No intervention by central bank as Thai Baht weakens following military's move

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BAHT
No intervention by central bank as baht weakens following military's move
Erich Parpart
Sucheera Pinijparakarn
The Nation

Bangkok: The Bank of Thailand will not intervene in the market despite the baht's fluctuation following the declaration of martial law yesterday.

Spokeswoman Roong Mallikamas said the country's banks and the financial markets were operating normally, although there had been some panic in the currency and stock markets in the morning due to the military's move.

"Some investors may have been panicked at the start of the market on May 20, but after the situation was assessed and the news digested, their concerns lessened," she said.

The baht dropped to 32.76 per US dollar yesterday, weakening 0.95 per cent from 32.45 the previous day.

Roong said reduced concern among investors over the political crisis was expected to result in a rapid correction in the currency and bond markets, while the overall impact of martial law on the economy remained to be seen.

Meanwhile, the central bank's Monetary Policy Committee (MPC) said the declaration of martial law would only have an impact on the economy in the short term, and it urged the military to provide clarification for foreigners so that they had a better understanding of the situation.

The MPC said current monetary policy was adequate for the economic situation, and that it would not intervene in any way since the policy interest rate was still able to simulate the economy.

Political instability is still playing the main role as the true adversary of the economy, the panel added.

MPC member Siri Karncharoendee said the declaration of martial law should bring about some positive changes in the political situation, provided it could put an end to protests from all sides.

"I truly hope martial law can rapidly bring back the rule of law and peace to the country. In the beginning, foreign investors might look at us in a negative way, but this will only be short term because if we can provide some understanding and the need for the law, we can really benefit from it greatly since the country and economy can finally move forward," he said.

Amonthep Chawla, head of CIMB Thai Bank's research office, said that while it was too early to predict the outcome for the economy, there should be a short-term impact in terms of foreign tourists' confidence.

The depreciation trend of the baht is expected to rebound shortly, in line with the region, although the unit's movement is affected more by external factors, he said.

The Stock Exchange of Thailand (SET) also experienced some fluctuation yesterday, with the main index falling 22 points in morning trading, before recovering to a drop of 15.94 points and closing on 1,394.69 points. Trading value was Bt43.25 billion.

Foreign investors recorded net sales worth Bt8.33 billion.

Brokerages KT-Zmico Securities and Globlex Securities commented that the SET fall was only a short-term phenomenon, since there was hope of some clarity in the political situation in the next two weeks.

They believe the falling index was largely due to concerns among some foreign investors, who downsized their investment portfolio in the belief that they could not invest in a country under martial law.

TRIS Rating said martial law would have a short-term negative impact on Thai corporate ratings, since most rating companies view it as having a negative impact on confidence.

However, it does not mean they will lower the country's rating right away, it said.

"If you read Moody's report, it did not say whether they would lower the country's rating due to the political situation, but they are trying to say that the political situation will affect the confidence level.

"If we look at the balanced budget target, not only Moody but S&P and other rating institutions also consider rating based on such a target and, when there is a situation such as this, these institutions will see it as negative - and they might consider it as a potentially negative factor more than lowering the country's rating right away," said Santi Kiranand, president of TRIS Rating.


-- The Nation 2014-05-21

[terryp]

dont belive them , the baht has been far too strong for the past 6 months the Country is on the ropes almost no growth and exports have crashed

[Mango Bob]

So the baht went up about 6 stang yesterday against the dollar, big deal, martial law is announced and little movement in the baht, don't tell us they didn't intervened. They sure the hell did.

[JRSoul]

Yingluk transferring cash off-shore?

[daveAustin]

the baht has been far too strong for the past 6 months

Make that 6 years!

[TimCM]

Yingluk transferring cash off-shore?

Although I do think you are joking, there are some on here stupid enough to think that they would have enough money to do this. The sheer size of FX markets is beyond the comprehension of most and it would take many multiples of what the entire Shin family have to move the markets by this much. Yesterday would have every FX trader in Asia targeting the Baht.

[alant]

Yingluk transferring cash off-shore?

Although I do think you are joking, there are some on here stupid enough to think that they would have enough money to do this. The sheer size of FX markets is beyond the comprehension of most and it would take many multiples of what the entire Shin family have to move the markets by this much. Yesterday would have every FX trader in Asia targeting the Baht.

"Stupid"! Does a lack of knowledge in one particular subject make one stupid?

Makes you wonder on what to think is stupid...

[phantomfiddler]

If you have foreign cash in Thailand, only change as little as possible because the baht will really fall when the merde hits the patlom, and it it has to and soon

[Scarpolo]

The baht is a VERY local currency, and even Thailands closest neighbors don't want it.

Laos wants US greenbacks,

Vietnam, same

Baht can maybe go to 34-35, but thats it,

no one really cares about it

[larsjohnsson]

The baht is a VERY local currency, and even Thailands closest neighbors don't want it.

Laos wants US greenbacks,

Vietnam, same

Baht can maybe go to 34-35, but thats it,

no one really cares about it

If you say Laos don't want or like Thai baht, then you have never been there

[Scarpolo]

been to Laos 3 times

the exchange rate from Baht was substantially less than it was from dollars

[icare999]

If you have foreign cash in Thailand, only change as little as possible because the baht will really fall when the merde hits the patlom, and it it has to and soon

i reckon you'll see baht strengthen now hopefully nonsense is stopped for t least a while. Im changing another 50k gbp soon and buying property here since hopefully their will be some bargains form those wanting to get out

well see

[Scarpolo]

buying property?

after all the propping up of the real estate market has top cycled?

[OJAS]

If you have foreign cash in Thailand, only change as little as possible because the baht will really fall when the merde hits the patlom, and it it has to and soon

i reckon you'll see baht strengthen now hopefully nonsense is stopped for t least a while. Im changing another 50k gbp soon and buying property here since hopefully their will be some bargains form those wanting to get out

well see

Well let's hope for both our sakes that the THB doesn't strengthen to 43 per GBP as it was this time last year.

That said, we should not, of course, forget that the 2008 and 2010 "nonsenses" resulted, perversely, in the THB's value soaring against the GBP at any rate in the TIT tradition!

[Scarpolo]

I havent followed the pound since the 80's, how does it fare against the EURO and how on earth can it ever do poorly against the baht?

Edited May 21, 2014 by Scarpolo

[HooHaa]

The baht is a VERY local currency, and even Thailands closest neighbors don't want it.

Laos wants US greenbacks,

Vietnam, same

Baht can maybe go to 34-35, but thats it,

no one really cares about it

hah, show me someone in laos who wont take baht. Vientiane at least

[Scarpolo]

you pay more w baht

[larsjohnsson]

No you probably pay a little bit less with Baht instead of their own currency. In Laos they love to get baht. And not only at the boarder or in Vientiane.

You wrote that they don't want baht in Laos. And that's wrong. Of all the currencies that exist, baht is #1 or #2 in Laos. Even far up in the country every meny or hotel bill is in baht

Edited May 22, 2014 by larsjohnsson

[DrTuner]

Baht weakened ? It's the end of the world!!!!!! Can't happen, baht defies any laws, natural or made up. Just look at the few last months.