Baht weaker but stable after rate cut

[webfact]

Baht weaker but stable after rate cut
ERICH PARPART,
SOMLUCK SRIMALEE,
SUCHEERA PINIJPARAKARN
THE NATION


BOT spokesman Chirathep Senivongs Na Ayudhya

BANGKOK: -- THE BANK OF THAILAND's 25-basis-point cut in the policy interest rate last week has depreciated the value of the baht by 0.5 per cent and taken the government bond yield curve to the lowest point in six years.

The decline in the bond yield has had the effect of lowering the cost of investment, and the central bank has urged businesses to take advantage of this.

The baht weakened from around 32.30 to nearly 33 against the US dollar after the BOT's Monetary Policy Committee (MPC) cut the benchmark rate from 2 per cent to 1.75 per cent. The yield for government 10-year bond dropped from 2.74 per cent as of March 11 to 2.49 per cent after the cut.

"The baht depreciated because the majority of the market believed that the MPC would maintain the policy interest rate," said BOT spokesman Chirathep Senivongs Na Ayudhya. "But the currency has stabilised now and there is currently no irregularity regarding fund flows ahead of the US Federal Reserve's statement this week."

The Federal Open Market Committee, which sets the US policy rate, is to conclude a two-day meeting tomorrow.

"The current [bOT policy] rate is very supportive, while the interest rate for the government's 10-year bonds is one of the lowest in the region," Chirathep said. "Therefore Thailand's monetary cost is very low … We urge the private sector to invest now when you can get a 10-year loan at an interest rate of around 2.5 per cent, since this an opportunity to expand and increase your competitiveness."

So far two commercial banks, Siam Commercial Bank and Bangkok Bank, have lowered their lending rates after the policy-rate cut.

Land & Houses managing director Adisorn Thananum-Narapool said the lower policy rate was a challenge to the company's plan to issue a new debenture this year. This will cut its interest rate to below 4 per cent.

The company plans to issue half of the Bt10-billion debenture in the first half of this year, and the rest in the second half, he said.

Pruksa Real Estate, which plans to issue a debenture worth Bt3 billion this year, also expects it to carry a lower interest rate than last year, chief operating officer Lersak Chuladesa said.

This is also good news for home-buyers, who will be able to get lower interest rates on their mortgages, he added.

Thai Bond Market Association forecasts Thai companies will issue debentures worth totalling between Bt520 billion and Bt540 billion in this year, dropping 1.8 per cent from last year.

Meanwhile, SCB might consider adjusting its minimum lending rate if other major banks trim their MLRs by only 0.125 percentage point, less than SCB's recent rate cut.

SCB on Thursday became the first bank to lower its MLR and its fixed deposit rate by 0.20 percentage point. On Friday, Bangkok Bank also cut its MLR and fixed deposit rate, but by just 0.125 percentage point.

Krungthai Bank and Kasikornbank, the second and fourth largest banks by assets, have remained quiet over the rate cut.

Arthid Nanthawithaya, senior executive vice president of SCB, said yesterday that if several banks decided to trim their MLRs by only 0.125 percentage point, less than SCB did, the bank would consider adjusting its rates in line with the market.

However, he noted that the policy rate could be cut further as the real interest rate is high and the baht remains strong compared with the currencies of other countries in the region.

He said it was clear to SCB that the Thai economy is still struggling, which has had an impact on retail, small and medium-sized enterprises, and some corporate clients. The bank agrees with the BOT that the rate cut should be a tool to help those sectors.

Source: http://www.nationmultimedia.com/business/Baht-weaker-but-stable-after-rate-cut-30256140.html

-- The Nation 2015-03-17

[BSJ]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

[loppylugs1]

In a low waged economy a weak currency would be a good thing for everybody,exports cheaper,more tourism,and more investment coming in,but it seems for Thailand the other way around. 17.8 billion$US lighter this quarter compared than last years.

With a military govt.no way to protest,only unemployment. Thais for the Thais

[cloudhopper]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

Import costs of all raw materials and energy rise when currency devalues.

Local prices rise when currency devalues.

Malinvestment occurs when currency devalues.

Savings become worth less when currency devalues.

More money/credit in the system mathematically equals devaluation.

Devaluation is always a lose/lose proposition in the longer term.

[Torrens54]

Devalued by 0.5 per cent....what a JOKE! ....and a very bad one.

