Bank Of Thailand Chief Rejects Rumours Of Insufficient Funds

[webfact]

BoT chief rejects rumours of insufficient funds
By English News



BANGKOK, March 20 – Thailand’s central bank chief has quashed rumours of inadequate funds available to intervene to slow the Thai currency's rapid appreciation which hits a record high in 28 months on Tuesday.

Prasarn Trairatvorakul said the rapid strengthening of the Thai baht was probably due to positive news on the Thai economy which has contributed to the inflow of foreign capital.

Rumours in the money market that the Bank of Thailand (BoT) doesn’t have the money to intervene to stem the baht rise were groundless, he insisted.

The Thai baht appreciated to Bt29.38-29.40 against the US dollar on Tuesday – its strongest in the past two years and four months.

The rumours led to a swaying index in the Securities Exchange of Thailand (SET) on Tuesday as investors reacted nervously. Some were concerned that the government may issue measures to stop the foreign capital inflow.

The Thai stock index dropped 23.40 points to 1,568.25 when it closed on Tuesday.

Tawatchai Assawapornchai, Globex chief analyst, said the sharp decline in the SET index was due to investors’ anxiety over the government’s possible measures to curb the appreciation of the Thai currency which was its strongest level in five years.

Some investors decided to make profit given the skyrocketing index in the past few months, he said. (MCOT online news)


-- TNA 2013-03-20

[laurentbkk]

ah too high Thai bath will not help exporters ..and Thailand is a major one .... Who is speculating on the Thai currency ? Countries like Malaysia , Vietnam will benefit about this issue as many already moved their factories in those countries.

[ajarnpot]

You know what they say, if you need to deny it.................................

[kerrysum]

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kilosierra

Hurry supplies will not last.....

[bigbamboo]

Hubble bubble.............

[Stjohnm]

Its not just Thailand, All major Asian currencies are at record levels against western denominations. its only recently that the likes of the SG$, HK$ & CN¥ have weakened ever-so slightly against the likes of the GB£, EU€ & US$

[SOTIRIOS]

.............just borrow some more.........to infinity........and the Thai people will be paying to infinity....

(........this phenomenon of not being able to post.......again....)(10th attempt to post........is this free speech....)

[kai k]

What is happening in Cyprus is a possibility here too someday. There is a lot of foreign investment in Thailand with much of it Russian money. It could be a matter of time when a tax can be placed on savings investments at Thai banks. Maybe, the Thai habit of obtaining, holding and trading actual gold is not a bad idea.

[notime]

Hah? Does it mean that the money printing machines broke down or what? This should not be a big problem for BoT to fix and they are quite correct with rejecting rumors. Now, that everybody is printing as fast as they can they should just make sure they have plenty of paper and other supplies on hand.

[tragickingdom]

Only morons do believe in such rumours, especially just after the rating agencies just gave Thailand a higher credit rating. If the market believed one moment in the rumours the baht would be falling from a cliff and would not becoming stronger. Shame omn those politicians that use these nonsense to damage the country in order to get in power.

[Locationthailand]

They will need a bit more folding than what is shown in this picture if PTP get their sticky fingers into the loan sharks (international bwankers) for 2+ trillion...

[MobileContent]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

[khunken]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

Too many posters have an opinion - is that what you're saying?

My opinion on Thailand is completely different to the corrupt mob in power.

This thread is not about banks but about the BOT - i.e. the central bank. The BOT is, in general, a well-run organisation. The CEO, despite efforts by the ruling PTP to undermine him, is competent and arguing for no change in interest rates.

The BOT can print money so it's not in any danger of being unable to buy US$ to stabilise the Baht. Rumours tend to drive many things here as apolitical information rarely is forthcoming.

Edited March 20, 2013 by khunken

[TheGhostWithin]

.............just borrow some more.........to infinity........and the Thai people will be paying to infinity....

(........this phenomenon of not being able to post.......again....)(10th attempt to post........is this free speech....)

