Baht unlikely to weaken to 37 if political woes ease: CLSA

[webfact]

BAHT
Baht unlikely to weaken to 37 if political woes ease: CLSA
The Nation

BANGKOK: -- Forecasts that the baht could weaken to 37 per US dollar by the end of the year will prove wrong if Thailand's political problems ease and a temporary government is formed to improve fiscal policy, according to CLSA Securities (Thailand).

Managing director Prinn Panitchpakdi said that given the country's sound economic fundamentals and high international reserves, a change in fiscal policy, particularly the scrapping of infrastructure projects worth Bt2 trillion, the baht might not fall much if the political problem is solved within two or three weeks.

Pipat Luengnaruemitchai, Phatra Securities assistant managing director, believes "there may be not much impact on the baht to weaken further with the exception of the possibility of more political trouble, which could affect investor confidence".

Morgan Stanley recently reiterated its forecast that the baht would weaken to 37 per the dollar by the end of the year if the political crisis pushes the economy into recession.

Merrill Lynch, Phatra Securities' ally, forecast the baht to depreciate to 33-33.5 per dollar after the United States' quantitative easing programme aided its economic recovery.

The baht is the only one of 12 Asian currencies tracked by Bloomberg to weaken against the dollar this month, slipping 0.4 per cent. It has retreated 4.3 per cent since the anti-government protests started at the end of October, the worst performance in the region, according to Bloomberg.

"Our target of 37 is very achievable," Bloomberg quoted Geoffrey Kendrick, Morgan Stanley's head of Asia currency and interest-rate strategy in Hong Kong, as saying. "The economy is in a massive hole. Thailand is certainly going to have a technical recession in the first half."

Pipat said Thailand's tourism industry needed to be monitored. Last year, tourism generated Bt1.3 trillion in income for the country, or more than 10 per cent of gross domestic product.

If tourism declines further, the country's current account could experience a lower surplus or even a deficit, and that could have an impact on the baht, he said.

Prinn said foreign investors were concerned that Thailand has not formed a new government to administer fiscal policy and deliver a budget for the next fiscal year's investments, and that was a key for growth.

The economy suffered a contraction of more than 2 per cent in the first quarter and may enter a technical recession in the second quarter, he said.

Foreign investors are also concerned about Thailand's competitiveness and productivity in the long term, and foreign direct investment after the unrest, he said, adding that investors from Japan, China and the United States may seek other markets.

Prinn said the economic slowdown prompted the Thai bourse to fall early this year.

Investors weighted Thai stocks medium to lower than the average compared with Morgan Stanley Capital Investment, he said, adding that foreigners may not be in a hurry as they want to see stock prices go down further.

In response to a question about the possibility for the Stock Exchange of Thailand to rebound in the fourth quarter, Prinn said it was expected to come back up if there were temporary government policies.

"Long-term state investment is not only [concerned with] structural reform, but also other reforms to benefit the country by making it more competitive, having higher productivity in the long term and more educational development and [better] governance," he said.

"The new [temporary] government should implement reforms before the full election. Foreign investors want to see these."


-- The Nation 2014-05-23

[terryp]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

[opalred]

should have been 45 months ago only shin clan and friends in control of reserve bank have been keeping strong till mob got its money out of country

and exchanged into $ which by now would have happened cheers

[ezzra]

All those pundits who say this or that are no smarter or knowledgeable than

you and I, any guess as where the baht is heading is just that.. a guess.....

[kalbo123]

nonsense! unpredictable!

Last coup the Baht gained value!

[LuckyLew]

woohoo

Do we hear 40 .... give me 40 ...LOL

[alfalfa19]

woohoo

Do we hear 40 .... give me 40 ...LOL

40 would be good. That's what it was on my first trip to Thailand.

[Tokay]

Bring it on. 37, 47... whatever. I welcome it.

[BlueSkyCowboy]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

This might be so, except we don't know how the new law in the US will affect the dollar. (Juli 1, 2014 in effect) I think we are screwed again

[BlueSkyCowboy]

All those pundits who say this or that are no smarter or knowledgeable than

you and I, any guess as where the baht is heading is just that.. a guess.....

Sure, but it makes us feeeeeeeeeeel good haha

[BlueSkyCowboy]

woohoo

Do we hear 40 .... give me 40 ...LOL

40 would be good. That's what it was on my first trip to Thailand.

I remember the 40. I could buy 5 small cokes at 7eleven. 8 Bt each. Now they are are 10 Bt and 32 Bt, 0nly 3 small, but cute bottles. The Gold was 8500, if I remember right. All small talk, we take what we get.

[dinger]

What a stupid headline, makes about as much sense as saying it might rain today unless the sun comes out

[spermwhale]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

Obviously you don't understand exchange rates. If it goes to 40 everything will be cheaper for foreign tourists coming here as will exports as it will take less dollars to purchase them.

DUH!

