Baht Appreciates To Strongest Level In 8 Years

[Heng]

Nothing wrong with shaking out inefficient exporters once in awhile. Almost 9 full years of inflated profits from USD-THB forex... if you haven't been diversifying and reinvesting in that stretch, you deserve to take a hit IMO.

Correct Heng. It was sabai for them.

But... the problem is that the "thai machine" is led by exports.

If this machine fails, then the whole country will catch a cold.

My point was that the whingers asking for gov't help are hardly representative of all exporters... and sound more like they are crying about the loss of the skim and creme, not the milk.

[Tiger7Moth]

How is it getting harder to transfer the money?

We as US citizens have to have US Bank accounts and a US address for our pension

or social security to be automatic deposit in our accounts. We then withdraw the money

with our ATM cards. Some US banks have stopped ATM withdrawals in most countries included Thailand. I have 3 US Bank accounts and I can shift money from one to the other, but I can not

transfer them into my Thai bank accounts. There is no agreement between Thailand and the US.

Also because of Bushes Homeland Security Act everyone is a terrorist suspect so one bank has cut my daily withdrawal limit just 6 month ago from $1000 a day to $200.

IF SOMEONE KNOW A BETTER WAY TO TRANSFER MONEY PLEASE LET ME KNOW

I have a bank account in Colorado. I simply send an e-mail and wire transfer to my Thai bank account for a flat fee of $35. Naturally, I try to transfer enough to last me for several months so that the fee is a small %. Now, I keep waiting and hoping for an improvement before my next large transfer. Over the last 3 years I have managed to average about 40 baht:$ but, things look bleak at the moment.

[Jai Dee]

Thai Baht Falls on Currency Sale Concern: World's Biggest Mover

Nov. 17 (Bloomberg) -- Thailand's baht, Asia's best performer this year, weakened on concern the central bank will sell the currency to prevent its gains from hurting exports.

Thai exporters such as Thai Union Frozen Products Pcl, the world's second-biggest tuna canner, this week asked the central bank to curb the appreciation, saying it has undermined their competitiveness. Bank of Thailand Governor Tarisa Watanagase said on Nov. 15 the central bank is ready to buy or sell the currency, which this week touched a seven-year high.

"Exporters raising their voices led to speculation the central bank will come in,'' said Koji Fukaya, chief economist and currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. The central bank "will probably be successful in putting a break on the currency's gain.''

The baht dropped 0.4 percent to 36.63 at 9.52 a.m. in Bangkok, erasing its weekly gain and posting the world's biggest currency move so far today. It may trade between 36.50 and 37 in a week, Fukaya said.

The baht reached the highest since 1999 on Nov. 14 as overseas investors bet the economy will pick up after armed forces ousted Thaksin Shinawatra as prime minister in the Sept. 19 coup. Consumer confidence rose for the second straight month in October to a seven-month high, according to the University of the Thai Chamber of Commerce.

Exporters Complain

Thai exporters of chicken meat, shrimps, soybean and other products are losing orders to competitors in China, Indonesia and Vietnam, whose currencies are strengthening at a slower pace than the baht, Poj Aramwattananont, president of Thai Frozen Foods Association, said yesterday at a press conference held by 10 industry groups.

A stronger currency increases the costs of Thai products overseas and reduces baht-denominated profits of exporters. The baht climbed 12 percent this year against the dollar, the best performer among 15 most actively traded Asia-Pacific currencies. China's yuan rose 2.5 percent, Indonesia's rupiah climbed 7.2 percent and Vietnam's dong fell 1.1 percent.

Thailand is relying on overseas sales to achieve its growth forecast of as much as 5 percent this year. Thailand's exports rose 16 percent from a year earlier to $35 billion in the third quarter, based on customs data compiled by Bloomberg.

The central bank, which holds its next monetary policy- setting meeting on Dec. 13, halted a run of nine straight rate increases in July. The interim government said last month it plans to boost state spending next year to help economic growth.

Thailand's baht is fluctuating too much because of foreign money flowing into the country and the region, Tarisa said on Nov. 15. Fund managers outside of the nation bought $3.2 billion more of Thai equities than they sold this year through yesterday, according to stock exchange data.

