BOT won't intervene in strengthening baht

[webfact]

BAHT
BOT won't intervene in strengthening baht
Erich Parpart
The Nation

BANGKOK: -- The Bank of Thailand is not worried about the strengthening baht and will not intervene through policy as it believes the movement of the national currency is due to external factors.

BOT spokeswoman Dr Roong Mallikamas said the recent strengthening was caused by the eaker US dollar.

She said the US market had expected that country's Federal Reserve to raise the benchmark interest rate in its last meeting but because of lower-than-expected indicators in many sectors, Fed chairwoman Janet Yellen said short-term rates would remain low indefinitely.

Roong said the lower-than-expected recovery in various US economic indicators, such as the employment rate and non-farm payroll, had led the Fed to maintain its current relaxed monetary policy.

She said that since the US benchmark interest rate remained low and the country's economic recovery was slower than expected, the dollar was weaker and the baht stronger.

Roong explained that when the BOT analysed the currency situation, it did not compare the baht to the US dollar only but also to competing currencies in this region. When that comparison was made, the baht was in the middle level.

According to the BOT website, the baht was trading at 32.35 per US dollar yesterday, which represents an increase of 1.1 per cent from 32.72 on March 3.

For other countries in this region, the Singapore dollar strengthened 2.36 per cent from 1.27 per dollar on March 3 to 1.24 yesterday.

The Indonesian rupiah strengthened 2.22 per cent from 11,590 to 11,332 per dollar in the same period, while the Malaysian ringgit strengthened 1.82 per cent from 3.28 to 3.22. The Philippine peso strengthened 1.05 per cent from 44.71 to 44.24 per dollar.

"The baht did not swing up that much and currency fluctuation is a normal thing," Roong said.

Meanwhile, funds in the portfolios of foreign investors have been on an outflow trend since the beginning of the year but the funds in the Stock Exchange of Thailand have been on a net-buy trend since the beginning of March. As a result, the overall outflow lessened.

As of Wednesday, foreign net buys in the SET were equal to Bt1.726 billion.

As for reserves, Roong said commercial banks should have plenty of "cushions" because in the past 10 years they had made enough profits to have sizeable funds in their reserves and they should be able to cater to customers with ease.

Commenting on China's falling exports and imports, Roong said this was expected, since the country had been over-invoicing last year, which led to lower export numbers.

She said that even though the downbeat headlines on export and import numbers in China had suggested otherwise, she expected the country's exports to be better in the coming months thanks to higher shipments to the Group of Three rich economies - the US, the European Union and Japan.


-- The Nation 2014-04-11

[JeremyBowskill]

hardly a strengthening is it 1.1% more a standard fluctuation, no?

[JoePai]

Have to write about something - obviously no other news

[hawker9000]

No, it's up a little against the dollar. 'Was down around 33THB/USD around the new year, and has gradually strengthened to about the 32 1/4 - 32 1/2 range. Maybe not front-page stuff, but 'seems like a valid, however gradual, trend to me. I think most were predicting it'd move the other way unless there was some resolution to the political turmoil. (But maybe the doomsayers overplayed their hands, and there's growing suspicion that civil war isn't actually imminent...)

[chiang mai]

Hmm, if that's true, what to do with those 10,000 tin hats.

[hawker9000]

Hmm, if that's true, what to do with those 10,000 tin hats.

Mini rice-cookers?

[ggold]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

[chiang mai]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

[BritManToo]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

[ggold]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

[chiang mai]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

No, because the relatively piddling monetary amounts of failed government polices, tend not to have much impact on the value of a closed currency, especially in a country where the foreign currency reserves are greater than the UK or the US.

[BritManToo]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

No, because the relatively piddling monetary amounts of failed government polices, tend not to have much impact on the value of a closed currency, especially in a country where the foreign currency reserves are greater than the UK or the US.

Given your infinitely superior knowledge on the GBP/Thai bht exchange rate mechanism, would you care to remind us what exchange rate you were predicting for the end of last year?

