No need to fear currency war, says Apisak

[webfact]

No need to fear currency war, says Apisak
ERICH PARPART
THE NATION

BANGKOK: -- A CURRENCY war in the region is unlikely as countries have different monetary tools to deal with different situations, Finance Minister Apisak Tantivorawong said yesterday.

"China has cut its [interest] rates in an attempt to [ensure] its economy expands by 7 per cent as it has targeted for this year.

"The Chinese government saw that the economy was slowing down, and there are many tools and bullets that China can used to stimulate and support its economy," he said after delivering the keynote speech at the 12th FPO Symposium arranged by the Fiscal Policy Office.

The People's Bank of China's decision to lower its benchmark interest rate and its commercial bank reserve requirement ratio was more of an attempt to support Beijing's economic-expansion target than an attempt to devalue the yuan further, he said.

The PBOC made a 25-basis-point symmetric cut to put the one-year loan rate at 4.6 per cent and deposit rate at 1.75 per cent, while the 50bps reserve requirement cut means that 680 billion yuan in reserves will be returned to the banking system on September 6.

Baht depreciated slightly

"The nature of the Chinese government is to manage its money markets instead of letting it go with market influences only, while the matter regarding currencies in the region is more of the market's matter where each country has different ways to stimulate its economy.

"It does not have to become a currency war and the chance for that to happen is unlikely at the moment," Apisak said.

The baht depreciated only slightly yesterday, by 0.23 per cent, against the US dollar after the Chinese rate cuts. The baht was trading at 35.63 against the greenback as of 4pm compared with its Tuesday close of 35.55.

Prinn Panitchpakdi, country head at CLSA Securities, agreed with the finance minister's assessment that a currency war in the region is unlikely.

China's interest-rate cut was faster than the market had anticipated but Prinn doubts it will help the market as it was an attempt to support the overall economy. Another cut to China's main interest rate is likely in the upcoming PBOC meeting and there will be more activities on the fiscal spending front, as Beijing is going to use everything in its vast arsenal to support its economy, he said.

"The PBOC is concerned about China's latest PMI and export numbers and it has widened the currency band to loosen the yuan to make sure that [China is] not at a disadvantage compared with other countries, so this is not a currency war," he told The Nation after attending the morning session of the FPO symposium.

The final reading for the Caixin China purchasing managers' index (PMI) dropped to 47.10 points in August from 47.80 in July, which is the biggest decline since 2009.

"For example, the baht has depreciated by 7-8 per cent against the US dollar since the beginning of the year, but the yuan on the other hand was appreciating by 3 per cent before the government decided to lower the midpoint of the yuan," Prinn said.

There should be no reaction from the Bank of Thailand regarding the Chinese rate cuts as the central bank is comfortable with the current policy rate even though the economy is currently weak. Any response would depreciate the baht even further, and the BOT "will not do anything drastic" until the new governor, Veerathai Santiprabhob, takes office in October.

Source: http://www.nationmultimedia.com/business/No-need-to-fear-currency-war-says-Apisak-30267519.html


-- The Nation 2015-08-27

[BuaBS]

A CURRENCY war in the region is unlikely as countries have different monetary tools to deal with different situations, Finance Minister Apisak Tantivorawong said yesterday.

No need to fear currency war, says Apisak

Then I guess that there is already a currency war in the region and there is a need to fear.

[ehs818]

In my experience, any time an official makes a statement like this one, usually exactly the opposite is true. TIT.

[elgordo38]

A CURRENCY war in the region is unlikely as countries have different monetary tools to deal with different situations, Finance Minister Apisak Tantivorawong said yesterday.

No need to fear currency war, says Apisak

Then I guess that there is already a currency war in the region and there is a need to fear.

When these people say there is "nothing to fear" you should be very very afraid well in our case happy as we will get a bigger baht bang for our bucks.

Edited August 27, 2015 by elgordo38

[Srikcir]

"this is not a currency war" but merely a manipulation of the yuan to give it an advantage over foreign currencies.

Any economic cost to other nations is purely coincidental and no appology is made.

To those countries who have Security and Trade Agreements with China such as Thailand must understand that China does what other superpowers do, consider its own interests first.

Thailand can be the Hub of a Patsy.