The world's biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading.

Source: Bloomberg - 17 November 2006

[Old Man River]

Nothing wrong with shaking out inefficient exporters once in awhile. Almost 9 full years of inflated profits from USD-THB forex... if you haven't been diversifying and reinvesting in that stretch, you deserve to take a hit IMO.

Correct Heng. It was sabai for them.

But... the problem is that the "thai machine" is led by exports.

If this machine fails, then the whole country will catch a cold.

My point was that the whingers asking for gov't help are hardly representative of all exporters... and sound more like they are crying about the loss of the skim and creme, not the milk.

While Dr. Tarsa can't be as direct as we can on TV, that is the main issue.

The BOT has learned a great deal from the 1997 crisis, and they are now doing the very things that the experts said they should have done in 1996/1997. At the end of the day, if the exporters can't compete then they should find a way to compete or get out of the business. It is the same for everyone.

[Indifferent]

Indifferent,

Can you give examples of Thailand investing in its own technology infrastructure in this regard?

Chownah

Yes.

IT Projects into the Future

In May 1997, the government led by General Chavalit Yongchaiyudh approved the budget commitment of about 4.2 billion baht for three major IT projects collectively titled IT Projects for national Development. These projects are Software Park, GINet (Government Information network) and ThaiSarn-III (Thai Social/Scientific, Academic and Research Network Third Generation).

which I suppose you could call an initial investment but has maintained continuous improvement through internal demand once the "basic" infrastructure was established.

ICT

The current Thailand ICT Policy Framework (IT 2010) and ICT Master Plan (2002-2006) calls for a promotion of ICT usage in the government or “e-government”. Consequently, many initiatives/programs/projects have been implemented by various ministries, with the aim to achieve the “e-government” objectives and targets put forth by the MICT. According to research done by NECTEC, using the information provided by each ministry, the government has approved 1,095 IT projects with the total budget of 28,436.25 million baht in 2003. In 2004, the number of projects have dropped down to 1,078, while the total budget has significantly increased to 60,408.62 million baht.

and.......

Thailand's PM Green Lights Second Software Park

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I'd also be intrigued to hear specifically how Thailand has been investing in its own technology infrastructure (in terms of manpower cost) comparable to India.

There is an "and"...... in between "in its own technology infrastructure and (in terms of manpower cost) comparable to India". And the subject is software engineering.

Maybe badly worded but basically saying that in previous years (2000-2003) 1 software man hr in Thailand was similar to 1 software man hour in India. The point of the statement was that as the baht strengthens, Thailands competitiveness in software weakens.

As a result, many software houses (in Thailand) are now sub-contracting labour intensive foreign programming to Myanmar (where the cost is considerably less). Or as the Americans say ... "cherry picking".

Thailand's Software Companies' Success Stories

With only six “high-value” programmers and thirty others on contract, Magic Software only performs the high value portion of each project, outsourcing data entry and screen design to programmers in Myanmar. Bunrak sees Myanmar as an opportunity, having low-value assignments performed at one tenth the cost of Thai programmers, leaving local talent free for more demanding tasks.

I can guarantee that at least 1 of those 6 is a farang.

Similarly the manufacturing industries are subcontracting production to Cambodia for the same reasons.

The result of the strong baht is that even Thailand can find cheaper labour forces along it's borders. So why should foreign companies bother with Thailand at all?

Edited November 17, 2006 by Indifferent

[Jai Dee]

Mr. Santi is confident that BOT can control the fluctuation of baht currency

Deputy President of the Federation of Thai Industry Santi Wilatsakdanont (สันติ วิลาสศักดานนท์) said he is confident that the fluctuation of baht currency can be controlled. At the same time, Mr Santi said that the increase in the amount of foreign currencies in Thailand showed signs of growing confidence amongst foreign countries on Thailand's situation.

He revealed that the baht currency is continuously strengthening, while private sectors need time to familiarize with the change. He, however, believes that Bank of Thailand (BOT) can control the situation and will not interfere in the strengthening of baht currency. He said that BOT should be able to control the baht currency and if necessary, adjust the currency accordingly so that it will not have much effects on the private sectors.