The Baht is WAY Over Valued and the above cut means ZIP, just check Today's Exchange Rate against whatever Currency you want to convert to Baht and you'll find there is almost no "change" since last week.

Edited March 17, 2015 by Torrens54

[Suradit69]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

Import costs of all raw materials and energy rise when currency devalues.

Local prices rise when currency devalues.

Malinvestment occurs when currency devalues.

Savings become worth less when currency devalues.

More money/credit in the system mathematically equals devaluation.

Devaluation is always a lose/lose proposition in the longer term.

"Devaluation is always a lose/lose proposition in the longer term."

Yes, that great economist Hugo Chavez tried that in Venezuela and Mugabe had devaluation handed to him in Zimbabwe. Extreme examples, but illustrative of the issues that arise with attempts to resurrect economies by currency manipulation. The US Fed faces the opposite problem. They're about the only central financial authority that wants to start raising rates, but the dollar is already overly strong. And of course the plummeting Euro is a blessing and a curse depending on your perspective.

Not everyone in Thailand is a rice farmer and even they can be negatively impacted by input inflation.

[ericthai]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

Import costs of all raw materials and energy rise when currency devalues.

Local prices rise when currency devalues.

Malinvestment occurs when currency devalues.

Savings become worth less when currency devalues.

More money/credit in the system mathematically equals devaluation.

Devaluation is always a lose/lose proposition in the longer term.

"Devaluation is always a lose/lose proposition in the longer term."

Yes, that great economist Hugo Chavez tried that in Venezuela and Mugabe had devaluation handed to him in Zimbabwe. Extreme examples, but illustrative of the issues that arise with attempts to resurrect economies by currency manipulation. The US Fed faces the opposite problem. They're about the only central financial authority that wants to start raising rates, but the dollar is already overly strong. And of course the plummeting Euro is a blessing and a curse depending on your perspective.

Not everyone in Thailand is a rice farmer and even they can be negatively impacted by input inflation.

exactly, most farmers are still using chemical fertilizers. While most of the fertilizers are made in Thailand the raw materials to make the fertilizer is imported.

Torrens don't know how you can say the baht is over valued, can you please explain why? I would like to see it get weaker as it would mean more baht in my pocket, but in reality I think it's just about where it should be.

[BlueSkyCowboy]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

As u said, you are no expert LOL. Just bired I guess

[xbusman]

Give me a one armed economist.

In an export based economy, one needs to have a "competitive" sustainable valuation. Thailand has not had a competitive valuation for almost a decade and it is finally showing in the contractions of exports. Fine if you develop your labor, move to higher technologies, educate your workforce such as South Korea, Japan, or Singapore. Not so fine if you are Greece, Venezuela or Myanmar. Eventually, the baht will find the proper level just more abruptly than if it were left to float.

[Thian]

Yeah I bet Kasikombank are staying quiet - yesterday they DROPPED their exchange rate to the pound from an already pitiful 46.8 to just 45.98 !!!

And how does it help home buyers when lending rates to private buyers are a ludicrous 7-8% ? That's just shameless profiteering and will hurt the economy. I came here this year to purchase 2 properties - at these rates I won't be buying squat !

If i were you i wouldn't buy properties now. There's a crisis around the corner with this high baht and no decent tourists.

If you can wait some years you can buy 4 properties for the price of 2 now.

[Dannyboy666]

Yeah I bet Kasikombank are staying quiet - yesterday they DROPPED their exchange rate to the pound from an already pitiful 46.8 to just 45.98 !!!

And how does it help home buyers when lending rates to private buyers are a ludicrous 7-8% ? That's just shameless profiteering and will hurt the economy. I came here this year to purchase 2 properties - at these rates I won't be buying squat !

. Kasikorn has Terrible Rates, TT here in Pattaya Dollar was 32.80, K was 32.53, WTH, I love Superich in Bangkok it's Number 1, in currency trades

[cloudhopper]

Give me a one armed economist.

In an export based economy, one needs to have a "competitive" sustainable valuation. Thailand has not had a competitive valuation for almost a decade and it is finally showing in the contractions of exports. Fine if you develop your labor, move to higher technologies, educate your workforce such as South Korea, Japan, or Singapore. Not so fine if you are Greece, Venezuela or Myanmar. Eventually, the baht will find the proper level just more abruptly than if it were left to float.

