Baht gains slightly after Fed keeps US policy rate steady

[webfact]

BAHT
Baht gains slightly after Fed keeps US policy rate steady
Erich Parpart
The Nation

BANGKOK: -- The baht strengthened slightly after the US Federal Reserve decided to maintain its policy interest rate.

The Thai currency gained by 0.9 per cent yesterday, to 33.59 against the US dollar, after closing at 33.62 on Wednesday.

"The US dollar depreciated after the Fed's meeting, which has contributed to the slight appreciation of the baht, but the movement is normal and is in line with other currencies in the region," said Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya.

Kasikorn Research managing director Charl Kengchon said Thailand would briefly escape the pressure from potential capital outflows. The baht movement would mainly be influenced by US economic indicators, he added.

Federal Reserve chairwoman Janet Yellen on Wednesday said the interest-rate decision was still up in the air and that she wanted "more decisive evidence" that the US labour market was healing, and that wages would increase beyond their current "subdued pace".

While an increase in the Fed funds rate from the current level of 0-0.25 per cent is anticipated in September, the Fed lowered its 2015 economic growth forecast for the US economy to 1.8-2.0 per cent versus the range of 2.3-2.7 per cent that was projected earlier.

Tim Leelahaphan, Maybank Kim Eng Securities (Thailand) economist, said the comments Yellen made after the Federal Open Market Committee (FOMC) meeting were "less hawkish than expected" but the securities firm maintains that the Fed rate increase will lift off in September at the earliest.

"The FOMC has revised down the US economic projection and it has revised down the path of the rate increase, while Yellen has also commented that its decision on the interest rate would be data-dependent, so the overall comments seem to be toned down," he said.

Maybank expects a 50-basis-points increase in 2015 and 100 basis points in 2016, and the momentum of the increase will be in a "go-stop-go" motion. The US policy interest rate has been in the range of 0-0.25 per cent since 2008.

Izumi Devalier, an economist at HSBC, said the important thing regarding the Fed rate increase was how quick it would be and where it ended up, and there was still a lot of uncertainty there.

Rate hike expected in Dec

"We expected the Fed to raise the interest rate in December, but in a very gradual manner, and that should be good for Asia's economy, as a very gradual rate normalisation in the United States means that there will be less volatility in Asia," she said.

HSBC expects an increase of 25 basis points this year and 50 basis points next year.

One risk that people should be keeping an eye on is a "very sharp and abrupt steepening" of the US long-term bond yield curve as the yield curve is quite flat. The short-term interest rate is zero and the 10-year yield is fluctuating at 2-2.5 per cent, but there are signs that the curve has steepened a bit and it could move up quite sharply in the future from a variety of factors, Devalier said.

"If the negative term premium becomes positive and if that happens in a very aggressive manner, it would be very disruptive for many Asian economies that have current-account deficits and high-level foreign ownership in portfolio debt, such as Malaysia and Indonesia," she said.

Thailand is not one of the countries at risk at the moment as foreign ownership in Thai government bonds is only at 11 per cent and the Kingdom is expected to have a current-account surplus of around US$12 billion this year, she concluded.

Source: http://www.nationmultimedia.com/business/Baht-gains-slightly-after-Fed-keeps-US-policy-rate-30262626.html

-- The Nation 2015-06-19

[morrobay]

1992 - 2000 saw some of the best recent years in the U.S. economy under President Clinton and interest rates in 6% - 7% range. And now talk about rates of 1% - 2% is a big deal ??.

The saps who caused the financial crisis ( bubble ) with very low interest rates seem to still be in control ?

Who benefits the most from very low interest rates besides the stock market ? This new normal slacked economy is the result.of this kool aid monetary policy.

Edited June 19, 2015 by morrobay

[BudRight]

1992 - 2000 saw some of the best recent years in the U.S. economy under President Clinton and interest rates in 6% - 7% range. And now talk about rates of 1% - 2% is a big deal ??.

The saps who caused the financial crisis ( bubble ) with very low interest rates seem to still be in control ?

Who benefits the most from very low interest rates besides the stock market ? This new normal slacked economy is the result.of this kool aid monetary policy.

It's not a conspiracy. They have completely lost their minds.

[Berkshire]

1992 - 2000 saw some of the best recent years in the U.S. economy under President Clinton and interest rates in 6% - 7% range. And now talk about rates of 1% - 2% is a big deal ??.