Mr Santi further added that exchange rates cannot be fixed as it fluctuates according to the current international currencies, political situations and the economy.

Source: Thai National News Bureau Public Relations Department - 17 November 2006

[Old Man River]

Mr. Santi is confident that BOT can control the fluctuation of baht currency

Deputy President of the Federation of Thai Industry Santi Wilatsakdanont ... said that BOT should be able to control the baht currency and if necessary, adjust the currency accordingly so that it will not have much effects on the private sectors. Mr Santi further added that exchange rates cannot be fixed as it fluctuates according to the current international currencies, political situations and the economy.

Source: Thai National News Bureau Public Relations Department - 17 November 2006

Interestingly, one sentance seems to contradict the other.

The THB is based on a managed float which means the BOT will, from time to time, either sell THB and buy USD or buy THB and sell USD to "tweak" its value. Apart from this as well as a few financial tools such as lowering the interest rate (which apparently will happen), there isn't a whole lot more the BOT can do. The lessons of 1997 are well learned.

[ray23]

On Bloomberg tonight they said they are going to have a program examing the 97 crash, miht be interesting to watch.Monday 0800 I beleive

[Indifferent]

On Bloomberg tonight they said they are going to have a program examing the 97 crash, miht be interesting to watch.Monday 0800 I beleive

08:00 EST? Thai/WIB? GMT?

[ray23]

Sorry 0800 Thai

[Indifferent]

Interestingly, one sentance seems to contradict the other.

The THB is based on a managed float which means the BOT will, from time to time, either sell THB and buy USD or buy THB and sell USD to "tweak" its value. Apart from this as well as a few financial tools such as lowering the interest rate (which apparently will happen), there isn't a whole lot more the BOT can do. The lessons of 1997 are well learned.

The control of the Baht was also tried in 97 (go back 1 or 2 pages and read FSRB Report) and was insufficient (or badly managed...or both) the only difference this time is that they are lowering the interest rate instead of raising it which I see as a positive move but maybe insufficient.

But as I said on another posting...it all depends on what the good years where invested in as to whether these steps alone will be effective.

-------------------------------------------

Sorry 0800 Thai

What an obnoxious time I'm going to have to find a place thats open 12:00-7:30am Sunday night to make sure I'm awake

[ray23]

Yep I was hoping someone would report the fimndings

[john b good]

If indeed the baht is stronger against the major currencies, just why is it, that the majority of imported food commodities have never been more expensive than they are now.

[Old Man River]

Interestingly, one sentance seems to contradict the other.

The THB is based on a managed float which means the BOT will, from time to time, either sell THB and buy USD or buy THB and sell USD to "tweak" its value. Apart from this as well as a few financial tools such as lowering the interest rate (which apparently will happen), there isn't a whole lot more the BOT can do. The lessons of 1997 are well learned.

The control of the Baht was also tried in 97 (go back 1 or 2 pages and read FSRB Report) and was insufficient (or badly managed...or both) the only difference this time is that they are lowering the interest rate instead of raising it which I see as a positive move but maybe insufficient.

I read the report and found it to be a good overview of what had happened. There is one fundamental difference on how the THB is managed now vis a vis pre deval. Pre deval, the value of the THB was pegged to the value of a basket of currencies that was 80-85% USD, then Yen and some DM. Therefore, the THB changed as the value of the basket changed, and in that direction. The THB/USD exchange rate was as close to being fixed as possible without making it 1 to 1. This was done to keep the THB stable with its main trading currencies. It worked for many years, until speculators realized they could attack (short) the THB.

Now, due to the free float, market forces are allowed to take hold and the opposite is happening (i.e. the THB strengthens as the USD weakens). This is free market forces at work and is how it should be. The tweaking being done by the BOT from time to time is how they manage the free float and is not unlike the central banks in many other countries. Hence, Dr. Tarisa's comments that if pressures are for the THB to continue strengthening against the USD, then it will continue strengthening. This would not have been the case prior to the deval.