AFAIK the baht does float freely, and the FX market determines its "value" in other currencies.

[Asiantravel]

More money for even more car loans

[X pat]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

You watch these (so called) money mangers will manage to mess every thing up and the people will be the loosers.

[whatawonderfulday]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

Import costs of all raw materials and energy rise when currency devalues.

Local prices rise when currency devalues.

Malinvestment occurs when currency devalues.

Savings become worth less when currency devalues.

More money/credit in the system mathematically equals devaluation.

Devaluation is always a lose/lose proposition in the longer term.

Wrong devaluation is not always a lose/lose situation

For those able to manipulate, control and move vast amounts of siphoned of taxpayers money out of the country, before those self same people make those changes, then it is a win win for the absolutely corrupt. Under the current regime you can not protest at it happening, only watch as the megalomaniac(s) carry on making decisions to suit themselves. Remember "bringing happiness back to the Thais" was just that but only for a handful of them !

Edited March 17, 2015 by whatawonderfulday

[Daniel Ingalls]

Gee from my perspective, the lowering of the baht, which will even get low as predicted means we might see the days of

35. baht to the dollar even. The sinking of the Euro is great news, let it go down even more. For too long now it has been hovering up in 43-45 baht to the dollar. The housing market may get a little boom out of this devaluation as well for foreign buyers and investors.

[max72]

I am no expert on high finance, but when we put all of the factors together it would seem devaluing the baht more would be a good thing.

The price of paddie has dropped again. Devaluing the baht would give rice farmers a needed boost in income without government subsidy.

Exporters of manufactured goods would benefit.

If there is more money in the system it will stimulate the economy.

Devaluation looks like a win/win situation for the Thai people.

Import costs of all raw materials and energy rise when currency devalues.

Local prices rise when currency devalues.

Malinvestment occurs when currency devalues.

Savings become worth less when currency devalues.

More money/credit in the system mathematically equals devaluation.

Devaluation is always a lose/lose proposition in the longer term.

THB is highly overvalued compared to its peers which have seen their currencies dropping much faster.

Thai exporters are suffering terribly.

The Baht should drop in the short/,medium term ( i agree in the long term it is not he right way towards the development).

Now it is the right moment too, because the energy coast is so low (Oil $42).

Look at the Indonesian rupiah, the Brazilian Real, the South African Rand and also most of asian currencies.

Thailand is one of the weakest economies in Southeast Asia and it has had one of the strongest currencies.

THB vs. Malysian ringgit for example was 11 many years ago, than dropped to 10 and now 9, despite the accumulated growth in Malaysia has been much higher and the accumulated inflation about similar. Productivity in malaysia is much higher and political stability better.

The baht is above at what it should be at the moment. I am not saying they should devalue it to 50, but I think the THB should be around 35-36,although it won't probably get there (yet).

[craigoaus]

I'm confused the article was about the official interest dropping not the baht being devalued. Is there a policy of devaluation? The Australian Reserve Bank has been dropping the official interest for some time now and there has not been talk of devaluation. The Aus dollar has dropped against the U.S. dollar but we are being told this is due mainly to the dollar strengthening.

[samran]

I'm confused the article was about the official interest dropping not the baht being devalued. Is there a policy of devaluation? The Australian Reserve Bank has been dropping the official interest for some time now and there has not been talk of devaluation. The Aus dollar has dropped against the U.S. dollar but we are being told this is due mainly to the dollar strengthening.

I think you better go back and read Glenn Stevens views on the AUD. He's been talking it down for yonks. Lower Interest rates, commodity prices and a slower economy will all contribute to a lower AUD.

Edited March 17, 2015 by samran

[kalbz]

Lucky i bought my new car late last year, today it's AUD $5,000- more expensive. At this new cost i would not have bought it. It's sad to see the Aussie dollar fall into the abyss. I can forget the idea of buying a condo here, my landlord seems happy with that. Don't know about the company that built the condo's next door which still are empty.

[AjarnMartin]

How is the Baht weaker and yet we are getting fewer Bahts to the £ and $ - an enigma...?

[Ballbearing]

THB is highly overvalued compared to its peers which have seen their currencies dropping much faster.

Thai exporters are suffering terribly.

The Baht should drop in the short/,medium term ( i agree in the long term it is not he right way towards the development).

Now it is the right moment too, because the energy coast is so low (Oil $42).

