Thai Baht in biggest weekly fall in four months after US Fed move

[webfact]

Baht in biggest weekly fall in four months after Fed move
Chairat Srisuk
The Nation

BANGKOK: -- The baht has had its sharpest weekly decline in four months, following the US Federal Reserve's announcement that it would reduce its monetary stimulus programme during the course of next year.

Bank of Thailand spokeswoman Roong Malikamas yesterday said the baht's depreciation was largely in line with its regional peers after the Fed's announcement, but the Thai currency was weakening more than others due to the country's political problems.

"The depreciation in the baht was triggered by the Fed's tapering [of quantitative easing]," Bloomberg quoted Kozo Hasegawa, a foreign-exchange trader at Sumitomo Mitsui Banking in Bangkok, as saying. "In the short term, the baht will remain under a gradual weakening basis. Thailand's political uncertainty will probably make it hard for investors to buy Thai assets."

The baht had fallen 1.8 per cent this week to 32.63 per US dollar as of 3.38pm yesterday in Bangkok, according to Bloomberg - the biggest weekly fall since August 23.

The unit dropped 0.5 per cent and touched 32.65 per dollar earlier in the day, the weakest level since June 2010. It has lost 4.3 per cent so far this quarter.

On Thursday, the baht lost 0.4 per cent, Singapore's dollar weakened 0.2 per cent, Indonesia's rupiah dropped 0.2 per cent and India's rupee fell 0.1 per cent.

Less uncertainties

At their joint meeting yesterday, the central bank's Monetary Policy Committee and Financial Institutions Policy Committee noted that the Fed's decision had reduced uncertainties in the financial market, but volatility would remain.

They were of the view that while financial risks were lower than in previous months - with declines in household debt, property sales and loan extension - economic risks were on the downside, with lower-than-expected private and public spending and limited export recovery.

Moreover, political chaos has dented investor confidence.

Though corporate finances remain in good shape, companies' earnings have tended to drop - particularly among small and medium-sized enterprises - due to economic deterioration.

While saying that the banking sector remained in good health, the two committees consider political instability and capital flow-driven volatility will be the two key factors affecting economic and financial stability.

On Wednesday, the Fed announced it would taper its monthly bond purchases by US$10-billion (Bt326 billion) increments over the next seven meetings, before ending the programme in December next year. The Fed's statement was accompanied by caution this time, unlike the previous ones that caused markets to panic.

Roong said that although given previous adjustments, money markets had not moved with high volatility, there could be market volatility if anything unexpected were to arise.

She conceded that Thailand's political uncertainties may affect capital movement.

Capital is expected to flow out of the Kingdom because of reduction in the US stimulus, Bloomberg quoted Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board, as saying in a national television broadcast recently.


-- The Nation 2013-12-21

[EricBerg]

The US still are printing over 80 BILLION usd each and every month. That is 1 TRILLION usd a year. Ditch the usd as standard or go down with it.

[soi41]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

[EricBerg]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

The rice scheme has a way higher influence than all of Sutheps actions. Any idea where that scheme came from?

Edited December 20, 2013 by EricBerg

[casindonet]

40 to a dollar would be nice....back to the good old days.

Sent from my GT-I9200 using Thaivisa Connect Thailand mobile app

[jaltsc]

The more the Thai government tries to save face the more baht goes into our pockets. Keep up the good work .

[lovetotravel]

The US still are printing over 80 BILLION usd each and every month. That is 1 TRILLION usd a year. Ditch the usd as standard or go down with it.

Actually, it's 75 billion now. And with a recently reported growth of 4.1%, the USD isn't going down any time soon. At least not in our lifetimes. There nothing out there to replace it. Bitcoins? 55555

http://money.cnn.com/2013/12/20/news/economy/gdp-report/index.html?iid=SF_E_LN

Economists at Jefferies & Co. expect the economy to grow 3.3% next year. That would be the biggest level of annual growth in ten years. They also expect the job market to finally replace all the private sector jobs lost in the recession.

[Suradit69]

The more the Thai government tries to save face the more baht goes into our pockets. Keep up the good work .

Right. When it comes to saving face (or more accurately trying to save one's butt), Thailand is out spent by a country mile by the desperate antics of the US, UK, Japan, and others. And as everyone has more and more baht, dollars, pounds, whatever in his/her pocket, it gets spent at a faster pace to keep up with price inflation. So far it's been subdued, but right now think about how much a typical trip to the supermarket costs you today compared to 10 years ago and then think what it will be over the next ten years.

I remember when I could go to Friendship, buy a fair amount and get change for a Baht 1000 note. Yesteday I went to Central Festival supermarket and didn't get much back from Baht 6000.

From December 2008 to the end of last year, total US debt increased from $10.7 trillion to $15.2 trillion, an increase of $4.5 trillion. However, only $2.9 trillion of this amount was borrowed from investors; the $2.9 trillion came from US investors, insurance companies and more than half from foreign countries and international investors. The remaining $1.6 trillion came mostly from the Federal Reserve.

http://www.forbes.com/sites/matthewcampione/2012/04/20/quantitative-easing-only-in-america/

When the UK embarked on quantitative easing (QE) in March 2009, in the aftermath of the Lehman Brothers collapse, the Bank of England was expected to administer a monetary stimulus equal to £50bn, writes Liam Halligan.