The saps who caused the financial crisis ( bubble ) with very low interest rates seem to still be in control ?

Who benefits the most from very low interest rates besides the stock market ? This new normal slacked economy is the result.of this kool aid monetary policy.

It just goes to show you how much power Wall Street still has over Washington. The financial industry wants to milk every last dime out of this bull run. They know a correction is coming--hiking rates now would only accelerate it.. And with the Greece/EU situation overhanging, they've got the feds by the balls...well, figuratively speaking in Janet Yellen's case.

[Acharn]

1992 - 2000 saw some of the best recent years in the U.S. economy under President Clinton and interest rates in 6% - 7% range. And now talk about rates of 1% - 2% is a big deal ??.

The saps who caused the financial crisis ( bubble ) with very low interest rates seem to still be in control ?

Who benefits the most from very low interest rates besides the stock market ? This new normal slacked economy is the result.of this kool aid monetary policy.

It's not a conspiracy. They have completely lost their minds.

Nonsense. They're making money, lots of money. The risks to the rest of us are unimportant. By "they," of course, I'm referring to the top 0.1% of the income distribution. I'm sure they wish they could get more of their gains from safe government bonds, but they just have to man up and accept risk if they want higher returns. So far it's worked, but with QE ended they have to push for higher interest rates on government bonds. They want safe returns from safe investments and to blazes with the rest of us. Oh, yeah, they want to keep the economy from growing to the point where workers can get wage increases, too. That's a feature of higher interest rates, not a bug.

[Srikcir]

The baht needs to hit Bt35 to 1 USD before September if the exchange rate is going to help keep the GDP rate above 3% for the year.

Otherwise the Finance Minister may have to do his job to stimulate the economy but that will mean more investment by the government in Thailand than relying on foreign debt. However, Prayut micromanages his cabinet and would rather use the treasury for quick payments for political purposes than for long-term fiscal goals.

[TheAppletons]

The baht needs to hit Bt35 to 1 USD before September if the exchange rate is going to help keep the GDP rate above 3% for the year.

Otherwise the Finance Minister may have to do his job to stimulate the economy but that will mean more investment by the government in Thailand than relying on foreign debt. However, Prayut micromanages his cabinet and would rather use the treasury for quick payments for political purposes than for long-term fiscal goals.

I don't think even 35:1 on the USD to THB rate will salvage 3% GDP growth. It's almost to the midpoint of the year now with virtually no growth so the economy would need to produce gains at 5-6% for the last half of the year to get 3% annual growth. Don't see how that's gonna happen.

[morrobay]

The baht needs to hit Bt35 to 1 USD before September if the exchange rate is going to help keep the GDP rate above 3% for the year.

Otherwise the Finance Minister may have to do his job to stimulate the economy but that will mean more investment by the government in Thailand than relying on foreign debt. However, Prayut micromanages his cabinet and would rather use the treasury for quick payments for political purposes than for long-term fiscal goals.

I don't think even 35:1 on the USD to THB rate will salvage 3% GDP growth. It's almost to the midpoint of the year now with virtually no growth so the economy would need to produce gains at 5-6% for the last half of the year to get 3% annual growth. Don't see how that's gonna happen.

The baht would be and would have been all along in this range, 35-38 had not Bush , Cheny and Greenspan taken the U.S. to ruin : Gore won the 2000 election and most likely a prosperous U.S. economy would have continued.. But a judicial coup by supreme court gave Bush the election. The disasterous invasion of Iraq and nation building in Afganistan while simultaneously cutting taxes and promoting reckless financial deregulation with that hack Greenspan caused the financial crisis. In my book Bush , and Cheny should be in the Hague while Greenspan should be in prison.Quote from Stalin :"The way to destroy a country is to destroy its currency "

Edited June 21, 2015 by morrobay

[TheAppletons]

The baht needs to hit Bt35 to 1 USD before September if the exchange rate is going to help keep the GDP rate above 3% for the year.

Otherwise the Finance Minister may have to do his job to stimulate the economy but that will mean more investment by the government in Thailand than relying on foreign debt. However, Prayut micromanages his cabinet and would rather use the treasury for quick payments for political purposes than for long-term fiscal goals.

I don't think even 35:1 on the USD to THB rate will salvage 3% GDP growth. It's almost to the midpoint of the year now with virtually no growth so the economy would need to produce gains at 5-6% for the last half of the year to get 3% annual growth. Don't see how that's gonna happen.

