?

[Denizen]

Thats the way to keep the tourist away... With the Pound the Euro and the Dollar Exchange rate No one can afford to come to Thailand on Holiday. So many other countries the rate is Much better. Thailand is hurting it's self.... Wake the F&*% up!!!!!!!

Cheap farang tourists who spend little are not what Thailand needs. The cheap tourists will be replaced by Chinese and Eastern European nationals who aren't as parsimonious as the UK (especially) and Western European farangs.

Bring it on!

Do you have hard evidence that Chinese in Thailand are big spenders? And who exactly do you mean by East European nationals? If you mean Russians and you are suggesting that they are big spenders then clearly you haven't heard the Thais complain about their frugality?

China and Russia [especially] have very high growth rates for inbound Thai tourism whereas UK is flat. The GBP is depressing UK outbound tourism.

I have heard UK farangs complain about their frugality.

Edited March 14, 2013 by Denizen

[MrWorldwide]

In comparison to the strength of the Thai baht I thought this presentation on ABC TV the other night about the concerns that the Indonesian Rupiah may be falling too quickly and too much was quite an interesting contrast…..

Particularly as one of the problems they cite in Indonesia is their huge bill for importation of oil. And yet I would have thought the conditions would not be dramatically different in Thailand ( particularly with the Thai government promoting more cars on the road ) where they also subsidise the cost of this to the public?

There will no doubt be more Aussies flocking to Bali again for their vacations

http://www.abc.net.au/news/2013-03-12/indonesias-rupiah-rapidly-falling/4569024

The biggest economy in SEA has a weakening currency despite double-digit economic growth year-on-year ? Could it be that someone is questioning whether the fundamentals match those numbers ? Beats me, but I will definitely search iView for the program you mentioned.

http://www.xe.com/currencycharts/?from=USD&to=IDR&view=5Y

http://www.xe.com/currencycharts/?from=EUR&to=IDR&view=5Y

http://www.xe.com/currencycharts/?from=AUD&to=IDR&view=5Y

I wouldn't be too quick to write Indonesia off - how many regional economies have 230 million consumers and an almost endless supply of cheap labor ? Potential problems - sure, but they aren't alone in that regard. Interesting times ahead.

[churchill]

I have seen plenty of Chinese and Russians throwing their cash around ... not all are prepaid and that will increase ..

Didn't most from the UK start on package tours all pre-paid ...

Not so much a rise in Baht but a fall in GBP & the other western currencies ...

[Denizen]

In comparison to the strength of the Thai baht I thought this presentation on ABC TV the other night about the concerns that the Indonesian Rupiah may be falling too quickly and too much was quite an interesting contrast…..

Particularly as one of the problems they cite in Indonesia is their huge bill for importation of oil. And yet I would have thought the conditions would not be dramatically different in Thailand ( particularly with the Thai government promoting more cars on the road ) where they also subsidise the cost of this to the public?

There will no doubt be more Aussies flocking to Bali again for their vacations

http://www.abc.net.au/news/2013-03-12/indonesias-rupiah-rapidly-falling/4569024

The biggest economy in SEA has a weakening currency despite double-digit economic growth year-on-year ? Could it be that someone is questioning whether the fundamentals match those numbers ? Beats me, but I will definitely search iView for the program you mentioned.

http://www.xe.com/currencycharts/?from=USD&to=IDR&view=5Y

http://www.xe.com/currencycharts/?from=EUR&to=IDR&view=5Y

http://www.xe.com/currencycharts/?from=AUD&to=IDR&view=5Y

I wouldn't be too quick to write Indonesia off - how many regional economies have 230 million consumers and an almost endless supply of cheap labor ? Potential problems - sure, but they aren't alone in that regard. Interesting times ahead.

Obviously Indonesian imports are growing faster than exports and capital inflow is not making up the difference.

Indonesia has two big disadvantages. Earth quakes and frequent floods and its traffic appears to be worse than Thailand's.

Otherwise, nice people and lots of well educated young people.

[Denizen]

I have seen plenty of Chinese and Russians throwing their cash around ... not all are prepaid and that will increase ..

Didn't most from the UK start on package tours all pre-paid ...

Not so much a rise in Baht but a fall in GBP & the other western currencies ...

The vikings invented package tours hundreds of years ago.

[TommoPhysicist]

Waiting patiently for the price of imported goods and oil/gas to come down.........................................................

Snickers bars have fallen from '3 for 54' to '3 for 49' in Makro.

[Pormax]

It is not only a loss of revenue to Thailand by the tourists who have a set amount of money put by for their holiday only to find that they can now buy about 20% less (if GBP) now than say 3 months ago but one will also find due to general price rises there is even less goods to purchase with your amount of Dollar, Euro, Yen or GBP.

How many guys overseas are sending money to their wives/girlfriends.(Thankfully not me now as I live here) Quite a few I reckon, and now they will finding it hard to make the payments they agreed on. This I am sure will be causing them a lot of headaches and a lot earache from the ladies of the men who cannot find a further 20% of funds.

Overall this means that generally shop keepers will find their turnover/profit margins will be way down as less money spent by those living here whose pension/income are severely effected, plus those that come on holiday and amount of cash sent to their other half.

I can definetely see it effecting tourism in the future.

I am not saying to live in Thailand is expensive as it is still relatively cheap compared to say the UK but it was not like it was a few years back and I do not think things will improve.

Those that are planning on retirement or a move to Thailand will have to do their sums again and be prepared for the worst.

I can see a Euro 35B, GBP 40B and US Dollar 28B in the not too distant future.

Oh happy days!

[Thailand1977]

as mentioned i think wishful drivel is understable and acceptable. but cold shivers are running down my back when i read that "tourists will frequent other countries which have better rates"

3 likely options are stay at home, holiday in ones own country or Eurozone, or go to Thailand spend the 1000 pound/Euro/USD as you did before, but unfortunately for Thailand it'll be 25-40 percent less in BHT terms, as much as Denzil hates the Brits and mocks cheap West Europeans they are an essential part of their tourism market. (and condo market)

For me its not the weakening of sterling as Thailand was cheap enough to take a hit on this (i get paid in USD/EUR anyway) but the vast inflation Thailands tourist areas have seen in the last few years. ++ everywhere makes it even worse.

Whatever happens a strong Baht is not going to be good for its tourist industry.

Though it could drop taxes on Western goods and become a shopping Mecca, boosting high spending tourists from China etc..