Thai Govt Won't Act To Halt Baht's Rise

[webfact]

Govt won't act to halt baht's rise
Business Reporters
The Nation

Currency hits 16-yr high; govt spending will ease pressure on unit, Kittiratt says

BANGKOK: -- Financial authorities yesterday remained adamant that they would not intervene in the foreign-exchange market despite renewed calls for action from the private sector as the baht strengthened to a 16-year high of 29.14 to the US dollar on waves of capital inflows.

"There will be no measure to intervene in the foreign-exchange market," Deputy Prime Minister Kittiratt Na-Ranong said.

Kittiratt, also the finance minister, urged patience, saying the imports that would account for half of the government's Bt2-trillion infrastructure investment plan would balance the forces pushing up the currency.

"The plan should kick off late this year or early next year. Until then, everyone needs to live with the appreciation," he said.

He showed little sympathy for some of the grumblers, saying an ill-advised response by authorities could backfire.

"For those seeking short-term gains, they can't complain when facing losses," he said.

"An unconventional measure will only ruin confidence among the global community," he said.

The Bank of Thailand is the authority in full charge of currency stabilisation, he said. However, the central bank should have lowered the policy rate when the baht was trading above 31 per greenback. A rate cut is the real solution while the government has taken other steps like introducing incentives for machinery imports, he added.

Bank of Thailand Governor Prasarn Trairatvorakul also said there was no need for special remedies despite the "rapid appreciation".

Thailand's economic success story is drawing in funds, while foreign players are skittish about the election in Malaysia and chronic current-account deficits in Indonesia, he said.

The baht matched 1997's peak of 29.14 after advancing 0.8 per cent yesterday, the biggest gain since January 2. The currency is up nearly 2 per cent this month and 4.7 per cent this year, though four other major currencies in Southeast Asia declined this month.

The robust recovery has continued to attract international attention, mostly to the bond market. After net buys of $6.4 billion (Bt186.2 billion) in the first two months, this month foreigners have bought $2.4 billion net of local bonds.

This month alone, foreign net buys of Thai stocks reached Bt8.89 billion after net buys of Bt6.5 billion ($250 million) in the first two months. Worries over the euro zone's future following the Cyprus episode as well as possible forex intervention have weighed on market sentiment in the past three days, after the Stock Exchange of Thailand (SET) Index zoomed to a 19-year high last week. Most Asian stocks yesterday declined amid concern that Cyprus' rejection of a bailout plan shows Europe will struggle to contain its debt crisis.

"The [Thai] economy is very solid and the central bank seems to be quite tolerant with the baht's gains," Kozo Hasegawa, a foreign-exchange trader in Bangkok at Sumitomo Mitsui Banking Corp, told Bloomberg. "But because the pace of appreciation was so fast, the tolerance doesn't mean they won't intervene at all, and we may see some correction soon."

Standard Chartered Bank sees the baht ending the year at 29.75, versus 29.10 forecast by Nomura. Kasikornbank has 28.50 in mind.

Thiti Tantikulanun, head of capital markets at KBank, admitted that the baht yesterday was not dancing in line with regional currencies. He attributed that to massive dollar sales by exporters, who fear further appreciation, which would reduce their income in baht terms.

"That's on top of inflows to the bond market, which is the major driver behind the appreciation," he said. While dollar sells will continue, he discounted the baht trading above 29 in the short term.

Vallop Vitanakorn, vice chairman of the Federation of Thai Industries, said that if the central bank announces no measure this week, the FTI will seek a meeting with its governor.

Kasikorn Research Centre estimates that every 1-percentage-point rise in the baht would shave 0.30 percentage point off of economic growth.


-- The Nation 2013-03-21

[allalong]

How false can it be when a country,s currency strength against others is based on speculation?

China has the best policy."We will tell the markets what value our currency is worth."

Edited March 21, 2013 by allalong

[lemoncake]

Everything that goes up must come down. The higher it goes the harder it falls.

I do not think Thai government is looking at the big picture, the future and consequences.

Once costs outweigh the benefits, many will make the move , and once they moved , they will not be returning.

I am talking about manufacturing giants

[Soupdragon]

Who benefits from a strong Baht. ?

Would it favour someone wanting to move large amounts offshore ?

[IrishIvan]

I thought one of Yinglucks election promises was to weaken the baht by 25 %

[Payboy]

Govt won't act to halt baht's rise

How does that help the price of Thai rice?

[allalong]

The strength of the Thai Baht."a mile wide and half an inch deep"

[Naam]

all above postings should be submitted to the Nobel Prize committee who's members will have a hard time to decide whom to award the next prize in economics.

[chainarong]

I am sure that the treasury department would have assessed the situation , talked daily with counterparts in other countries, They know the game , I see no reason to interfere in a free market ???