We got your previous posts too.. please remember to push the refresh button after you post.. and please, could you delete the other posts which basically say the same thing over and over? Makes for less reading and frustrating for those looking to read facts, figures and summary arguments. Many thanks.

[TheGhostWithin]

What is happening in Cyprus is a possibility here too someday. There is a lot of foreign investment in Thailand with much of it Russian money. It could be a matter of time when a tax can be placed on savings investments at Thai banks. Maybe, the Thai habit of obtaining, holding and trading actual gold is not a bad idea.

With the pathetic interest returns on banks in Thailand, I do wonder why anyone has their money sitting in Thai bank accounts - it is simply "dumb money", returning less than inflation in a high risk economy.

I can understand why people invest in stocks and businesses here, but keeping money in an account, vs. say Australia or New Zealand, where banks return a lot more in interest, inflation is lower and the economies are much more stable, is beyond me. God forbid we even consider a tax on the measly few percent Thai banks give to deposit holders..

The Thai economy is 75% socialist policies, 25% capitalist. Of those 25% capitalist policies, I would say by reading this forum and my market news each day most of those policies are being exploited in illegal and corrupt approaches which ensure a very few greedy people are profiting from this. This leaves lets say 5% of the country making profits by selling things such as rice at a loss, whilst the remaining 95% of the population to foot the bill in years to come - all whilst Thailand is paying interest to debt holders (such as China) at rates higher than it pays to deposit holders. This is where smart people, which hold most of the money in institutional investment, take note. In a market which returns on deposits return less than the risk premium required, it is known as a high risk, low return investment - something every investor who knows what they are looking at ensures they avoid. The economy is broken, and a tax on deposits will make things even worse.

[Tatsujin]

Can't they just print some more monopoly money?

[TheGhostWithin]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

MobileContent, please show figures within the past 3 months (this is, since the effects of the rice pledging scheme, the higher baht, higher wages, and increased competitiveness of Thailands soon to be ASEAN neighbors, increased efforts of the current party in power to use the law to take out political rivals, and the aging of the courageous King all come into play).

Picking on Europe is like picking on the biggest kid in the playground because he is sick - Europe is not the only continent in the west, by the way. Care to make the same statement against Aussie or American banks? Perhaps we could stay in Asia, care to make the same comment against say, Malaysian or Singaporean banks?

Great to see others thinking, but it is about time people backed theories and thinking up with established facts and figures.

[MobileContent]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

[MobileContent]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

Too many posters have an opinion - is that what you're saying?

My opinion on Thailand is completely different to the corrupt mob in power.

This thread is not about banks but about the BOT - i.e. the central bank. The BOT is, in general, a well-run organisation. The CEO, despite efforts by the ruling PTP to undermine him, is competent and arguing for no change in interest rates.

The BOT can print money so it's not in any danger of being unable to buy US$ to stabilise the Baht. Rumours tend to drive many things here as apolitical information rarely is forthcoming.

I replied to the post where users on TV try to pash the ruling party. Read all pages before you reply to my posting

[MobileContent]

To many users on TV seems to have something against Thailand in general or at least against the current party in power.

Looking at Thailand, I am happy to be here and wouldn't like to change with any country in Europe which seems to be going down the toilet from Greece, Italy, France, Spain, Portugal to just name a few but the flu might hit as well Germany and the UK.

Thailand banks are stable which can't be said about those banks in the western world such as in Europe.

MobileContent, please show figures within the past 3 months (this is, since the effects of the rice pledging scheme, the higher baht, higher wages, and increased competitiveness of Thailands soon to be ASEAN neighbors, increased efforts of the current party in power to use the law to take out political rivals, and the aging of the courageous King all come into play).

Picking on Europe is like picking on the biggest kid in the playground because he is sick - Europe is not the only continent in the west, by the way. Care to make the same statement against Aussie or American banks? Perhaps we could stay in Asia, care to make the same comment against say, Malaysian or Singaporean banks?

Great to see others thinking, but it is about time people backed theories and thinking up with established facts and figures.

