BOT measures a tonic for foreign investment

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BOT measures a tonic for foreign investment
ERICH PARPART
THE NATION

BANGKOK: -- BUSINESSES believe the Bank of Thailand's (BOT) move to lower the policy interest rate and relax foreign exchange regulations have depreciated the baht and made it easier for firms to invest abroad.

The baht stood at Bt32.95 against the US dollar on January 1 and at Bt32.63 on April 28 (a day prior to the BOT's Monetary Policy Committee decision to reduce the policy rate from 1.75 to 1.50 per cent) before depreciating to Bt33.48 on Thursday, a week after the cut.

Somhatai Panichewa, chief executive officer of Amata VN and president of Amata (Vietnam) Joint Stock Company, said that even though the stronger baht is good for firms that want to invest overseas, there needs to be a balance because the appreciation of the baht will effect the export sector.

"A strong baht is good for investment overseas because it means that we can spend less money procuring equipment and materials for construction and production but exporters will not be happy. The stronger it is the better for us but there needs to be a balance," she said.

Amporn Kanjanakumnerd, chief operating officer for the Thai sugar business at Mitr Phol Group, said the depreciation of the baht has "definitely helped" the export sector because the country's foreign exchange competitiveness has been in tatters since the end of last year when the currencies of other trading partners depreciated faster than the baht.

"The deprecation has helped a lot because other currencies have been depreciating since last year but the baht remains more or less the same from the beginning of the year until the cut and other added measures last week," she said.

Mitr Phol is the country's largest sugar producer and exporter while Brazil is the main trading partner whose currency has depreciated around 25 per cent since November 2014 until now.

Somhatai explained that the central bank's relaxing of the foreign exchange regulations will not have that much of an impact on firms in the real sector because companies in the real sector always have a tangible plan before they invest overseas.

"Moving fund overseas is not a problem for us because we always have a clear plan for all of our overseas projects and the central bank has never stopped us from transferring any money to or from abroad because of that but the relaxation should be able to help firms in other sector who do not have a tangible plan to move abroad or firms that wants to transfer money to wait overseas first before coming up with a detail plan to show to the BOT," she added.

Meanwhile, Tim Leelahaphan, Maybank Kim Eng Securities (Thailand) economist and assistant vice president of its Research Department, has maintained that the consecutive cuts of the policy interest rate at the last two MPC meetings will only have a "limited impact" and the baht is expected to be in the region of Bt33-Bt34 in the coming period before ending the second quarter at around Bt33 against the US dollar.

Source: http://www.nationmultimedia.com/business/BOT-measures-a-tonic-for-foreign-investment-30259759.html


-- The Nation 2015-05-11

[Srikcir]

"the baht is expected to be in the region of Bt33-Bt34 in the coming period"

I predicted in January 2015 an exchange rate of Bt35 to 1 USD by end of 2015Q2.

BUT

Thai exports still face uncertainty, especially in seafoods, because of overfishing and human trafficking issues with the US and UK. Also, the continued surge in household debt and defaults that are the highest in the ASEAN countries together with a sluggish government stimulus plan may push the economy into deflation, further complicating the stability of the baht. A worse-case scenario would drive the baht to 40 by summer 2015.

[pattayasnowman]

The chart indicates the long awaited break out above 33 to the $.

If this holds to the end of May and does not reverse the next point of resistance is the 2009 high of 36

Added to this technical picture is the recent policy shift by the BOT to weaken the Baht:

"Thailand's baht has long out-muscled regional peers, but amid a stumbling economy, the central bank has pulled the plug on supporting the currency."

http://www.cnbc.com/id/102647724

The move to 36 could be very rapid

Edited May 11, 2015 by pattayasnowman