Baht under BOT watch as 'good news' draws funds

[webfact]

BAHT
Baht under BOT watch as 'good news' draws funds
Erich Parpart
The Nation

BANGKOK: -- The Bank of Thailand is closely monitoring the strengthening of the baht, which has been caused by the return of foreign funds to the Kingdom's capital and bond markets due to improved economic and political conditions.

"Thailand has had good news coming out lately, such as the forward movement of the economy, the expectation of a continuous economic recovery in the second half of the year, and the political development of the introduction of the provisional charter, along with clarity in the setting up of government agencies.

"These factors have been interpreted by foreign investors as positive news, which makes them increase their investment weighting on the country," Roong Mallikamas, spokeswoman of the central bank, said yesterday.

She said that beside the inflow of foreign funds, a reduction in the country's credit default swap (CDS) level - a measure of the risk of buying government bonds - also indicated that foreign investors were now gaining more confidence in Thailand's financial markets and economy.

The country's CDS level fell 28 basis points between May 22, when the military took power, and July 22.

Thailand's CDS level currently stands at 105.5 basis points, against 133.5 in May, while those of Malaysia and the Philippines stand at 85.3 and 88, down from 97.1 and 95.2 respectively in the same period.

Roong added while CDS levels had fallen across Asia because of increased foreign investor confidence in the region, Thailand's had reduced the most because of the improving internal situation.

She warned, however, that external factors such as markets' interpretation of major economies' fiscal and monetary policies and geopolitical risks could affect the value of the baht in either direction, or lead to an outflow of foreign funds. This makes it important for the central bank to monitor both internal and external factors closely, she explained.

Source: http://www.nationmultimedia.com/business/Baht-under-BOT-watch-as-good-news-draws-funds-30239395.html


-- The Nation 2014-07-25

[Pib]

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

[djjamie]

When one looks at the graph here the baht and markets are certainly putting a lot of faith in the Juntas ability to bring stability. Remember this is a narrative the Junta cannot control. These are market forces. Only the PTP think they can control market forces. (rice prices)

Of course as per djjamie's theory of negativity when the news article shows the Junta in a good light and the RS apologists have no excuses (not even "evolved" excuses) to use they simply ignore the positive news and post a weak joke to mask their admittance of the Juntas success.

Look no further than the above to see the point in case.

My theory holds.

Well done Junta. The baht has not been this strong since the 22nd of November. About the same time the terrorist attacks started. Give the Junta a few more weeks and it will strengthen further which is a shame because I draw funds in usd.

If I was to be critical of the Junta for one thing, it is for being too good at bringing stability!!!

Edited July 25, 2014 by djjamie

[chiang mai]

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

Flippant and inappropriate remarks, presumably they are intended as throw away comments - given the current stage of its development I think BOT has performed more than reasonably, Tarisa Watanagase in particular did an excellent job of defending the independence of the BOT, so much so that she received public accolades and endorsement from the very highest quarters.

http://www.bot.or.th/English/AboutBOT/Governors/Pages/GovTarisa_new.aspx

[Noi657]

Bugger!

[amerasian]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

[chiang mai]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

Er, what is your definition of strong medium and weak, as it pertains to THB levels?

[Hawk]

Good news? Not for us.

[carstenp]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

I dont have a Education in Economy. But for me will a strong bath be good for Thailand right now, cause of all the project the junta has begun. They need a lot import. So strong bath is good. Is right export will become hit be the strong bath, but later BOT can make it weak again.

[noitom]

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

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

And they watch it when they manipulate it. Watching the gap between the onshore and offshore rates.

[iancnx]

Today I signed up for 2.8% interest for 11 month term deposit with Bangkok Bank.

[noendtoit]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

I dont have a Education in Economy. But for me will a strong bath be good for Thailand right now, cause of all the project the junta has begun. They need a lot import. So strong bath is good. Is right export will become hit be the strong bath, but later BOT can make it weak again.