Australian banks not much to say about but they are small any away in terms of assets. (Top 36) and US banks most have been bailed out not long ago, so on the next crisis they will get another haircut.

The largest bank is currently Deutsche Bank and and the second largest bank is BNP. Both have been hit badly. Most of the banks currently with cash is the Chinese and Japanese banks. Malaysian and Singapore banks don't make it even to the Top 50 banks in the world. If the Chinese or Japanese banks are going after the Baht we should be worried but banks in the western world have their own problems.

[geriatrickid]

The same problem has occurred in Canada and Switzerland, although the problem was more serious. The inflow of funds caused the currencies to soar to the point where both countries exporters have suffered for their strong banking systems and financial strength. However, now Canada is having it's currency slowly go down as money flows back to the USA. Although some western economies are in trouble, the banking systems of many are still strong. Countries such as Sweden, Denmark and Norway are robust. Even the Netherlands with its problems still has a strong reliable banking sector. Yes the PIGS are in trouble, but they have been in trouble for some time. The issue in Asia is due in large part to the manner in which China manages its currency. The big difference in the west is that there is a degree of transparency and oversight. When the bubble explodes in China, there will be no soft landings. All Thailand can do is try and manage not to drwon when China makes its waves.

[bkk_mike]

Common sense says they can't run out of money when trying to stop the baht RISING, because how you do that is by using baht to buy foreign currency, and the Bank of Thailand can literally start up the printing presses if required for that. (In the same way that the Swiss have done to stop the Swiss Franc rising too much against the Euro).

You can only run out of money when you're trying to support a price where the market is trying to push it lower, as in that case you need to use your foreign currency reserves to buy your own currency, and you can't print the foreign currencies (unless you're North Korea )

[Naam]

The same problem has occurred in Canada and Switzerland, although the problem was more serious. The inflow of funds caused the currencies to soar to the point where both countries exporters have suffered for their strong banking systems and financial strength. However, now Canada is having it's currency slowly go down as money flows back to the USA. Although some western economies are in trouble, the banking systems of many are still strong. Countries such as Sweden, Denmark and Norway are robust. Even the Netherlands with its problems still has a strong reliable banking sector. Yes the PIGS are in trouble, but they have been in trouble for some time. The issue in Asia is due in large part to the manner in which China manages its currency. The big difference in the west is that there is a degree of transparency and oversight. When the bubble explodes in China, there will be no soft landings. All Thailand can do is try and manage not to drwon when China makes its waves.

side note on Netherlands. one of the big Dutch bank was nationalised only a few weeks ago. shareholders and bondholder were expropriated by the Dutch government with a simple statement on a friday evening.

The expropriation of shareholders and bond holders of the Dutch Bank "SNS Bank" by the Minister of Finance was legitimate, as the Administrative Law Division of the Council of State has ruled in its judgment today, the 25th of February 2013.

The judges of the Council of State have only partially annulled the decision of the Minister of Finance of 1 February 2013 to expropriate securities and capital components of SNS Bank and SNS Reaal. The expropriation of securities, including shares, subordinated bonds and participation certificates and the subordinated private loans, is in accordance with the law; however the judges held that future claims could not be taken into public ownership.

http://www.cmslegal.com/judgment-on-expropriation-of-dutch-sns-bank-25-02-2013

[paz]

Common sense says they can't run out of money when trying to stop the baht RISING, because how you do that is by using baht to buy foreign currency, and the Bank of Thailand can literally start up the printing presses if required for that. (In the same way that the Swiss have done to stop the Swiss Franc rising too much against the Euro).

You can only run out of money when you're trying to support a price where the market is trying to push it lower, as in that case you need to use your foreign currency reserves to buy your own currency, and you can't print the foreign currencies (unless you're North Korea )

Absolutely correct. Add to that, inflation rate is within levels coherent with a growing economy, sovereign debt is relatively small, import/export flow is favorable, one sees that it takes an huge imbecil to say they are "short of funds".

Edited March 20, 2013 by paz

[reflectionx]

BOT run out of ink? Just go to Staples and buy some ... Seriously, ridiculous rumour ...