The baht would be and would have been all along in this range, 35-38 had not Bush , Cheny and Greenspan taken the U.S. to ruin : Gore won the 2000 election and most likely a prosperous U.S. economy would have continued.. But a judicial coup by supreme court gave Bush the election. The disasterous invasion of Iraq and nation building in Afganistan while simultaneously cutting taxes and promoting reckless financial deregulation with that hack Greenspan caused the financial crisis. In my book Bush , and Cheny should be in the Hague while Greenspan should be in prison.Quote from Stalin :"The way to destroy a country is to destroy its currency "

Do you get all of your news from MSNBC's Rachel Maddow or just the left wing conspiracy theory stuff?

[NeverSure]

I don't think even 35:1 on the USD to THB rate will salvage 3% GDP growth. It's almost to the midpoint of the year now with virtually no growth so the economy would need to produce gains at 5-6% for the last half of the year to get 3% annual growth. Don't see how that's gonna happen.

The baht would be and would have been all along in this range, 35-38 had not Bush , Cheny and Greenspan taken the U.S. to ruin : Gore won the 2000 election and most likely a prosperous U.S. economy would have continued.. But a judicial coup by supreme court gave Bush the election. The disasterous invasion of Iraq and nation building in Afganistan while simultaneously cutting taxes and promoting reckless financial deregulation with that hack Greenspan caused the financial crisis. In my book Bush , and Cheny should be in the Hague while Greenspan should be in prison.Quote from Stalin :"The way to destroy a country is to destroy its currency "

Do you get all of your news from MSNBC's Rachel Maddow or just the left wing conspiracy theory stuff?

Rachel Maddow is ignorant, but not this ignorant. This guy is swinging from the trees.

[NeverSure]

The baht would be and would have been all along in this range, 35-38 had not Bush , Cheny and Greenspan taken the U.S. to ruin : Gore won the 2000 election and most likely a prosperous U.S. economy would have continued.. But a judicial coup by supreme court gave Bush the election. The disasterous invasion of Iraq and nation building in Afganistan while simultaneously cutting taxes and promoting reckless financial deregulation with that hack Greenspan caused the financial crisis. In my book Bush , and Cheny should be in the Hague while Greenspan should be in prison.Quote from Stalin :"The way to destroy a country is to destroy its currency "

Are you real? The economy was on the upswing when Clinton took office and was slipping into recession when he left. It officially entered a recession just weeks after Clinton left office, in March, 2001. Al Gore would have inherited the Clinton recession.

Clinton brought us the Community Reinvestment act which essentially said that all Americans deserved to own a house, and mandated that banks not appraise or lend by location. Historically location has been theee foundation of appraisal. Neighborhoods that were run down couldn't be "discriminated against" and lenders began to make a lot of loans they otherwise wouldn't have. This led not only to the housing bubble, but to bank losses due to foreclosing collateral that wasn't worth having.

Clinton's social experiments shouldn't have been carried out with real money. He should have been given monopoly money. The sub prime mortgage derivatives were filled with nonsense loans that had no real basis.

You are so far off track that's as far as I'm going.

[morrobay]

The subject of the OP is the exchange rate and the too strong baht having adverse effects on the Thai economy. Following the financial crisis that I referred to post # 8. The Fed with Bernanke launched all this quantitative easing to support the banks. Instead of taking this capital and developing infrastructure projects in the U.S. that would have employed thousands and upgraded the sorry condition of the countries bridges while improving seaports and rail connections that would help the manufacturing/export sector,the banks speculated on assets in emerging economies like the Thai baht. And the only conspiracies about all the above and (post # 8) are from those trying to cover it up.

Edited June 22, 2015 by morrobay

[TheAppletons]

The subject of the OP is the exchange rate and the too strong baht having adverse effects on the Thai economy. Following the financial crisis that I referred to post # 8. The Fed with Bernanke launched all this quantitative easing to support the banks. Instead of taking this capital and developing infrastructure projects in the U.S. that would have employed thousands and upgraded the sorry condition of the countries bridges while improving seaports and rail connections that would help the manufacturing/export sector,the banks speculated on assets in emerging economies like the Thai baht. And the only conspiracies about all the above and (post # 8) are from those trying to cover it up.

Suuuuuuuure it is.....