Thailand's foreign reserves up US$800 million to 5.644 trillion baht

[Jonathan Fairfield]

Foreign reserves up US$800 million to 5.644 trillion baht

BANGKOK:-- Thailand’s foreign reserves as of November 13 increased by US$800 million to US$ 157.3 billion or 5.644 trillion baht based on the exchange rate of 35.80 baht/dollar, according to the Bank of Thailand.

Thailand’s forward position, meanwhile stood at US$10.8 billion in the same period, representing a decrease of US$ one billion compared to a week earlier of US$11.8 billion.

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened. Baht has stabilized at between 35.80-36.00 baht against the US dollar.

Commercial banks’ deposits with the central bank and cash in circulation now total 1.52 trillion baht, slight drop from last week’s 1.542 trillion baht.

Source: http://englishnews.thaipbs.or.th/foreign-reserves-up-us800-million-to-5-644-trillion-baht

-- Thai PBS 2015-11-21

[ezzra]

Yeah, no wonder I had to pay tax last year... this is why....

[loong]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

[bangkokheat]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

same reason as the electricity is not same here as other countries

[Naam]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

you know, i know and a lot of others know that the BoT buying Dollars would weaken the Baht.

but why would anybody assume that a journalist of "The Broadcaster You Can Trust" would know that?

[empireboy]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

It's a "hedge" against the rising usd/falling thb. The amount of usd bought would hardly make a blip on the usd rate moving up but it would give some reassurance to the thb, especially if you were of the view the trend was set to continue...

[Acharn]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

That's what I was going to ask. Totally counter to orthodox economic theory.

[Acharn]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

same reason as the electricity is not same here as other countries

??? What other countries? 220 volt 50 cycle is very common. It's the U.S. that is the outlier with its weird 120 volt 60 cycle. Does any other country do that? Canada? Mexico?

Edit: Interesting. Found List of Worldwide AC Voltages and Frequencies.

Edited November 21, 2015 by Acharn

[spambot]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

It's a "hedge" against the rising usd/falling thb. The amount of usd bought would hardly make a blip on the usd rate moving up but it would give some reassurance to the thb, especially if you were of the view the trend was set to continue...

empireboy

If I understand you correctly - The more USD in the central bank of Thailand = more the THB will be tied to the movement of the USD and therefore less tied on the organic value of the THB itself - Is that what you mean by the Hedge?

[empireboy]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

It's a "hedge" against the rising usd/falling thb. The amount of usd bought would hardly make a blip on the usd rate moving up but it would give some reassurance to the thb, especially if you were of the view the trend was set to continue...

empireboy

If I understand you correctly - The more USD in the central bank of Thailand = more the THB will be tied to the movement of the USD and therefore less tied on the organic value of the THB itself - Is that what you mean by the Hedge?

Hmmmm.... More like, if I'm fully invested in a currency that is falling, but another (the benchmark) is rising, then if I buy the rising one I have some insurance (up-side potential). If the benchmark falls my thb rises but if the benchmark rises I have THOSE gains to off-set my losses on the thb.. Kind of an "each-way-bet"

Edited November 21, 2015 by empireboy

[spambot]

Ahhh - OK - I think we are on the same page - I used a clumsy word "tied" and you explain it better - Hence in my way of thinking if you cleared out all the central bank THB (ok I know this is not realistic and only used here to identify meaning) and replaced it 100% with USD - Result = no downside risk impact from the THB to the central bank (But obviously then - and I have totally ignored the fact that - there is no further THB available for future circulation and hence the THB would be a proxy for the USD in effect) - net result = THB becomes stronger than it was before the USD purchase (and obviously less exposed to downside fluctuations to THB caused by the stronger and increasing USD that is currently the fear)

Edited November 21, 2015 by spambot

[Srikcir]

Interesting that the Thai government invests in USD's while encouraging the foreign and domestic investment community to put their market capital into Thai businesses.

[Naam]

Currency traders attributed the increased foreign reserves to the central bank’s purchase of US currency to prop up the baht which has also strengthened

Excuse my ignorance, but how does buying USD prop up the Baht? If they buy USD with Baht, that would strengthen the USD and weaken the Baht (against the USD)

It's a "hedge" against the rising usd/falling thb. The amount of usd bought would hardly make a blip on the usd rate moving up but it would give some reassurance to the thb, especially if you were of the view the trend was set to continue...

are you be aiming for the "Gobble Prize" with your theory? fact is that the BoT does indeed, and that since years, intervene and influence USDTHB rate by buying or selling Dollars.

even rather small amounts affect the exchange rate of a restricted and internationally insignificant currency like the Thai Baht.

[waldroj]

Finally - a piece of objective journalism from the Broadcaster we can trust (or so you would think)!

But, alas, according to Alan Sunderland from the Australian Broadcasting Corporation, “Anyone who simply collects facts and sets them down is not a reporter. Unless you also weigh the evidence, you're not a journalist, you're a stenographer” http://www.abc.net.au/news/2015-09-10/sunderland-objective-reporting-has-never-been-more-necessary/6764320.

What this seemingly innocuous collection of figures (from the Bank of Thailand) fails to show is that the value of foreign currency reserves (expressed in $US) have shown a protracted decline since 29 April 2011 ($US189.9 billion) - see my plot of BoT data starting from March 2003.

The current political uncertainty and lack of foreign investment confidence suggest the BoT would be unlikely to try to be too adventurous any time soon (regardless of the stimulus incentives currently touted by the junta)!

It would be interesting to get other people’s views about the net forward positions figures, specifically whether its decline since the end of last year is due to manipulation by the BoT, trying to weaken the baht to help exports (and also attract Chinese tourists)?

During the period of the plot, the BoT has applied a number of capital control measures (with varying degrees of success, and some more visible in the plot than others) mainly to stop the outflow of foreign currency or limit damage to exporters of an appreciating baht.

[Robert24]

Looks like the baht is surprisingly strong if they had to weaken it. I thought the weaker baht was more a reflection of the Global sell off of EM currencies and general $ strength. But clearly the BoT intervened to make the baht weaker.