[ggold]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

No, because the relatively piddling monetary amounts of failed government polices, tend not to have much impact on the value of a closed currency, especially in a country where the foreign currency reserves are greater than the UK or the US.

That may be so but just because one has a bigger dick than the other two doesn't make it financially sound. Besides the $ and the £ are a bit more solid than the Thai baht will ever be. Well maybe not the $.

[chiang mai]

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

No, because the relatively piddling monetary amounts of failed government polices, tend not to have much impact on the value of a closed currency, especially in a country where the foreign currency reserves are greater than the UK or the US.

Given your infinitely superior knowledge on the GBP/Thai bht exchange rate mechanism, would you care to remind us what exchange rate you were predicting for the end of last year?

It's THB not Thai bht and I was betting that you in particular would get it wrong!

If you don't like my response to the current topic, put me on ignore. But don't go down the road of trying to open up seven year old exchange rate discussions out of context.

[chiang mai]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

Did you miss the part about the Thai foreign currency reserves being USD 160 Bill. Plus all the other aspects of the Thai economy in it's normal state including adequate labor supply, low wages, lack of unions etc etc. And did you miss the part about THB being a closed currency, BOT determines its values, not the overseas investors, Poster Ticker2000 may be of help with this, but there again, maybe not!

EDIT: I almost forgot, to mention a deficit and debt comparison of the Thai economy vs whoever, feel free to do so however and let us know how it turns out! http://en.wikipedia.org/wiki/Government_debt

Edited April 11, 2014 by chiang mai

[ggold]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

Did you miss the part about the Thai foreign currency reserves being USD 160 Bill. Plus all the other aspects of the Thai economy in it's normal state including adequate labor supply, low wages, lack of unions etc etc. And did you miss the part about THB being a closed currency, BOT determines its values, not the overseas investors, Poster Ticker2000 may be of help with this, but there again, maybe not!

EDIT: I almost forgot, to mention a deficit and debt comparison of the Thai economy vs whoever, feel free to do so however and let us know how it turns out! http://en.wikipedia.org/wiki/Government_debt

BOT determines its values, not the overseas investors

Thats why we had the BOT today saying the strength of the Thai Baht or THB if you will, is because of the weakness of the dollar! If a countries value is in the currency, then why does the value of the dollar effect the Baht? So do the BOT really have as much control over its currency as you seem to suggest? I don't think so.

[Prbkk]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

Did you miss the part about the Thai foreign currency reserves being USD 160 Bill. Plus all the other aspects of the Thai economy in it's normal state including adequate labor supply, low wages, lack of unions etc etc. And did you miss the part about THB being a closed currency, BOT determines its values, not the overseas investors, Poster Ticker2000 may be of help with this, but there again, maybe not!

EDIT: I almost forgot, to mention a deficit and debt comparison of the Thai economy vs whoever, feel free to do so however and let us know how it turns out! http://en.wikipedia.org/wiki/Government_debt

The Baht does trade freely. Some will recall the disastrous attempts to keep a peg back in 97/98 ( THB/USD@ 46 for about a week). George Soros made billions.

[bigbamboo]

Considering Thailand is now reminiscent of Disneyland I'm the surprised the baht hasn't become a Mickey Mouse currency. It's actually pretty stable this year and that's largely down to the fact that in spite of the politicians worst efforts the country largely runs itself.

[chiang mai]

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

Did you miss the part about the Thai foreign currency reserves being USD 160 Bill. Plus all the other aspects of the Thai economy in it's normal state including adequate labor supply, low wages, lack of unions etc etc. And did you miss the part about THB being a closed currency, BOT determines its values, not the overseas investors, Poster Ticker2000 may be of help with this, but there again, maybe not!

