Strong Baht: Meeting With Kittiratt Eases Bank Of Thailand Pressure

[webfact]

Meeting eases BOT pressure
Nakarin Srilert,
Sarun Kijvasin
The Nation


Kittiratt

Kittiratt appears to back off call for rate cut, as Prasarn welcomes 'creative' input

BANGKOK: -- Intense pressure on the Monetary Policy Committee to counter the strong baht looked to have eased after the momentous meeting yesterday between the Bank of Thailand, Finance Minister Kittiratt Na-Ranong and the private sector.

Bank of Thailand Governor Prasarn Trairatvorakul said all sides pledged to listen more to the other stakeholders. The central bank would host the next tripartite meeting, he said.

The meeting took place as the baht retreated to near the 30 mark against the US dollar for the first time in four months.

Kittiratt said an interest-rate cut was just "one of a hundred" measures that could be used to deal with the strong currency.

He appeared to be backing off his strong insistence for the central bank to lower its policy interest rate to reduce the baht's appeal.

Kittiratt, who is also a deputy prime minister, described the meeting with central bankers and executives as "having a good atmosphere and beneficial".

Prasarn said he felt no pressure during the meeting, which he described as "creative". "The meeting did not discuss measures to take care of the baht or the policy interest rate. Most of the discussion involved the challenges, both long term and short term, for the Thai economy," he said.

The government and the private sector did not push the Bank of Thailand for a rate cut at the MPC meeting on May 29, he said.

After the meeting in the morning, Prasarn said the overall economic situation was at the centre of the discussion, not specific measures to tackle the baht's appreciation or the policy rate.

The short- and long-term economic outlook was discussed, while the private sector ticked off their troubles ranging from labour shortages and productivity plateaux to competitiveness erosion, he said. It was agreed that all parties are confronting big challenges amid global volatility.

Six of the seven members of the MPC, which is chaired by the central bank governor, attended the meeting at Government House. It lasted a little over two hours. Thong-urai Limpiti, a panel member, was absent due to a busy schedule overseas.

Representatives from the private sector, including the Federation of Thai Industries, Thai Chamber of Commerce and the National Economic and Social Development Board, the government's think-tank, also attended the rare meeting.

The baht climbed 0.3 per cent to 29.69 per dollar as of 3pm in Bangkok after slipping 1.4 per cent in the two days to Friday, according to data from Bloomberg. Earlier, it touched a two-month low of 29.85.

Kittiratt, who initiated the meeting, expected to neutralise the mounting feud between his ministry and the central bank over exchange-rate policy.

The MPC had been pressured to reduce the policy rate to slow down capital inflows that have boosted the baht against the greenback. The Bank of Thailand last week issued a statement explaining why the policy rate could not be cut. One of the reasons is the low real rate, the policy rate minus inflation (see graphic). Thailand's real policy rate as of May 9 stood below 0.5 per cent, making it the second lowest in Asia after Indonesia's.

Prior to the MPC's next regular meeting, the NESDB will release its report on the first-half economic indicators.

Prasarn noted that Kittiratt suggested holding similar meetings in the future and said the BOT would host the next one. He agreed many issues require views from the public to ensure measures are integrated.


-- The Nation 2013-05-14

[A Member]

Wonderful they are all great pals again but what are they doing about easing the strong baht that is hurting exporters ? Well nothing of course as that would involve making decisions.

[chiang mai]

Wonderful they are all great pals again but what are they doing about easing the strong baht that is hurting exporters ? Well nothing of course as that would involve making decisions.

If you look at the exchange rate tables you'll see that USD/THB has been weakening since 22 April and shows 29.68 this morning.

[Thait Spot]

Di Kittirat turn up in his flip-flops?

[yoshiwara]

'Kittiratt, who initiated the meeting, expected to neutralise the mounting feud between his ministry and the central bank over exchange-rate policy.'

Well that's interesting as the central bank is supposed to act independently when it comes to monetary policy.

[lifeincnx]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

[Rosco911]

Wonderful they are all great pals again but what are they doing about easing the strong baht that is hurting exporters ? Well nothing of course as that would involve making decisions.

Correct and to top that our raw material suppliers are starting to increase prices. Why, pure greed at the exporters cost yet again.

[chainarong]

Wonderful they are all great pals again but what are they doing about easing the strong baht that is hurting exporters ? Well nothing of course as that would involve making decisions.

Same as OZ till yesterday, large exporters would be hedging against the Bht on the currency market, only the small fry suffer

[Mampara]

Di Kittirat turn up in his flip-flops?

Do you walk around just in your underpants?

[Thai at Heart]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

You think a 3% change is going to have any significant effect when it is offset by higher import costs for other things?

[harryfrompattaya]

It appears they just talk that they want a weaker baht but they keep interest rate higher they most countries to attach money to Thailand. They been saying the same and the baht keeps getting higher to pound euro and dollar.

What will happen if interest rate were the same as Europe United States or England How much will come here they known it

[chiang mai]

It appears they just talk that they want a weaker baht but they keep interest rate higher they most countries to attach money to Thailand. They been saying the same and the baht keeps getting higher to pound euro and dollar.

