BoT governor says Thailand unaffected, despite QE withdrawal

[webfact]

BoT governor says Thailand unaffected, despite QE withdrawal
By Digital Media



BANGKOK, Jun 17 – The US withdrawal of its monetary stimulus through quantitative easing (QE) will not have a negative impact on Thailand, central bank governor Prasarn Trairatvorakul said today.

He said the US Federal Reserve has yet to make an official announcement but Thailand, with foreign investors’ holding Bt800 billion or US$30 billion in bonds, will not be affected by the upcoming decision.

Foreign ownership of Thai bonds represents 12 per cent of the total bond market, with most being long-term bonds having a 4-5 years’ maturity, he said.

A large lot will be sold in the next two weeks, reducing the percentage to 11 – a volume Mr Prasarn described as minimal compared to the country’s international reserves of US$200 billion.

Even though foreign investors liquidate their bond holdings, the international reserves remain sufficient, he said, indicating that the sales volume in the stock market, at US$ 200-300 daily, is lower than the bond market and still acceptable.

He said the central bank must be cautious and transparent in its monetary policy management. “We can’t jump to one extreme and abruptly change our policy when the situation changes. It will jeopardise the central bank’s credibility.”

He said the central bank has always been prepared to maintain balance in light of volatile money market and it has refrained from putting the international reserve in a single currency basket to avoid burden in the future.

The central bank governor warned that borrowings for infrastructure investment will increase investment costs in the long run and the private sector should be cautious in seeking loans given the possibility of surging US dollars in the future.

He said the central bank has so far absorbed liquidity in the system from Bt4.9-5 trillion to Bt4.7 trillion.

Chantawan Sucharitkul, deputy governor of the Bank of Thailand (BoT), urged the private sector and investors to be especially cautious of capital inflows and outflows due to the baht volatility and investors’ adjustments of their portfolios.

The US Fed’s move on QE must be closely monitored. The BoT will see to it that the currency movement will not affect relevant parties.

The baht surge at 6.4 per cent since early this year was in tandem with regional currencies with the Philippine peso, the Malaysian ringgit and the South Korean won appreciating by 9.03 per cent, 8.53 per cent and 8.55 per cent respectively.

The baht depreciated 2.49 per cent during May 22-June 14 after foreign investors sold their bonds and stocks at Bt90 billion. (MCOT online news)


-- TNA 2013-06-17

[Pib]

Yea, I guess all the financial media reports/shows where they talk about how emerging markets, like Thailand, are feeling the impact of possible Fed QE easing with the funds going back to the U.S. market is just meaningless chit-chat. While a lot of such news is indeed such chit-chat for reporters to fill their daily print quota, I think in this case the probable upcoming QE easing is significantly impacting emerging markets like Thailand. But hey, I know the Thai govt always has to put a happy face on everything...say no impact to the little Thai universe...all is good.

[yoshiwara]

“We can’t jump to one extreme and abruptly change our policy when the situation changes. It will jeopardise the central bank’s credibility.”

That is a message for the PTP Finance minister and the rest of the cabinet.

[HUAHIN62]

Yea, I guess all the financial media reports/shows where they talk about how emerging markets, like Thailand, are feeling the impact of possible Fed QE easing with the funds going back to the U.S. market is just meaningless chit-chat. While a lot of such news is indeed such chit-chat for reporters to fill their daily print quota, I think in this case the probable upcoming QE easing is significantly impacting emerging markets like Thailand. But hey, I know the Thai govt always has to put a happy face on everything...say no impact to the little Thai universe...all is good.

If you are talking about western fanacial media which normally are as far sighted as a mole, you are looking at the wrong media.

Some facts:

1. After the fund outflows from the SET the Baht/US$ depreciated, which is good for Thailand. But the Baht is still strong against most other currencies which indicates that the economic fundamentals is still good.

2. Thai exports contributes 67% to the Thai GDP, with the weaker Baht Thai exports become more competitive, thus a positive for the country. (Did the western madia mention this in their reports)

3. Thailand have too much of its foreign reserves in US$ instruments (not mentioned in reports). The BoT intervened in the foreign currency market last week and off loaded some of their US$ instruments.

4. The Thai bond market is still stable and doesn't show extreme volatility.

Yes funds are flowing out of Thailand but that is not always a bad thing as the strong Baht was hurting exports, the SET was overpriced and everyone knew QE wasn't infinite.

[hawker9000]

Well, the baht has been falling against the dollar recently. Not too dramatically if you look at it from the perspective of many years, but certainly a trend reversal. And it seems like that started at just about the time the US 'no more QE' headlines appeared. Whether that's a "good effect" or a "bad effect" for Thailand depends on your school I guess, but it's undeniably an "effect". As a visitor, if inflation in Thailand doesn't offset it completely, I'd say it's a positive development. The only question is whether to buy (baht) now, or wait for even better to come...

[yoshiwara]

The only question is whether to buy (baht) now, or wait for even better to come...

That's always the question.

[Pib]

The only question is whether to buy (baht) now, or wait for even better to come...

That's always the question.

I'm looking into my crystal ball right now and got pen & paper in hand to jot down its prediction...it's going to answer the question of, "What will be the baht's average monthly exchange rate for each of the next 12 months?", and it says....dam_n...the bulb in the ball just burnt out. By the time I get to Lotus to buy a replacement bulb the alignment of planets won't be right and the crystal ball won't give me the exchange rate info again until the planets realign in the year 2315 (according the zodiac and manual in Chinese that came with the ball). Now, I'm back to flipping a coin on whether the baht trends up or down each month....but that method has been as accurate as the projections by so called FOREX experts....and to be totally truthful as accurate as the crystal ball previous predictions (i.e., before the bulb burnt out).

[Eesat]

Well, the baht has been falling against the dollar recently. Not too dramatically if you look at it from the perspective of many years, but certainly a trend reversal. And it seems like that started at just about the time the US 'no more QE' headlines appeared. Whether that's a "good effect" or a "bad effect" for Thailand depends on your school I guess, but it's undeniably an "effect". As a visitor, if inflation in Thailand doesn't offset it completely, I'd say it's a positive development. The only question is whether to buy (baht) now, or wait for even better to come...

If you're calling a high in the Thai Baht I'd say you'd be wrong,unless they continue to raise interest rates,even by 25 basis points per month.

[yoshiwara]

Well, the baht has been falling against the dollar recently. Not too dramatically if you look at it from the perspective of many years, but certainly a trend reversal. And it seems like that started at just about the time the US 'no more QE' headlines appeared. Whether that's a "good effect" or a "bad effect" for Thailand depends on your school I guess, but it's undeniably an "effect". As a visitor, if inflation in Thailand doesn't offset it completely, I'd say it's a positive development. The only question is whether to buy (baht) now, or wait for even better to come...

If you're calling a high in the Thai Baht I'd say you'd be wrong,unless they continue to raise interest rates,even by 25 basis points per month.

Except the BoT have been continuously reducing interest rates since the end of 2011. Have another go.