EDIT: I almost forgot, to mention a deficit and debt comparison of the Thai economy vs whoever, feel free to do so however and let us know how it turns out! http://en.wikipedia.org/wiki/Government_debt

BOT determines its values, not the overseas investors

Thats why we had the BOT today saying the strength of the Thai Baht or THB if you will, is because of the weakness of the dollar! If a countries value is in the currency, then why does the value of the dollar effect the Baht? So do the BOT really have as much control over its currency as you seem to suggest? I don't think so.

"If a country's value is in it's currency", hmmm, that's a complex equation, if you factor in debt and deficit! But:

USD is the global reserve currency, so yes, currency exchanges between USD and THB impact the value of THB. But that's not down to individual investors, banks, finance houses or Soros equivalents, it's a function of the global monetary system, it remains however that BOT can control that direction if it finds it desirable to do so.

As mentioned earlier BOT could easily spend a fraction of it's USD foreign currency reserves and buy THB, that would boost the value of THB substantially, alternatively if could do the opposite to achieve the obverse..

But of course, when THB strengthens, exports suffer, so what's BOT to do? Let water find it's own level I would guess, leave it to market forces, safe in the knowledge that nobody anywhere in the world is capable of acting against them other than the US Fed deciding to devalue USD. Shh, don't let poster Alfiecon hear you say that, he doesn't believe there's a link between THB and USD.

[Prbkk]

Considering Thailand is now reminiscent of Disneyland I'm the surprised the baht hasn't become a Mickey Mouse currency. It's actually pretty stable this year and that's largely down to the fact that in spite of the politicians worst efforts the country largely runs itself.

Luckily for Thailand it grows and makes things that people want to buy and it is still a major tourist destination. Far greater challenges will come for Thaikand from its ageing population and relatively high levels of personal debt. But nothing nearly as bad as the UK/US.

[chiang mai]

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

But if with all the other schemes it bankrupted the country, how would the currency hold up? I'm not saying it will but if.

I know the IMF and others would fall over backwards to lend money to Thailand but at what rate of interest at what cost the Thai Baht.

The only thing that saved some countries in the EU from collapse was that the bigger members chipped in. And Greece Spain Portugal etc were in the EU monetary system. Which had to be saved or the Euro would have the same value as monopoly money!! Not to mention what effect that would have had for the whole of the EU and its credibility!

I see your point but still think it would have some effect on the value of the currency, if not directly.

Did you miss the part about the Thai foreign currency reserves being USD 160 Bill. Plus all the other aspects of the Thai economy in it's normal state including adequate labor supply, low wages, lack of unions etc etc. And did you miss the part about THB being a closed currency, BOT determines its values, not the overseas investors, Poster Ticker2000 may be of help with this, but there again, maybe not!

EDIT: I almost forgot, to mention a deficit and debt comparison of the Thai economy vs whoever, feel free to do so however and let us know how it turns out! http://en.wikipedia.org/wiki/Government_debt

The Baht does trade freely. Some will recall the disastrous attempts to keep a peg back in 97/98 ( THB/USD@ 46 for about a week). George Soros made billions.

If I had a baht for ever time this aspect was touted on TV, I'd be richer than Soros:

"Soros draws a distinction between being a participant in the market and working to change the rules that market participants must follow. According to Mahathir bin Mohamed, Prime Minister of Malaysia from July 1981 to October 2003, Soros — as the hedge fund chief of Quantum — may have been partially responsible for the economic crash in 1997 of East Asian markets when the Thai currency relinquished its peg to the US dollar. According to Mahathir, in the three years leading to the crash, Soros invested in short-term speculative investment in East Asian stock markets and real estate, then divested with "indecent haste" at the first signs of currency devaluation.^[2] Soros replied, saying that Mahathir was using him "as a scapegoat for his own mistakes", that Mahathir's promises to ban currency trading (which Malaysian finance officials hastily retracted) were "a recipe for disaster" and that Mahathir "is a menace to his own country".^[3]

The two traded angry barbs against each other in various newspapers and broadcast interviews over the next nine years. The nominal US dollar GDP of ASEAN fell by US$9.2 billion in 1997 and $218.2 billion (31.7%) in 1998.

