Baht rebounds fast after dip on news: BOT

[Lite Beer]

Baht rebounds fast after dip on news: BOT
Business Reporters
The Nation

Roong Mallikamas

BANGKOK: -- Thursday 'panic' short-lived, currency bounces back; SET closes down 0.6%

Panic in the foreign-currency markets after Thursday's coup causes the baht to depreciate but the effect was short-lived, the Bank of Thailand said.

BOT spokeswoman Roong Mallikamas said there was a mild panic initially that led to a weakening of the baht by 0.23 against the US dollar on Thursday but it soon bounced back.

"Some investors were uncertain about the coup situation at the start, so they had to protect themselves from risks, which is in the nature of investors and understandable, but it caused the baht to depreciate quite rapidly by 0.23. However, it bounced back after a short period of time," she said.

Roong said the currency yesterday morning was moving within the range of 32.48-32.57, which was not much different from its value before the coup. As of 6pm it was 32.64.

The baht was valued at 32.669 per dollar on Wednesday.

The SET Index yesterday dropped 0.60 per cent to close at 1,396.

"If there is a situation that causes the currency's value to change too rapidly, such as a continuous panic situation or if there is a currency movement that is not in line with the basic fundamentals of the economy, the BOT will have the duty to consider stepping in to take care of the stability of the financial market," Roong said.

She said the current stability in the financial market was based on a number of factors, including its ability to absorb political news. Some market players also believe that the coup could be a changing point from the chronic uncertainty of the past several months. "Thailand's financial market is deep and wide enough that there are variety of market players who can create a range of views and not flock in the same direction. Therefore it can be said that the country's financial market is quite stable, but stability does not mean no movement."

Roong said that after the news of the coup came out, government bond yield increased slightly, by 4-5 basis points, but fell almost immediately to where it was before the Army's seizure of power. This showed that investors in the bonds were not panicked by the situation.

As for the movement in the Stock Exchange of Thailand yesterday, Roong said some investors had sold and closed down their status to wait and see how the political situation develops, and the index fell by 20.75 points in the morning.

She said the stock market would probably experience some capital outflow but not much since there was little change in prices.

The SET Index yesterday dropped 8.37 points to close at 1,396.84. SET chairman Sathit Limpongpan said the morning session saw foreign net sales of Bt3.6 billion while individual investors purchased a net Bt4 billion, indicating that the latter had confidence in the market and understood the present political situation.

The SET will work closely with the Association of Thai Securities Companies to provide more information to foreign investors that Thai-listed firms have solid fundamentals, he said.

SET president Charamporn Jotikasthira said the market had experienced several crises over the years, so it had gained strength to weather each new one. He also noted that foreign investors' sales in the two days following the declaration of martial law were worth Bt11 billion, not a huge amount. Foreign investors' sales were worth Bt200 billion last year.

According to Fitch Ratings, the military takeover is not in itself a negative sovereign-ratings trigger. The key factor for Thailand's sovereign credit profile is the speed at which the country can move towards installing an effective, fully functioning government without sparking a further escalation in political instability.

If a process for political stabilisation is not in place by early in the second half of this year, then the rating agency would expect more lasting damage to the economy that could ultimately be negative for Thailand's sovereign credit.

Fitch expects to lower its forecast of 2.5-per-cent growth for 2014 for Thailand on the back of the political uncertainty and weak first-quarter data showing that gross domestic product contracted by 0.6 per cent year on year. The government has already cut its own growth forecast to a range of 1.5-2.5 per cent, from an initial 3-4 per cent.

The economy is reasonably well positioned to rebound quickly from short negative shocks, it said.

Suchart Thanathitiphan, executive director of the Thai Bond Market Association, said the coup could put negative pressure on the stock market rather than the bond market, given the different types of investors in each.

No controls have been put on financial transactions and businesses, and people continue to live their normal lives, he said.

Foreign investors in the Thai bond market are relatively confident with the country's economic fundamentals and the coup should provide more ways out and allow foreign investors to gain confidence, he said.

In the four days following the declaration of the martial law on Tuesday, foreign investors sold Bt600 million worth of Thai bonds on Monday and Bt2 billion on Tuesday before purchasing Bt2 billion on Wednesday and Bt3.5 billion on Thursday.

"Upgrading in response to the coup may have some impact on the bond market, but not much, as it may have on the stock market," Suchart said.