You take a bath and spend a baht. Right now, with the strengthening baht, I'm taking a bath.

[cloudhopper]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

You must have failed Econ 101. A strong baht cheapens imported energy and other inputs for manufacturing and makes it more attractive for the country to sell bonds, among other benefits. It is mathematically impossible for countries, in aggregate, to profit by devaluing their currencies merely to improve the export side of the equation.

[chiang mai]

Today I signed up for 2.8% interest for 11 month term deposit with Bangkok Bank.

Interestingly, I was also at that point yesterday with a bond that had matured, I decided against a fix and instead went with 2% instant (no tax) on the basis that I think rates will rise within the next eleven months.

[iancnx]

Today I signed up for 2.8% interest for 11 month term deposit with Bangkok Bank.

Interestingly, I was also at that point yesterday with a bond that had matured, I decided against a fix and instead went with 2% instant (no tax) on the basis that I think rates will rise within the next eleven months.

I just completed my annual extension so was keen to get those funds back on a fixed deposit, and 11 months is ideal. I think rates will go up and the baht will strengthen again, but this is just a gut feeling. I transferred a good chunk from HSBC last week, enough to live on for the next year at a good rate, and at a cost of only £4. The funds were in my Bangkok account within 24 hrs. Excellent service. So no need to concern myself for the next year financially.

[Pib]

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

Flippant and inappropriate remarks, presumably they are intended as throw away comments - given the current stage of its development I think BOT has performed more than reasonably, Tarisa Watanagase in particular did an excellent job of defending the independence of the BOT, so much so that she received public accolades and endorsement from the very highest quarters.

http://www.bot.or.th/English/AboutBOT/Governors/Pages/GovTarisa_new.aspx

I just hope BOT don't watch the baht go to around 28.5 baht/USD like last year.

Sent from my Samsung S4

[chiang mai]

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

Flippant and inappropriate remarks, presumably they are intended as throw away comments - given the current stage of its development I think BOT has performed more than reasonably, Tarisa Watanagase in particular did an excellent job of defending the independence of the BOT, so much so that she received public accolades and endorsement from the very highest quarters.

http://www.bot.or.th/English/AboutBOT/Governors/Pages/GovTarisa_new.aspx

I just hope BOT don't watch the baht go to around 28.5 baht/USD like last year.

Sent from my Samsung S4

Interestingly they spent significant amounts of foreign reserves trying to weaken the Baht, during that period. Most posters here at the time were convinced BOT was either doing nothing or were spending money trying to strengthen the currency, just so that the powers that be could cash in, the usual conspiracy theory stuff. The upside from it all was that Thai exporters finally learned to use swaps hence we may not hear as much noise from them the next time around.

[jacko45k]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

I dont have a Education in Economy. But for me will a strong bath be good for Thailand right now, cause of all the project the junta has begun. They need a lot import. So strong bath is good. Is right export will become hit be the strong bath, but later BOT can make it weak again.

I don't understand either, Thailand is a strongly export driven country and exports account for 65% of GDP, sure a stronger baht will make Thai manufactured goods more expensive overseas and make those goods less attractive. But influx of foreign funds into the markets is indicative of confidence in the Thai economy and its direction. Anyhow, the baht is only back where it was at the end of last year.

[carstenp]

Thats a pure lie, A strong Baht does nothing for the economy but discourage foreign investment and destroys exports businesses, Economics 101 you all should be fired or worse, How in the hell did you ever get your jobs.You bought them when the baht was weak I bet. Totally clueless. This is why the country is suffering now Thailand cant export anything that can be made in any other Asian country. Not competitive.

I dont have a Education in Economy. But for me will a strong bath be good for Thailand right now, cause of all the project the junta has begun. They need a lot import. So strong bath is good. Is right export will become hit be the strong bath, but later BOT can make it weak again.

You take a bath and spend a baht. Right now, with the strengthening baht, I'm taking a bath.