Over the past four years, such "extraordinary measures" have extended somewhat more, with the Bank's bond-buying programme now amounting to £375bn - almost eight times the original estimate ...

http://www.bbc.co.uk/news/business-24614016

Japan's central bank has promised to unleash a massive programme of quantitative easing – worth $1.4tn (£923bn) that will double the country's money supply – in a drastic bid to restore the economy to health and banish the deflation that has dogged the country for more than a decade.

http://www.theguardian.com/business/2013/apr/04/japan-quantitative-easing-70bn

[Lancelot]

I would starve as a currency trader...

I pulled 40k on Dec 19 and received 32.08. Had I waited I would have received around 32.60; about 640 baht more in my pocket.

Even modest changes in the exchange rate add up over the long term

[Card]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

Or rather, regaining it.

[Card]

I would starve as a currency trader...

I pulled 40k on Dec 19 and received 32.08. Had I waited I would have received around 32.60; about 640 baht more in my pocket.

Even modest changes in the exchange rate add up over the long term

Yes, what I have to bring over soon for a car and condo will have increased by about 200,000 baht by the UK pound increasing in value from 50 baht/pound to 53. however, western currencies still have a long way to go to recover what they lost since 2008.

[cloudhopper]

A baht devaluation will inevitably manifest as an increased rate of local price inflation.

[Maipenrai007]

This headline should read "USD strengthens", as it has done against all of the other major currencies this week! I am waiting for the posts now of oh Thailand's doomed, it was bound to happen, Yinluck's fault, yellow/red shirts etc........... Yawn!

Simple fact, the US$ has strengthened globally on the back of the reduced amount of bond purchases from the FED.

Edited December 21, 2013 by Maipenrai007

[Berkshire]

The more the Thai government tries to save face the more baht goes into our pockets. Keep up the good work .

That's a pretty ignorant statement. Clearly, you have no idea how the global financial system works or what effects currency exchange rates.

[X pat]

I am glad to see this,hope it keeps this up for a loooooooooooooooooong time.

[Lancelot]

A baht devaluation will inevitably manifest as an increased rate of local price inflation.

Agreed. Oil is priced mostly in USD, so fuel will rise in Thailand.

And that puts pricing pressure on goods and services.

The hefty increases in the minimum wage, rice support and consumer credit also increases demand.

Too many baht chasing too few products- but its been a GREAT party

[yankee99]

The US still are printing over 80 BILLION usd each and every month. That is 1 TRILLION usd a year. Ditch the usd as standard or go down with it.

The usd might go down but not in our lifetime.

[ginjag]

YIPPEEEEEEEE, from 44 baht to the pound sterling to 54 in a few months, YIPPPPEEEEE

[stoli]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

The rice scheme has a way higher influence than all of Sutheps actions. Any idea where that scheme came from?

Any idea where that scheme came from?

Yes, commonly used in developed countries. The US provides subsidies to most agriculture crops since food in necessary for all of the citizens of that country. You must do everything in your power to see that the farmers keep farming, because without them...well obviously you know the answer to this. It takes a special person to be a farmer, and it is usually passed down from generation to generation. You don't see business people deciding to become farmers. Don't force farmers to become bankers, because you will not have anyone to grow your food supply.

I must say that the Thai government made the wrong decision to pay subsidies and then thinking they could raise the price of rice on the world market. Sheer lunacy. They should have just risen taxes to support the subsidies and be done with it. Thinking they could move the market price of rice around the world was their downfall here, and made it seem like the entire program (scheme) was faulty. Not so, just their implementation. They were correct in supporting the farmer. (And no, I have never been a farmer. You could never get me to work that hard for so little.)

[kevinc]

The US still are printing over 80 BILLION usd each and every month. That is 1 TRILLION usd a year. Ditch the usd as standard or go down with it.

The usd might go down but not in our lifetime.

...That depends on how old we are. I personally think the Dollar will go down, my guess is within 10 years, there are many factors that i base my assumption on, here's a few to start... 1) i believe there is no gold left in Fort knox, 2) the sellers of 'paper gold' (again in my opinion) have over sold the contracts by at least 5 times. 3) One of the reasons the Dollar keeps its value is that to buy oil the price is in Dollars so oil has to be purchased (from Saudi etc) in Dollars therefor other countries use Dollars for this purpose, soon however i believe there will be a change to this (Russia, China or India) will trade their currency direct for oil thus stunning the Dollar, add that to the $17.2 Trillion Dollars of the US nationel debt will maybe not kill the Dollar outright but it will make it pretty worthless.

[rreddin]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

The rice scheme has a way higher influence than all of Sutheps actions. Any idea where that scheme came from?

Any idea where that scheme came from?

Yes, commonly used in developed countries. The US provides subsidies to most agriculture crops since food in necessary for all of the citizens of that country. You must do everything in your power to see that the farmers keep farming, because without them...well obviously you know the answer to this. It takes a special person to be a farmer, and it is usually passed down from generation to generation. You don't see business people deciding to become farmers. Don't force farmers to become bankers, because you will not have anyone to grow your food supply.