In 2006, during a visit by Soros to Malaysia on his book tour in the region, he met with Mahathir for the first time, and Mahathir conceded that he did not view Soros as responsible for the financial crisis.^[4]".

http://en.wikipedia.org/wiki/George_Soros_conspiracy_theories

And no, the Baht does not trade freely, that's why BOT set a limit on the amount of Baht that may be exported and why foreign banks are limited in the amount of Baht they can supply!

Edited April 11, 2014 by chiang mai

[Prbkk]

There is no doubt that Soros made a vast amount of money by speculating that the Baht would suffer a huge depreciation. He was correct. I don't say he was wrong. In the face of a crazy attempt to keep an artificial peg, the Baht got slammed: from 30 or so to 46 in the space of a few weeks. As you know, Malaysia took a different route and has paid a fairly high price for that.

The BOT could not defend a run on the Baht today , notwithstanding the fairly pale pink measures they might have to attempt such a thing.

I believe the Baht is fairly valued and have nor been one of the "gloom and doom" voices. I would like to see the THB a little lower /USD to get some export stimulus.

I was a buyer of (quality) Thai shares in 98 and they have outperformed just about every investment choice I ever made. Thailand has a bright future if only the politics could be sorted and some measure of reality brought back into the business/investment sectors. I don't think we are disagreeing here

[englishoak]

Baht isnt strengthening, the dollar is weakening

[chiang mai]

There is no doubt that Soros made a vast amount of money by speculating that the Baht would suffer a huge depreciation. He was correct. I don't say he was wrong. In the face of a crazy attempt to keep an artificial peg, the Baht got slammed: from 30 or so to 46 in the space of a few weeks. As you know, Malaysia took a different route and has paid a fairly high price for that.

The BOT could not defend a run on the Baht today , notwithstanding the fairly pale pink measures they might have to attempt such a thing.

I believe the Baht is fairly valued and have nor been one of the "gloom and doom" voices. I would like to see the THB a little lower /USD to get some export stimulus.

I was a buyer of (quality) Thai shares in 98 and they have outperformed just about every investment choice I ever made. Thailand has a bright future if only the politics could be sorted and some measure of reality brought back into the business/investment sectors. I don't think we are disagreeing here

Soros made his money on that one as a bi-product of other events, he wasn't the cause of those events, banks leveraging in USD was.

"The BOT could not defend a run on the Baht today". Set out for us all a scenario that could cause a run on THB that BOT couldn't defend successfully, actually, just set out for us how a run could happen in the first place. And don't forget that BOT, in its fairly recent history, has been known to implement currency controls to maintain the onshore value of THB to the level it wanted - the offshore value in those circumstances is not particularly relevant since THB is restricted.

[wolfmanjack]

Where did she get anyone was expecting the fed to raise interest rates this last session? Everything i have read the rise in the interest rate was not expected until 2015.

in the last meeting minutes yellen has been perceived as being more dovish and that is what has caused the USD to weaken a bit.

The problems in thailand and the ratings downgrades do not seem to be having much affect on the THB for some reason.

[hawker9000]

from the point of view of exports then yes she is right, in other respects we have yet to know just how much of an effect the rice scam will have on the value of the currency. But for us expats it's good news. we get more baht.

Here's a clue, the rice scheme fiasco will have absolutely no impact on the value of THB, why would it!

Because its bankrupted the country and brought it to the point of civil war?

Somewhat hyperbolic. Certainly the rice scheme hasn't done the country any good. But so far, whatever recent movement there's been in the value of the baht has arguably more to do with the end (or "tapering") of U.S. QE, and less to do, however surprising, with events in Thailand. And the movement, since New Year's, has actually been (moderately) in the opposite direction (against the dollar at least). One would think that things like national bankruptcy and imminent civil war would have a far more dramatic impact...