Sorry english is not my first language and sometimes the spell control just change word without my notice Edited July 26, 2014 by carstenp

[Baerboxer]

Today I signed up for 2.8% interest for 11 month term deposit with Bangkok Bank.

Interestingly, I was also at that point yesterday with a bond that had matured, I decided against a fix and instead went with 2% instant (no tax) on the basis that I think rates will rise within the next eleven months.

I just completed my annual extension so was keen to get those funds back on a fixed deposit, and 11 months is ideal. I think rates will go up and the baht will strengthen again, but this is just a gut feeling. I transferred a good chunk from HSBC last week, enough to live on for the next year at a good rate, and at a cost of only £4. The funds were in my Bangkok account within 24 hrs. Excellent service. So no need to concern myself for the next year financially.

GBP 4 transfer charge from HSBC? Which HSBC was that, location?

Their charges for transferring by internet are usually higher than that.

Edited July 26, 2014 by Baerboxer

[12DrinkMore]

Baht under Bank of Thailand watch. Yes, they watch it as it goes down and watch it as it goes up. Continue the good work.

Flippant and inappropriate remarks, presumably they are intended as throw away comments - given the current stage of its development I think BOT has performed more than reasonably, Tarisa Watanagase in particular did an excellent job of defending the independence of the BOT, so much so that she received public accolades and endorsement from the very highest quarters.

http://www.bot.or.th/English/AboutBOT/Governors/Pages/GovTarisa_new.aspx

I just hope BOT don't watch the baht go to around 28.5 baht/USD like last year.

Sent from my Samsung S4

Interestingly they spent significant amounts of foreign reserves trying to weaken the Baht, during that period. Most posters here at the time were convinced BOT was either doing nothing or were spending money trying to strengthen the currency, just so that the powers that be could cash in, the usual conspiracy theory stuff. The upside from it all was that Thai exporters finally learned to use swaps hence we may not hear as much noise from them the next time around.

Nonsense.

In order to weaken the Baht they would have had to sell Bahts and buy foreign currency.

The BoT watches the Baht against a basket of other Asian currencies, They try to keep it more or less aligned with the regional currencies.

[chiang mai]

Flippant and inappropriate remarks, presumably they are intended as throw away comments - given the current stage of its development I think BOT has performed more than reasonably, Tarisa Watanagase in particular did an excellent job of defending the independence of the BOT, so much so that she received public accolades and endorsement from the very highest quarters.

http://www.bot.or.th/English/AboutBOT/Governors/Pages/GovTarisa_new.aspx

I just hope BOT don't watch the baht go to around 28.5 baht/USD like last year.

Sent from my Samsung S4

Interestingly they spent significant amounts of foreign reserves trying to weaken the Baht, during that period. Most posters here at the time were convinced BOT was either doing nothing or were spending money trying to strengthen the currency, just so that the powers that be could cash in, the usual conspiracy theory stuff. The upside from it all was that Thai exporters finally learned to use swaps hence we may not hear as much noise from them the next time around.

Nonsense.

In order to weaken the Baht they would have had to sell Bahts and buy foreign currency.

The BoT watches the Baht against a basket of other Asian currencies, They try to keep it more or less aligned with the regional currencies.

You haven't done your homework:

Foreign currency reserves in July 2012 were USD 182 billion, in March 2013 they were USD 177 billion, during that time the reserves might reasonably be expected to have increased at the rate of USD 0.7 billion per month. So what happened? Just because Foreign Currency reserves are denominated in USD that does not mean that they represent only captured USD nor that they must remain in USD! Or perhaps you have a better explanation for the loss of USD 8 billion from the reserves.

http://www.oanda.com/currency/historical-rates/

Edited July 26, 2014 by chiang mai

[Pib]

I think this mid 2013 news article on how the BOT watched the baht's appreciation to 28.5 baht/USD sums it up pretty well.