I must say that the Thai government made the wrong decision to pay subsidies and then thinking they could raise the price of rice on the world market. Sheer lunacy. They should have just risen taxes to support the subsidies and be done with it. Thinking they could move the market price of rice around the world was their downfall here, and made it seem like the entire program (scheme) was faulty. Not so, just their implementation. They were correct in supporting the farmer. (And no, I have never been a farmer. You could never get me to work that hard for so little.)

Do not forget that the Thai government is also supporting rubber growers, most of whom are in the south. The world over supply will get worse as vast new plantations in neighbouring countries start producing latex. This scheme has tha potential to dwarf the problems with the rice pledging scheme.

[Maipenrai007]

The US still are printing over 80 BILLION usd each and every month. That is 1 TRILLION usd a year. Ditch the usd as standard or go down with it.

The usd might go down but not in our lifetime.

...That depends on how old we are. I personally think the Dollar will go down, my guess is within 10 years, there are many factors that i base my assumption on, here's a few to start... 1) i believe there is no gold left in Fort knox, 2) the sellers of 'paper gold' (again in my opinion) have over sold the contracts by at least 5 times. 3) One of the reasons the Dollar keeps its value is that to buy oil the price is in Dollars so oil has to be purchased (from Saudi etc) in Dollars therefor other countries use Dollars for this purpose, soon however i believe there will be a change to this (Russia, China or India) will trade their currency direct for oil thus stunning the Dollar, add that to the $17.2 Trillion Dollars of the US nationel debt will maybe not kill the Dollar outright but it will make it pretty worthless.

Looks like you've been to YouTube economics 101 class?

Doesn't matter if you have more gold than me your in you cupboard, if I have a bigger guns and a bigger army/navy/airforce than you I can just come over to your house shoot you and take it.

The current USD paradigm is here for a long time yet!

Edited December 21, 2013 by Maipenrai007

[BlackArtemis]

Brought money in when it was 29, now I have to move back in June, this is going to hurt

[leggo]

Glad the commentators here have such an in-depth understanding of the currency markets!

Sent from my i-mobile IQ 2 using Thaivisa Connect Thailand mobile app

[LALes]

Next week's action:

Do I hear 33? I hear 33 from the gentleman in the rear. Do I hear 34? 34?

[davejones]

40 to a dollar would be nice....back to the good old days. Sent from my GT-I9200 using Thaivisa Connect Thailand mobile app

Good for selfish people like you, but not good for Thai people who want to travel abroad. Funny how so many expats on this forum just think of themselves. Why care about anyone else, as long as you're ok.

[bigbamboo]

That is why Benito Sutheppi is so popular with some posters here!!

He is increasing the value of their pensions!

The rice scheme has a way higher influence than all of Sutheps actions. Any idea where that scheme came from?

Any idea where that scheme came from?

Yes, commonly used in developed countries. The US provides subsidies to most agriculture crops since food in necessary for all of the citizens of that country. You must do everything in your power to see that the farmers keep farming, because without them...well obviously you know the answer to this. It takes a special person to be a farmer, and it is usually passed down from generation to generation. You don't see business people deciding to become farmers. Don't force farmers to become bankers, because you will not have anyone to grow your food supply.

I must say that the Thai government made the wrong decision to pay subsidies and then thinking they could raise the price of rice on the world market. Sheer lunacy. They should have just risen taxes to support the subsidies and be done with it. Thinking they could move the market price of rice around the world was their downfall here, and made it seem like the entire program (scheme) was faulty. Not so, just their implementation. They were correct in supporting the farmer. (And no, I have never been a farmer. You could never get me to work that hard for so little.)

Do not forget that the Thai government is also supporting rubber growers, most of whom are in the south. The world over supply will get worse as vast new plantations in neighbouring countries start producing latex. This scheme has tha potential to dwarf the problems with the rice pledging scheme.

Too much latex? An Eighties fashion revival would solve that problem in no time!

[Cheops]

This headline should read "USD strengthens", as it has done against all of the other major currencies this week! I am waiting for the posts now of oh Thailand's doomed, it was bound to happen, Yinluck's fault, yellow/red shirts etc........... Yawn!

Simple fact, the US$ has strengthened globally on the back of the reduced amount of bond purchases from the FED.

Then why also the Euro and other currencies are getting stronger against the Thai baht? Edited December 21, 2013 by Cheops

[sandhurstmolonski]

Quite Logical ..

Just as the AUD needed to Fall from Great Highs , The Barht has been WAYYY too high also .

Good for Thai exports , and with current unrest it was pretty obviously going to go this way . On a selfish level , Good for me Also .

The Barht will find its correct place over the next few months .

[slipperylobster]

40 to a dollar would be nice....back to the good old days. Sent from my GT-I9200 using Thaivisa Connect Thailand mobile app

That increase would pay my rent and utilities alone.... I already was awarded a free scooter payment this month (as compared to last month).

I would not count on it staying high, so that means no running out and buying a new car, based on projected favorable dollar exchange.