[saltandpepper]

Bring it to 1 Euro = 20 Baht or less for 2 days, let me process the transfer i have to make to Europe, and bring it back immediately to 1 Euro = 45 Baht

Everyone happy, especially me!

[Payboy]

all above postings should be submitted to the Nobel Prize committee who's members will have a hard time to decide whom to award the next prize in economics.

I must respectfully decline that recognition owing to the fact that it basically signals the end of ones career.

[pedro01]

Who benefits from a strong Baht. ?

Would it favour someone wanting to move large amounts offshore ?

I don't think there's a conspiracy going on.

Controlling the value of the Baht whilst it is still afloat on the open market - is beyond the control of the government.

[Pib]

Govt won't act to halt baht's rise

Incorrect...key govt officials act everyday....they are Oscar award winning actors...and they all have expert script writers that allow them to shift the story line at a moment's notice. Well, I take that back about "all" have expert script writers....Deputy Prime Minister Chalerm don't use writers as he's improvises.

[Soupdragon]

Who benefits from a strong Baht. ?

Would it favour someone wanting to move large amounts offshore ?

I don't think there's a conspiracy going on.

Controlling the value of the Baht whilst it is still afloat on the open market - is beyond the control of the government.

So the headline should read Govt can't act to halt baht's rise ?

[Thai at Heart]

The last crisis was caused by having a fixed exchange rate.

Now we have a "managed" float, with management that isn't ever going to be strong enough to neutralise massive capital inflows. GDP growth looks ok, inflation is ok, a strengthening currency isn't a sign of crisis. Exporters are under some pressure, but it isn't so simple, since a huge amount of exported goods rely on imported raw materials and components. The only completely home grown export industry is agriculture, but even that relies on imported fertilisers.

So, ok, if and when the EU, US and UK, get into better shape, the money will move back out of the country and the baht will reduce. It isn't rocket science, but to intervene with capital measures causes big issues in the short term, and will destabilise the market, so I say, go with the flow, the cost of intervening is too high.

[MAN2SIN2BKK]

Someone is making a pile of cash with the baht being high....................... especially the Merc and BMW distributors; their prices have not taken account of the baht being 38 to the Euro instead of 50+

[IMA_FARANG]

For the short term, probably for at least 6 months or perhaps a year the foriegners will just have to live with unfavorable exchange rates for the Dollar and the Pound.

Foe one thing, the Dollar and the Pound are NOT safe currencies anynore due to unwise and possibly disasterous monetary policies in those countries.

By which I refer to the debt load those countries are currently shouldering .... borrowing is another way to put it,,,, they seem to have forgotten borrowing has to be repaid sometime.

The stupid policy of printing extra money ... Quanitative Easing they call it... is a recipe for future disaster

In comparison the return on loans and investing money in Asia seems good compared to the returns on lending to the U.S., the U.K., or the Eurozone countries.

Thailand is considered to be part of that "healthy" Asian group and is therefore attracting investors in looking for a good short term profit.

HOWEVER, there are always the chances of political problems and worse in Thailand.

The problems of 2010 and the political disvisions shown in Thailand then are NOT resolved ... very far from it in fact.

So it's always possible that such political problems will return to the streets of Bangkok again.

If so, no one can safely say what will happen in Thailand.

Things COULD get very nasty yet ... and the Baht will fall faster than it is rising.

And as for the SET (Stock market in Thailand) it is a small and tightly controlled market that can easily drop hard anytime.

Edited March 21, 2013 by IMA_FARANG

[webfact]

Central bank chief calms concern on baht’s strength
By English News



BANGKOK, March 21 – Thailand’s central bank chief admitted that the Thai baht has strengthened too rapidly, mainly due to speculation and manipulation by currency traders and buyers.

In yesterday's economic cabinet meeting, Bank of Thailand (BoT) Governor Prasarn Trairatvorakul explained that the appreciating Thai currency was not related to huge inflows of foreign capital.

Describing the global monetary market as unstable, he said the Thai economy has fared positively amid news in neighbouring countries that has shaken foreign investor confidence.

“Malaysia is approaching a general election while Indonesia is having a budget deficit. Singapore is encountering a property bubble,” he said.

The BoT governor said the volume of capital inflow to Thailand has not been unusually large, and has mainly been for investment in long-term bonds.

Investment of foreign capital in short-term bonds reached Bt800 billion while the ratio of foreign ownership has increased from 5-6 per cent to 12-15 per cent of the total Bt4 trillion in bond investment, he said.

This is not unusual compared to Indonesia and Malaysia where foreign investors own local short-term bonds at 40 per cent and 30 per cent respectively, he said.

