Flows Push Thai Baht To Highest Vs Dlr Since Jan'00

[nokia]

Flows push Thai baht to highest vs dlr since Jan'00

Tue Oct 24, 2006 11:05pm ET

SINGAPORE, Oct 25 (Reuters) - Strong foreign investment flows into Thailand drove the baht on Wednesday to its strongest level against the dollar since January 2000.

The baht rose as high as 37.11 per dollar, traders said. It stood at about 37.20 per dollar in late trade on Tuesday and has gained 1.3 percent in two weeks.

"The dollar broke the support at 37.20 on offshore selling, especially from Singapore," a Bangkok-based trader said.

Some dealers had expected the baht to weaken in anticipation of a possible sale by Singapore state firm Temasek Holdings of a stake in Thailand's Shin Corp , which it bought in January from the family of ousted Thai Prime Minister Thaksin Shinawatra.

Thaksin's critics have said the agreement breached foreign ownership laws and the deal is under investigation.

Claudio Piron, a JPMorgan Chase currency strategist, said he was sceptical about market talk that such huge outflows from Thailand were lined up.

Rather, heavy foreign buying of undervalued Thai stocks and the progress on the political front were underpinning the baht, he said.

Thailand's 242-member National Legislative Assembly, handpicked by the leaders of the military coup, met for the first time on Tuesday. The baht has now fully recovered losses made after the Sept. 19 military coup.

http://yahoo.reuters.com/news/articlehybri...News&rpc=44

[Losangels]

Good news for people with earnings in Baht and bad for those that aren't.

My previous prediction(guess) for the Baht by year end was in the 39-40 baht range to the US$

###### it I should not have exchanged the baht into dollars earlier this year

Any one care to give a shot to where the Baht be at the end of this year?

[Jai Dee]

Central Bank says baht too strong

Bank of Thailand acting governor Dr Thalisa Watanakes said baht is now "a little bit too strong" at the rate of Bt37.11 per a US dollar.

The baht rose to Bt37.11 per US dollar in the morning trade, the strongest level in six years.

She said the baht became stronger mainly because of inflow capitals to the stock market.

Thalisa declined to commit herself whether the central bank would intervene to soften baht.

Source: The Nation - 25 October 2006

[cclub75]

Central Bank says baht too strong

Do you notice that in the world, we have like a crazy race between countries to have a "weak currency" ?

It's especially true in Asia : massive intervention in Japan to the Yen under the water vis-a-vis USD, authoritarian parity for the Yuan in China.

Europe too. If euro comes close to 1.30 USD, then it's a like a concert of screaming people : "too high !".

In the USA, we have double language : Bush administration advocates a "strong dollar", but in the facts, they do exactly the contrary.

What is happening ?

I don't really buy the "exportations" issue. I mean China, Asia in a whole has already killed most of industries in the West. I'm not sure they need a weak Yuan in order to "export more". They have enough of competitive advantages (very low wages, volume, and support/subventions from central government).

Could it be an effect of the big.. USD problem ?

Japan and China have huge reserves in USD (1 trillion for China).

So if they let their currencies going up (and "normally they should, Yen and now Yuan are grossly undervalued), then the USD will sink (which "normally" should happen) relatively.

A stronger Yen and Yuan would reveal the weakness of the USD.

And nobody wants that.

My opinion : market rules are no longer at work in the world, regarding economy and currencies.

What do you think ?

[Old Man River]

Good news for people with earnings in Baht and bad for those that aren't.

My previous prediction(guess) for the Baht by year end was in the 39-40 baht range to the US$

###### it I should not have exchanged the baht into dollars earlier this year

Any one care to give a shot to where the Baht be at the end of this year?

If Dr. Tarisa says it is currently too strong, then we can assume it will be in the 38 to 39 range. I don't know when you said 39-40, but it was probably and excellent guess at the time. If anyone really knew, then they would give Bill Gates a run for his money.

[Old Man River]

Central Bank says baht too strong

My opinion : market rules are no longer at work in the world, regarding economy and currencies.

What do you think ?

I tend to agree. The "exportations" theory works for small countries who trade with the US (Thailand for example). They will try to make sure their currencies stay within a stable range of the USD. If the USD weakens, then they will try to weaken their currency etc.

However, for other currencies it is different. We discussed this on TV last week. China, Japan and the oil exporting countries (oil exports are all USD denominated, regardless of countries involved) have all purchased USD securities. They continue to do so, regardless of their returns (i.e. USD interest rates are expected to fall). This is contra to what you would expect. The US Government is hanging its hat on the fact that China, Japan and the OPEC countries (surplus countries) will continue to support the USD with their purchases of USD securities and not stop buying these securities or even worse, sell their existing portfolios. The thought is that if they did, the USD would weaken, causing them to take huge losses.

If countries running surpluses with the US stop supporting the USD at a time when the Fed deems it necessary to halt interest rate rises (i.e. market forces again rule), the USD will take a major tumble in value. Hopefully, this won't happen, but if it does, then Losangels prediction of the USD/THB by the end of the year will look good.

[Old Man River]

Central Bank says baht too strong

My opinion : market rules are no longer at work in the world, regarding economy and currencies.

What do you think ?

If countries running surpluses with the US stop supporting the USD at a time when the Fed deems it necessary to halt interest rate rises (i.e. market forces again rule), the USD will take a major tumble in value. Hopefully, this won't happen, but if it does, then Losangels prediction of the USD/THB by the end of the year will look good.

I just realized I got the above wrong and want to correct it. If the USD were to fall because surplus countries dump USD, the BOT would have to dump (sell) a heck of a lot of THB to keep up with the falling USD to keep a stable USD/THB exchange rate. This would be difficult if it is a large USD drop, hence, the THB would likely strengthen against the USD, not weaken as I had above.

[bkkandrew]

It is actually the case that the THB is strong against the USD specifically. GBP value to THB is within 3% of 1-year high..

The problems of the USD (today 37.06 to THB, 1.877 to GBP) are over-exaggerating any strength of regional currancies and are not really of significance.. IMHO

Edited October 25, 2006 by bkkandrew

[thaigene2]

Come on..

It's a VERY short-term combo of the USD continued weakening and panic that Singapore is going to get royally screwed over Temasek. Put the two together and the Baht strengthens.

How many invested in oil continuing an upward climb in the last two months..?? Any more takers on a rising oil market?

[cclub75]

Any more takers on a rising oil market?

Well... we have right now a nice push on the oil (+3 %)... after a rather "unexpected" decline in U.S. Stockpiles... That's really too bad : elections are in less than 2 weeks.

[Gary A]

The baht is now trading at 36.92 to the dollar. I was holding off making a wire transfer until it was 39 to a dollar. I sure missed my guess on this one.

[cclub75]

USD - THB = 36.98 right now....

The BOT is sleeping ?

Edited October 26, 2006 by cclub75

[samran]

USD - THB = 36.98 right now....

The BOT is sleeping ?

BOT is waiting....to be seen to be in a panic is just as bad.

[george]

This topic continues here:

http://www.thaivisa.com/forum/index.php?showtopic=90106