"The situation could slow down purchases or prompt sales in the short term before a buy-back. When everything eases, there's a chance for foreign capital to return."

-- The Nation 2014-05-24

[khwaibah]

This was written on Wednesdays figure. Need to check today's numbers.

[terryp]

a case of ...... lets talk the baht up shall we ..................the cr"p has not even started yet so better do something BOT as its going to get hit and hard

[SheungWan]

a case of ...... lets talk the baht up shall we:whistling: ..................the cr"p has not even started yet so better do something BOT as its going to get hit and hard

Actually no. The markets have interpreted the coup as an attempt to control the crap. Now whether the authorities are able to maintain that control is another question. Not a certainty which way it will go, but the article reasonably accurate based on previous experiences. Remember that the downward value of the baht over the last year already has a significant amount of 'crap' already baked in.

Edited May 24, 2014 by SheungWan

[SuwadeeS]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

[carstenp]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

It's very simple BOT helping the baht and has done is for some time now.

Every country is doing this to keep a stabile currency

Edited May 24, 2014 by carstenp

[SheungWan]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

This forum is full of 'failed existences' of pundits who know what 'should be'.

[realenglish1]

Just poor reporting the Baht has further sunk in value since the writing of this story.

[SheungWan]

Just poor reporting the Baht has further sunk in value since the writing of this story.

Against the pound the baht has over one week moved from 54.65 to 54.75. Not exactly a big deal. Brief volatility to almost touch 55 but dropped back to its current rate.

[timewilltell]

More smoke and mirrors. You just can't believe anyone in this country and least of all those in power of any form

Sent from my iPad using ThaiVisa app

[BlackJack]

the great thing about accounting is that you can get any end result you want

[shaurene]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

Silly SuwadeeS. You know nothing about currency's in situations. Over the last 6-7 months the baht has dropped at lot. This Coup has saved Thailand from disaster with those so called politicians and now the country has a positive direction, it will now get stronger because the shower of <deleted> before are under control.

[Strangebrew]

As I said about 6 months ago by July baht will be trading at close to 40 to 1 USD That is when baht was 28.5 to 1 USD. The fall out from the rice scam and rubber haven't been factor in yet. Then there will The fall out from BOT overvaluing the Baht. Investors are now looking at ways to cover there losses from not being able to run night shifts. This might means shutting down operations and take the loss as a write off to boost bottom line. Then rethink doing Business in Thailand again for the for seeable future.

[slipperylobster]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

Now that is pretty self-serving logic.. Don't worry about the baht, I think the bars will reduce the beer prices due to the lack of tourists..

That should more than make up for your potential earnings.

[Anon999]

As I said about 6 months ago by July baht will be trading at close to 40 to 1 USD That is when baht was 28.5 to 1 USD. The fall out from the rice scam and rubber haven't been factor in yet. Then there will The fall out from BOT overvaluing the Baht. Investors are now looking at ways to cover there losses from not being able to run night shifts. This might means shutting down operations and take the loss as a write off to boost bottom line. Then rethink doing Business in Thailand again for the for seeable future.

The baht was at its strongest in March/April last year since then the US$, GBP & euro have recovered from their lows due to stabilisation of their economies and the £ has gained the most, being up against both the US$ and the euro as well. Your assumption about the US$ come July is purely unfounded speculation and I'm interested to know if you shorted the baht 6 months ago and how much profit you have made?

[icare999]

a case of ...... lets talk the baht up shall we ..................the cr"p has not even started yet so better do something BOT as its going to get hit and hard

nonsense if anything the baht will strengthen now some order has been put in place. In 2006 baht went up after coup.

If it goes down it will be because of economics and nothing to do with coup.

[Naam]

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

why only 100?

[GinBoy2]

There are not huge overseas holdings of the ฿, so it trades as a third tier currency. Volatility isn't really affected by the politics more the inflow & outflow of multinational companies. Toyota probably can move the currency more than any coup. So to all the armchair pundits hoping to see their Euros & $ skyrocket in ฿...I wouldn't go splurging just yet

[spermwhale]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.
At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.
Tourist and international trade is dropped.
Right now after the coup there is a dictator in Thailand.
So what keep the Baht up?

It should be around a 100 Baht for a Euro.

This forum is full of 'failed existences' of pundits who know what 'should be'.