Look at the Indonesian rupiah, the Brazilian Real, the South African Rand and also most of asian currencies.

Thailand is one of the weakest economies in Southeast Asia and it has had one of the strongest currencies.

THB vs. Malysian ringgit for example was 11 many years ago, than dropped to 10 and now 9, despite the accumulated growth in Malaysia has been much higher and the accumulated inflation about similar. Productivity in malaysia is much higher and political stability better.

The baht is above at what it should be at the moment. I am not saying they should devalue it to 50, but I think the THB should be around 35-36,although it won't probably get there (yet).

Max,

Not sure where you get the idea productivity is much higher in Malaysia.

I have been working in Malaysia for 4 years in Engineering / Construction and Thailand has a much better work culture.

In Thailand at lunch time in all the factories they will charge around playing football - in Malaysia they all go to sleep.

And don't get me started on how much time is lost to prayers,

Cheers,

BB

[Strangebrew]

If would be borrowers hold off for a month or two that alone will make rates much better. And the baht would be adjusted to the correct exchange rate law of supply and demand.

[PungShoeWrote]

Don't be surprised if this Googin running the country devalues the the currency 30% or more. That would bring in a lot more buffalo's to spend on over priced bar girls.

And, now that I have officially left that GD shit whole county after 6 years of being treated lower than Buffalo shit. I would like to say All Thai government officials can kiss my buffalo ass!!!!!!!!!!!!!!!!

Fnuck you too....

[davidmann]

cant understand why the Thai Bt is strong ,and most people so poor

[TheAppletons]

How is the Baht weaker and yet we are getting fewer Bahts to the £ and $ - an enigma...?

If you are getting fewer baht to the U.S. dollar then you are definitely changing your money in the wrong places. It's 32.92 to the dollar today; two weeks ago, it was approx 32.40.

[davidmann]

Don't be surprised if this Googin running the country devalues the the currency 30% or more. That would bring in a lot more buffalo's to spend on over priced bar girls.

And, now that I have officially left that GD shit whole county after 6 years of being treated lower than Buffalo shit. I would like to say All Thai government officials can kiss my buffalo ass!!!!!!!!!!!!!!!!

Fnuck you too....

I Never thought the girls are over priced and nearly always thought you get good service ,try going to the south france ,1000 euros a go if you lucky ,thats over priced

[neverdie]

Lucky i bought my new car late last year, today it's AUD $5,000- more expensive. At this new cost i would not have bought it. It's sad to see the Aussie dollar fall into the abyss. I can forget the idea of buying a condo here, my landlord seems happy with that. Don't know about the company that built the condo's next door which still are empty.

Mate I'm not sure if the Australian Paeso has fallen to the abyss, it's still fetching 25-26 baht and I remember days where it was well under 20.

It's come along way down from 32-33 but it's a hell of a way from the bottom. Historically the AUD sits around the 70 cents to the USD mark, still a way to go yet 555555

The baht is stupidly string considering the state of affairs.

Lots of smoke and mirrors atm, me thinks ???

[hawker9000]

Give me a one armed economist.

In an export based economy, one needs to have a "competitive" sustainable valuation. Thailand has not had a competitive valuation for almost a decade and it is finally showing in the contractions of exports. Fine if you develop your labor, move to higher technologies, educate your workforce such as South Korea, Japan, or Singapore. Not so fine if you are Greece, Venezuela or Myanmar. Eventually, the baht will find the proper level just more abruptly than if it were left to float.

AFAIK the baht does float freely, and the FX market determines its "value" in other currencies.

I think it's officially been a "managed-float exchange rate regime" since 1997. Intervention by the BoT is supposedly only to limit volatility and "achieve economic policy targets". This rate cut would be an example of the latter. Ending up going from 32.4-5:USD to 33:USD doesn't sound like something that'll have any measureable effect on tourism, but I can imagine it would help exporters and maybe stimulate a little borrowing.

[Swiss1960]

Don't be surprised if this Googin running the country devalues the the currency 30% or more. That would bring in a lot more buffalo's to spend on over priced bar girls.

And, now that I have officially left that GD shit whole county after 6 years of being treated lower than Buffalo shit. I would like to say All Thai government officials can kiss my buffalo ass!!!!!!!!!!!!!!!!

Fnuck you too....

From your post, you don't seem to be a loss to the Land of Smiles