What will happen if interest rate were the same as Europe United States or England How much will come here they known it

Inflation, big time.

[chiang mai]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

You think a 3% change is going to have any significant effect when it is offset by higher import costs for other things?

The majority of Thai's don't spend any money on imports.

[Thai at Heart]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

You think a 3% change is going to have any significant effect when it is offset by higher import costs for other things?

The majority of Thai's don't spend any money on imports.

Even farmers use diesel, duh.

[Neilly]

BANGKOK: -- Intense pressure on the Monetary Policy Committee to counter the strong baht looked to have eased after the momentous meeting yesterday between the Bank of Thailand, Finance Minister Kittiratt Na-Ranong and the private sector.

My guess would be that he was starting to get squeezed and needed an out

[paulmw]

Also on Friday Vietnam lowered their currency 3 percentage points to keep their exports on track.

[ataloss]

#6 "...while those at the top move their money outside to invest while taking full advantage of the rate...."

I'd say so.

Just like last time, the Baht won't decline significantly until word is in, all vested interests have their Baht outside Thailand.

[khunken]

It's impossible to satisfy every lobby group with the Baht exchange rate. Too high - exporters complaining; too low - importers complaining. In the middle - both sides complaining.

One very large group that hasn't a lobby and rarely gets a look in - is consumers. Actually the BOT are the only ones that looks at the effect of the rate on consumers. They are currently worried about inflation & rightly so.

I buy a lot of meat, vegetables & fruit from my local (wet) market and prices have risen substantially in recent months. A lot of what I buy is the same as what Thais buy.

What Kittirat & his ilk refuse to acknowledge is that the minimum wage increases have led to higher prices. In addition the strong Baht is used as an excuse for the party being unable to sell Thai rice openly on world markets.

It really is about time for PTP to allow the (up to now) independent BOT deal with the Baht in the best interests of the whole country. They're not doing a bad job.

[chiang mai]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

You think a 3% change is going to have any significant effect when it is offset by higher import costs for other things?

The majority of Thai's don't spend any money on imports.

Even farmers use diesel, duh.

Which, since it's paid for in Dollars becomes cheaper as the Baht strengthens, but I was actually refering to discretionary imports, Homer!.

[Naam]

#6 "...while those at the top move their money outside to invest while taking full advantage of the rate...."

I'd say so.

Just like last time, the Baht won't decline significantly until word is in, all vested interests have their Baht outside Thailand.

it's all a big conspiracy of those bad Thais who hate us foreigners

[Naam]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

the "writing on the wall" is done by an ignorant writer who is

obviously not aware that Thailand is also a big importer.

here some figures for any ignorant journalist and resident poster:

Naam, on 10 May 2013 - 03:58, said

"artificially strong Baht hurts exports, therefore not sustainable"

is heard over and over again without taking into consideration that the

strong Baht is positive for imports.

here's the beef:

Thailand exports 2012..........$226.2 billion

Thailand imports 2012..........$213.7 billion

Difference............................$ 12.5 billion (5.585%)

improvement compared to 2011 when the ex/import difference was 8.412%.

it goes without saying that the positive effect of lower import prices does not

necessarily fully benefit the exporters. but it's the bottom line that counts no

matter what any wisecrack might argue.

[Thai at Heart]

A 29.68 baht is far from sufficient weakening - it's pure pandering.

For over a year the Thai Exporters Assoc. has repeatedly stated the baht needs to be around 31 to remain competitive in the Southeast Asia market. Alas, it just falls on deaf ears while those at the top move their money outside to invest while taking full advantage of the rate. Look at the tax levied on imports - absurd, so Thais are being screwed both ways. When (not if) this bubble bursts there will be so much egg on these faces that won't be able to see the finger-pointing at them.

Here's just one 'writing on the wall' example...http://www.nationmultimedia.com/business/High-prices-strong-baht-batter-exports-30205723.html

the "writing on the wall" is done by an ignorant writer who is

obviously not aware that Thailand is also a big importer.

here some figures for any ignorant journalist and resident poster:

Naam, on 10 May 2013 - 03:58, said

"artificially strong Baht hurts exports, therefore not sustainable"

is heard over and over again without taking into consideration that the

strong Baht is positive for imports.

here's the beef:

Thailand exports 2012..........$226.2 billion

Thailand imports 2012..........$213.7 billion

Difference............................$ 12.5 billion (5.585%)

improvement compared to 2011 when the ex/import difference was 8.412%.

it goes without saying that the positive effect of lower import prices does not

necessarily fully benefit the exporters. but it's the bottom line that counts no

matter what any wisecrack might argue.

What percentage of these imports are parts and components that turn straight back around and leave the country after assembly?

An awful lot. Take with one give with the other.

[ginjag]

Just stepping asside from exports and imports, interest rates-infltion-and the other B s##T,

My take is it is kept this way for 1 reason only, Big Power VIPs and the like are making a bomb with the exchange rate at this level there are Millions making Billions.

Buying a condo at 750,000 bht 10 years ago====10 thousand pounds or near.-----now sell it at 1 million and turn it into pounds, at the rate of 45 bht to the pound sterling, 20 thousand pounds or near....................if it can be done by me or a foreigner what are the posh elite doing.???