Obviously they don't want to bring the currency down. They don't even need to print the money to do it: look at Canada, they don't print money, but Carney speaks out and delivers trim outlook for the economy (still in the growth though!) and the looine lost 3-4% against USD and euro in 1 week.

Thailand is not on Pluto, every other country on Earth is trying to devaluate their pesos (including neighbors Malaysia, Philippines), whereas Thailand, where exports account for 2/3 of the economy, is blooming and blossoming.

I'd be really curios to see some non-manipulated stats about exports, employment, new contracts, etc, but this ain't happening, not in Thailand anyway.

All it takes is few words, but their words actually encourage the appreciation. We can only guess why they are doing it, only time will show. Everything else is chitchat ...

[paz]

All it takes is few words, but their words actually encourage the appreciation. We can only guess why they are doing it, only time will show. Everything else is chitchat ...

Because as long exports and tourism are not seriously affected (and with the mild leves of appreciation of today they are not), a strong currency is something very good. It allows, for example, to finance oneself internationally very cheaply, Or to gain political support in those that can personally take advantage of the exchange for business, imported goods or travel. That is how the US kept the world under check after Britton Woods.

Then if the problem happens later, it is easy to correct as somebody noted. Japan, with their former hiper conservative monetary policy, set an example NOT to follow.

[Time Traveller]

ah too high Thai bath will not help exporters ..and Thailand is a major one .... Who is speculating on the Thai currency ? Countries like Malaysia , Vietnam will benefit about this issue as many already moved their factories in those countries.

It's highly unlikely appreciation is due to speculation on the Thai baht. More likely it's appreciating due to a combination of export earnings being repatriated by thai companies, foreign direct investment and net portfolio investment in thai stocks and bonds.

If there was a problem of solvency, people would be selling the baht, not buying it as they are now.

Edited March 21, 2013 by Time Traveller

[reflectionx]

All it takes is few words, but their words actually encourage the appreciation. We can only guess why they are doing it, only time will show. Everything else is chitchat ...

Because as long exports and tourism are not seriously affected (and with the mild leves of appreciation of today they are not), a strong currency is something very good. It allows, for example, to finance oneself internationally very cheaply, Or to gain political support in those that can personally take advantage of the exchange for business, imported goods or travel. That is how the US kept the world under check after Britton Woods.

Then if the problem happens later, it is easy to correct as somebody noted. Japan, with their former hiper conservative monetary policy, set an example NOT to follow.

Haven't seen much data lately related to export and tourism. And even if there is, one might doubt it's truthfulness ... The govt might keep telling that Thailand is doing great, but that's not what my in-laws think; they say the buying price of the palm tree seed went from 6 baht in November down to 3 baht lately. Probably the govt statement encompasses the big corps and corrupted politicians, but not the Average Joe who is trying to make living working their butts off ... Or it could be that my in-laws are complainers ...

For one thing I completely disagree - if the problem happens sooner or later, it won't be easy to fix! Once investor settle elsewhere in a stable low-cost environment, why would anyone come back? Fool me once, shame on you, fool me twice ...

[pitrevie]

Once these trillion baht infrastructure projects get approval and underway we should see a large outlow of Thai baht.

[JGregory]

reflectionx

I'd be really curios to see some non-manipulated stats about exports,employment, new contracts, etc, but this ain't happening, not in Thailand anyway.

All it takes is few words, but their words actually encourage the appreciation. We can only guess why they are doing it, only time will show. Everything else is chitchat ...

You are so right... and thanks for wrapping up this thread succintly and putting my own research about the strong Thai baht to rest. Doesn't really matter till it matters

Even Japan and Switzerland are devaluing currency in the race to get a bigger piece of the exports pie for their own commodities. Eventually, this has to catch up to the blooming economy here. Strong currency... they go to Manila to buy shiploads rice, and tourists stop coming to TH when the crappy exchange rate gets in the news.

It will change. Soon I hope, big hit on the USD since I first arrived here

Edited March 22, 2013 by JGregory