Friday, June 21, 2013, 09:16

Fed’s currency war dictates baht’s fate

By Thanong Khanthong

Thailand’s financial markets are subject to hints of movement in America’s fiscal policies

It can now be fully confirmed that we in Thailand are in the middle of a currency war on a global scale. On April 19, the Thai baht was trading at 28.55 against the US dollar. At that point, Prasarn Trairatvorakul, the Bank of Thailand governor, almost lost his job. He had failed to stem the baht’s rise. And he had also defended the central bank’s interest rate policy as appropriate for the potential growth of the Thai economy.

Prasarn is also reluctant to intervene in the foreign exchange market to weaken the baht. Doing so would create further losses on the central bank’s balance sheet when the weak dollar is converted to baht term. Yet the rapid rise of the baht is seen as unacceptable by the government and powerful exporters. The Bank of Thailand has become a punching bag.

But over the past week the central bank has been buying up the baht to prevent its rapid decline.

The Nation, Asia News Network.

Read more here: http://www.chinadailyasia.com/opinion/2013-06/21/content_15076368.html

Edited July 27, 2014 by metisdead
Edited as per fair use policy

[12DrinkMore]

Interestingly they spent significant amounts of foreign reserves trying to weaken the Baht, during that period. Most posters here at the time were convinced BOT was either doing nothing or were spending money trying to strengthen the currency, just so that the powers that be could cash in, the usual conspiracy theory stuff. The upside from it all was that Thai exporters finally learned to use swaps hence we may not hear as much noise from them the next time around.

Nonsense.

In order to weaken the Baht they would have had to sell Bahts and buy foreign currency.

The BoT watches the Baht against a basket of other Asian currencies, They try to keep it more or less aligned with the regional currencies.

You haven't done your homework:

Foreign currency reserves in July 2012 were USD 182 billion, in March 2013 they were USD 177 billion, during that time the reserves might reasonably be expected to have increased at the rate of USD 0.7 billion per month. So what happened? Just because Foreign Currency reserves are denominated in USD that does not mean that they represent only captured USD nor that they must remain in USD! Or perhaps you have a better explanation for the loss of USD 8 billion from the reserves.

http://www.oanda.com/currency/historical-rates/

I was making the point that to weaken the Thai currency the BoT would have to sell Bahts into the market and buy forex.

I was not addressing the fact that the Baht weakened in that period at the same time as the forex holdings were reduced. This might, for example, indicate that the bank was trying to reduce the Baht's rapid rate of decline.

Edit:

I see that PIB beat me to it.

"But over the past week the central bank has been buying up the baht to prevent its rapid decline."

Edited July 26, 2014 by 12DrinkMore

[chiang mai]

Interestingly they spent significant amounts of foreign reserves trying to weaken the Baht, during that period. Most posters here at the time were convinced BOT was either doing nothing or were spending money trying to strengthen the currency, just so that the powers that be could cash in, the usual conspiracy theory stuff. The upside from it all was that Thai exporters finally learned to use swaps hence we may not hear as much noise from them the next time around.

Nonsense.

In order to weaken the Baht they would have had to sell Bahts and buy foreign currency.

The BoT watches the Baht against a basket of other Asian currencies, They try to keep it more or less aligned with the regional currencies.

You haven't done your homework:

Foreign currency reserves in July 2012 were USD 182 billion, in March 2013 they were USD 177 billion, during that time the reserves might reasonably be expected to have increased at the rate of USD 0.7 billion per month. So what happened? Just because Foreign Currency reserves are denominated in USD that does not mean that they represent only captured USD nor that they must remain in USD! Or perhaps you have a better explanation for the loss of USD 8 billion from the reserves.

http://www.oanda.com/currency/historical-rates/

I was making the point that to weaken the Thai currency the BoT would have to sell Bahts into the market and buy forex.

I was not addressing the fact that the Baht weakened in that period at the same time as the forex holdings were reduced. This might, for example, indicate that the bank was trying to reduce the Baht's rapid rate of decline.