Exactly.. The majority here don't understand how it work. As a student of international economics, I'm rather surprised that the baht hasn't taken a hit since the coup or martial law was imposed, but it could be that the BOT is intervening. It's too early to tell how it will be affected, but 100 baht per euro is a pipe dream. Even 40 is.

[Dogmatix]

Ms Rong adopting the shambolic Annie Hall look today.

[chiang mai]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Be pragmatic. If you look at the economy, which is very down, and if you look close enough, you are able to see the hidden unemployment everywhere.

At a food stall, where one person was enough to sale food, there are now two or three people. The temple are full with failed existences etc.

Tourist and international trade is dropped.

Right now after the coup there is a dictator in Thailand.

So what keep the Baht up?

It should be around a 100 Baht for a Euro.

This forum is full of 'failed existences' of pundits who know what 'should be'.

Exactly.. The majority here don't understand how it work. As a student of international economics, I'm rather surprised that the baht hasn't taken a hit since the coup or martial law was imposed, but it could be that the BOT is intervening. It's too early to tell how it will be affected, but 100 baht per euro is a pipe dream. Even 40 is.

A quick review of the BOT foreign currency reserve holdings confirms that BOT is not intervening and hasn't done so for many months, not since it tried to weaken THB.

[Sandman77]

Why only America has there own rating agency!,and can weaken every currency in the world!

Why Europeans and other country's not have there own rating agency , to weaken the US dollar also, I not understand this?

[Naam]

Why only America has there own rating agency!,and can weaken every currency in the world!

Why Europeans and other country's not have there own rating agency , to weaken the US dollar also, I not understand this?

you have to understand that currencies are not rated!

[SheungWan]

Why only America has there own rating agency!,and can weaken every currency in the world!

Why Europeans and other country's not have there own rating agency , to weaken the US dollar also, I not understand this?

you have to understand that currencies are not rated!

The Forum Ratings Agency (FRA) have just downgraded him to Junk Comment status, outlook: negative.

[Naam]

Why only America has there own rating agency!,and can weaken every currency in the world!

Why Europeans and other country's not have there own rating agency , to weaken the US dollar also, I not understand this?

you have to understand that currencies are not rated!

The Forum Ratings Agency (FRA) have just downgraded him to Junk Comment status, outlook: negative.

sometimes i pity him and sometimes i feel ashamed being his "country fellow".

[Sandman77]

But every time the American downgrade a country the currency go also down on the same day!

This is the result of ratings to weaken a currency, we see it in the euro crisis

When Greece was downgraded euro also loose value !

So I was right!

You must coincider the complete picture , not only a part of it,before you rate someone in public!

[slipperylobster]

Sometimes there is a silver lining.

Less tourists

Better Bargains

Possibly better Exchange Rates

Emergency Sellers (Getting Out of Town Fast)

Let us wait and see....it is still early.

My Opinion is the baht is not going to move much. Shows a great deal of confidence Internationally.

[chiang mai]

But every time the American downgrade a country the currency go also down on the same day!

This is the result of ratings to weaken a currency, we see it in the euro crisis

When Greece was downgraded euro also loose value !

So I was right!

You must coincider the complete picture , not only a part of it,before you rate someone in public!

A credit agency rates the ability of a debtor to repay debt - currency strength is a measure of a country's economy, the two things are similar but not the same.

[Berkshire]

But every time the American downgrade a country the currency go also down on the same day!

This is the result of ratings to weaken a currency, we see it in the euro crisis

When Greece was downgraded euro also loose value !

So I was right!

You must coincider the complete picture , not only a part of it,before you rate someone in public!

Calm down, amigo. American rating agencies have downgraded American debt in the past. Rating agencies are not affiliated with the government. They are typically objective (excl CDO's) and use a number of key factors to determine credit worthiness.

[SheungWan]

But every time the American downgrade a country the currency go also down on the same day!

This is the result of ratings to weaken a currency, we see it in the euro crisis

When Greece was downgraded euro also loose value !

So I was right!

You must coincider the complete picture , not only a part of it,before you rate someone in public!

Actually you are just in a hole and digging. There is not a 1:1 relationship here. One week after Greece was downgraded from Ba1 to B on March 7 2011, the Euro was stronger against the USD. USDEUR from .7161 to .7147 I doubt if you have studied the issue at all. Just throwing out prejudices. PS Moody's is not a government agency. PPS, the rating agencies extremely patient with Greece and its financial antics.

Edited May 29, 2014 by SheungWan