[dinger]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

Obviously you don't understand exchange rates. If it goes to 40 everything will be cheaper for foreign tourists coming here as will exports as it will take less dollars to purchase them.

DUH!

How do human rights fit into this equation?

[Naam]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

am i right to assume that you are an eggsburt in economics?

[Naam]

LOL ..dream on , more like 40 to the US ...tourism, exports, auto production, human rights etc etc all down the drain

Obviously you don't understand exchange rates. If it goes to 40 everything will be cheaper for foreign tourists coming here as will exports as it will take less dollars to purchase them.

DUH!

How do human rights fit into this equation?

since when are human rights a factor in exchange rate equations?

[CPH]

The dollar will most probably strengthen against most developing countries currency when QE ends. Thai baht will be a little weaker than the other currencies due to political turmoil and recession. The end of QE and the withdrawal of money from Emerging markets will be a stronger force than the problems in Thailand.

[Robert24]

I fully agree with CPH. Expect the $ to gradually appreciate vs EM currencies given the change in US monitary policy. I don't expect big short term moves given that BoT has a lot firepower to stop it. Strong weakening of the baht would lead to higher inflation which the BoT will try to avoid.

[heybruce]

should have been 45 months ago only shin clan and friends in control of reserve bank have been keeping strong till mob got its money out of country

and exchanged into $ which by now would have happened cheers

Some people credit the Shinawatra's with magical powers.

[Thakkar]

The dollar will most probably strengthen against most developing countries currency when QE ends. Thai baht will be a little weaker than the other currencies due to political turmoil and recession. The end of QE and the withdrawal of money from Emerging markets will be a stronger force than the problems in Thailand.

Your logic is spot on, but I think the adjustment in emerging market currencies has already happened since the pace and scale of QE withdrawal was signaled well in advance.

Currency predictions are hit and miss at the best of times, but I believe the baht is where is should be and will edge up ever so slowly unless there are further unhappy developments and political turmoil/civil strife. There's also the great unknown--the subject we can't talk about. The prudent strategy would be to keep two years' worth of expenses here and the rest in dollars, overseas. I know a guy who bet the farm on 29 to the dollar and is now crying into his cheap Thai whiskey when he could've been celebrating with Chivas.

The usual caveat: I know no more than the average Somchai.

T

[PhilipCook]

Haha, I'm warning you if you don't do this, that, x, y, z, then the currency will weaken to 37. Lets see, but my guess is that we will see sub 30 within the next 3-4 quarters. Manufacturing will rise in q4/q1(15), tourism will be back to full blast in q4/q1(15) and most important of all consumer demand will rebound stronger than ever with some nice marketing ie Support Our Thai Spirit, Buy Local Stay Local and so on

[thailand49]

Don't really know if it will or not? But these idiots shot themselves in the foot and as far as I'm concern the sooner the better and hope it is for a long time........................like a bunch of spoiled children the military steps in as if there was like a war going on. They are killing themselves and maybe that is the best thing for everyone? Let the investment pull out and their corruption money dry up! I love this stuff and now what are they fighting about again?

Edited May 23, 2014 by thailand49

[belg]

previous coup, that was a good time for the euro & dollar to be high...

but very bad time if you want to get out of here, if the baht weakens, you will get less dollars & euros if you want to bring your money home .... if the thai banks would allow it, that is another question.... bring in as much as u want, but oho if you want to take it out again...

yes if you have a FET, but what if you had your money here for several years, in baht converted and put on a 3% net saving account ...

[chiang mai]

The dollar will most probably strengthen against most developing countries currency when QE ends. Thai baht will be a little weaker than the other currencies due to political turmoil and recession. The end of QE and the withdrawal of money from Emerging markets will be a stronger force than the problems in Thailand.

Your logic is spot on, but I think the adjustment in emerging market currencies has already happened since the pace and scale of QE withdrawal was signaled well in advance.

Currency predictions are hit and miss at the best of times, but I believe the baht is where is should be and will edge up ever so slowly unless there are further unhappy developments and political turmoil/civil strife. There's also the great unknown--the subject we can't talk about. The prudent strategy would be to keep two years' worth of expenses here and the rest in dollars, overseas. I know a guy who bet the farm on 29 to the dollar and is now crying into his cheap Thai whiskey when he could've been celebrating with Chivas.

The usual caveat: I know no more than the average Somchai.

T

Mostly agreed, except it's going to be a case of THB weakening against USD rather than USD strengthening.

BTW we're half way through US QE tapering and it hasn't produced too much movement thus far, no reason to believe the remaining 50% will behave differently.

[Jonmarleesco]

Frankly, the baht has been overvalued for some years and is just starting to face reality. To me, 37 seems reasonable.

[h90]

Selling 1.00000 USD you get 32.4353 THB Buying 1.00000 USD you pay 32.5440 THB

I don't see any change to the last days.....

[fabianfred]

The Baht has been so corrupt for so long... a nuclear bomb wiping out Bangkok wouldn't put a dent in it..