And where do you imagine those Baht that were used came from!

[12DrinkMore]

And where do you imagine those Baht that were used came from!

These central bankers have absolutely no problem in finding their own sovereign currency. They can just type numbers into a computer.

Even the Swiss did it to prevent the CHF shooting up further against the EUR.

[chiang mai]

And where do you imagine those Baht that were used came from!

These central bankers have absolutely no problem in finding their own sovereign currency. They can just type numbers into a computer.

Even the Swiss did it to prevent the CHF shooting up further against the EUR.

I wasn't asking a question!

Let's take this one step at a time:

in July 2012 USD/THB stood at 31.55, in April 2013 it was worth 28.76. (any news article written in June 2014 is superfluous)

During the same period, FCY reserves were USD 182 bill. and USD 177 bill. respectively.

Whilst the value of THB during the above period strengthened by circa 10%, reserves fell by around USD 8 bill. (assumes average accruals of USD 0.7 bill. per month).

So, if BOT wanted to, inexplicably, strengthen the value of THB they needed to do nothing, had they done that the FCY reserves would be USD8 Bill. higher than they actually were - they weren't!

Where did the reserves go?

[12DrinkMore]

And where do you imagine those Baht that were used came from!

These central bankers have absolutely no problem in finding their own sovereign currency. They can just type numbers into a computer.

Even the Swiss did it to prevent the CHF shooting up further against the EUR.

I wasn't asking a question!

Let's take this one step at a time:

in July 2012 USD/THB stood at 31.55, in April 2013 it was worth 28.76. (any news article written in June 2014 is superfluous)

During the same period, FCY reserves were USD 182 bill. and USD 177 bill. respectively.

Whilst the value of THB during the above period strengthened by circa 10%, reserves fell by around USD 8 bill. (assumes average accruals of USD 0.7 bill. per month).

So, if BOT wanted to, inexplicably, strengthen the value of THB they needed to do nothing, had they done that the FCY reserves would be USD8 Bill. higher than they actually were - they weren't!

Where did the reserves go?

As they cannot disappear into thin air either

they were used to purchase THB as an independent action of the BoT to try and manipulate the exchange rate or to reduce forex exposure

or

they were sold for THB due to demands from other finance institutions who needed forex

or

they were used to buy some other asset such as gold

can't think of any other route they could go down.

If you know the answer, then let us in on the secret.

Maybe the answer is in the BoT accounts, but I am a little pressed for time today.

[chiang mai]

I wasn't asking a question!

Let's take this one step at a time:

in July 2012 USD/THB stood at 31.55, in April 2013 it was worth 28.76. (any news article written in June 2014 is superfluous)

During the same period, FCY reserves were USD 182 bill. and USD 177 bill. respectively.

Whilst the value of THB during the above period strengthened by circa 10%, reserves fell by around USD 8 bill. (assumes average accruals of USD 0.7 bill. per month).

So, if BOT wanted to, inexplicably, strengthen the value of THB they needed to do nothing, had they done that the FCY reserves would be USD8 Bill. higher than they actually were - they weren't!

Where did the reserves go?

As they cannot disappear into thin air either

can't think of any other route they could go down.

If you know the answer, then let us in on the secret.

Maybe the answer is in the BoT accounts, but I am a little pressed for time today.

Refer to post 17 and the BOT foreign currency reserve accounts posted several times. Again: http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG

[12DrinkMore]

Hi,

Handy little tool that.

For the months you are talking about referring to the foreign currency reserves.

The highest in July 2012 was on 27th at 165,096 million. (Baht was 31.572)

The lowest in March 2013 was on the 29th at 167,728 million. (Baht was 29.302)

That is an increase of 1.6%.

This is possibly down in the noise of currency fluctuations as we have no idea how the forex mix at the BoT is comprised.

Where do you get the expected THB 0.7 billion of accruals each month?

Or am I somewhere off the track?

Edited July 26, 2014 by 12DrinkMore