Mr Prasarn said the sharp decline in the Thai stock market index in the last two days was unrelated to central bank activities. (MCOT online news)


-- TNA 2013-03-21

[Huayrat]

Soon be worried if buisness ppl move to vietnam or malaysia

Edited March 21, 2013 by metisdead
: Font

[hellodolly]

I am sure that the treasury department would have assessed the situation , talked daily with counterparts in other countries, They know the game , I see no reason to interfere in a free market ???

You are overlooking the fact that the Minister of Finance claims it is OK to lie and he was backed up by the PM in a cabinet reshuffle when he was left in the same position.

How are we supposed to know what the government plans to do with people like that in charge.

The best method would be to look at their personal finance dealings and see which way it would have to ff=go for their personal gain,

[muratremix]

Am I the only one thinking that PTP is trying to bankrupt Thailand anyway they can? First Rice scheme, Then there is First car Rebate and now stronger than ever Thai baht for export oriented Thai economy? Oh, don't forget 300 baht / day min. salary so everybody can increase price of food, services and more!

I wonder when companies will begin to move other countries? And who plans to buy Thailand at a bargain price with 400 billion (estimated) net worth.

[jamesdoe1234]

Who benefits from a strong Baht. ?

Would it favour someone wanting to move large amounts offshore ?

I don't think there's a conspiracy going on.

Controlling the value of the Baht whilst it is still afloat on the open market - is beyond the control of the government.

So what's Abe and Co doing in Japan at the moment?

You do not understand currency manipulation. Please search monetary easing, Interest rate manipulation or similar and it's effect on Forex, then remove your comment.

[sscsamui]

May be someone in Dubai is part of huge inflows of foreign capital... Just a thought...

[meatboy]

whats left to promote the land of smiles,i can only think of 1 the weather

[Payboy]

whats left to promote the land of smiles,i can only think of 1 the weather

Ramping up the cloud seeding should take care of that.

[alant]

I find it hard to complain when my homeland manipulates its currency in the opposite direction in a headless chicken act to sort out the mess it is in.

[MaxLee]

So in really simple terms for the sake of the government if guess it means:

"Do nothing, let it happen, let the nation suffer, rip even more tax money off from the nation and uninformed lost-in translation foreigners with those so called Mega Projects which in reality are nothing more than face saving scams."

[lemoncake]

Central bank chief calms concern on baht’s strength

By English News

BANGKOK, March 21 – Thailand’s central bank chief admitted that the Thai baht has strengthened too rapidly, mainly due to speculation and manipulation by currency traders and buyers.

In yesterday's economic cabinet meeting, Bank of Thailand (BoT) Governor Prasarn Trairatvorakul explained that the appreciating Thai currency was not related to huge inflows of foreign capital.

Describing the global monetary market as unstable, he said the Thai economy has fared positively amid news in neighbouring countries that has shaken foreign investor confidence.

“Malaysia is approaching a general election while Indonesia is having a budget deficit. Singapore is encountering a property bubble,” he said.

The BoT governor said the volume of capital inflow to Thailand has not been unusually large, and has mainly been for investment in long-term bonds.

Investment of foreign capital in short-term bonds reached Bt800 billion while the ratio of foreign ownership has increased from 5-6 per cent to 12-15 per cent of the total Bt4 trillion in bond investment, he said.

This is not unusual compared to Indonesia and Malaysia where foreign investors own local short-term bonds at 40 per cent and 30 per cent respectively, he said.

Mr Prasarn said the sharp decline in the Thai stock market index in the last two days was unrelated to central bank activities. (MCOT online news)

-- TNA 2013-03-21

But the other week, they came up with a strategy not to limit/limit foreign investment and today its not due to foreign investment

[goatfarmer]

Plaudits to Mr Kittiratt. He seems to have learnt the lesson: governments cannot alter the trend of a free (or managed) floating currency. They can only alter the rate at which the trend proceeds, which is an expensive and ultimately futile exercise. I'm with Pedro and Thai at Heart (above). The currency will balance itself when exports get too expensive and when hot money flows out of the stock market after it finally crashes (not holding my breath).

[Thai at Heart]

Plaudits to Mr Kittiratt. He seems to have learnt the lesson: governments cannot alter the trend of a free (or managed) floating currency. They can only alter the rate at which the trend proceeds, which is an expensive and ultimately futile exercise. I'm with Pedro and Thai at Heart (above). The currency will balance itself when exports get too expensive and when hot money flows out of the stock market after it finally crashes (not holding my breath).

Well, the only way to avoid a very quick crash, is to let it balance itself gradually. Fix the currency, or restrict the capital account, and when it goes it will be a big whammy. Allowing the rate to move with the flows, at least allows the pressure to be taken out gradually. Thai interest rates also have some space left in them to be reduced to stimulate domestic consumption should the economy start to really slow down. But to move them now to reduce capital inflow, would only put more fuel on the fire of the domestic construction industry.