Baht

[jadran]

What will happen with Baht when the markets open?

Do you think it will cross the 37 mark on Wednesday?

[Naam]

What will happen with Baht when the markets open?

Do you think it will cross the 37 mark on Wednesday?

HK and SIN markets are open. last trades THB/USD 35.42

[dgoz]

It still seems to be stronger than the govt's wishes. I can just see them now sitting around an oversized table coming up with another brilliant stratergy to weaken it like they did last month

A cut in interest rates will do it but that will send inflation rocketing. I wonder if they know about that one. C'mon General, give us another spectacular display of economic management, I always like a good chuckle.

[londonthai]

the bombings did not work for the baht weakening - so expect more of the bombs. Probably they were set off for that purpose by the government itself

[jadran]

didn't work yet...

Wait till Wednesday US time, Thu our time - Thai market is closed today and so is NYSE (mourning for ex-pres Ford).

It has weakened 0.15 today...

[farangsay]

What will happen with Baht when the markets open?

Do you think it will cross the 37 mark on Wednesday?

Hope you're talking about the Dollar and not the Euro !

[pumpuiman]

the bombings did not work for the baht weakening - so expect more of the bombs. Probably they were set off for that purpose by the government itself

This actually crossed my mind....but thought too "grassy knoll" to bring up.

I wondered if also we will see a quick resolution, like the patsy in the Thaksin bombing.

[Naam]

the bombings did not work for the baht weakening - so expect more of the bombs. Probably they were set off for that purpose by the government itself

reliable sources claim that the Pope and Osama bin-Laden are involved too

[tuky]

Moved to the correct forum

[londonthai]

reliable sources claim that the Pope and Osama bin-Laden are involved too

no sources jus roughly knowing mechanisms how the capitalist state operates, that's why I said 'probably'. We all will know in about 25 - 50 years what the truth was.

[LaoPo]

US$-Thai Baht intra day

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

GBP-Thai Baht intra day

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

Euro-Thai Baht intra day:

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

In general the Baht is slipping a bit but that doesn't say anything for the near future.

LaoPo

[cclub75]

the bombings did not work for the baht weakening - so expect more of the bombs. Probably they were set off for that purpose by the government itself

Audacious hypothesis !

But to create panic among investors, it would be enough to make Doctor Tarisa, boss of BOT, finance minister.

More seriously : the USD is sinking (euro 1.3288 right now). That's the main issue. After that, THB going a little bit north or south against the global trend... it's another story.

[Meerkat]

I reckon we'll see the BOT buying USD at anything under 36, and the rest of the world selling.

The King Canute of the forex market. Again.

[MartinBKK]

Can someone explain to me what is going on. 7 bombings around Bangkok, Thailand in political turmoil and i check out the Baht's rate today and see it has actually strenghtened against both the USD and the GBP.

Does anyone understand what is going on?

[aaaaaa]

Can someone explain to me what is going on. 7 bombings around Bangkok, Thailand in political turmoil and i check out the Baht's rate today and see it has actually strenghtened against both the USD and the GBP.

Does anyone understand what is going on?

perhaps this might help to shed some light on this matter:

ASIA HAND

US, China square off

By Shawn W Crispin

Washington is losing its sway over Southeast Asia as its chief competitor China emerges as a global power with a diplomatically attractive no-strings-attached policy on aid and investment. As US hegemony gradually comes to an end, so too it seems will the region's short-lived experiments with democracy and financial liberalism.

BANGKOK - Of all the factors that contributed to Thailand's mid-December decision to impose restrictive controls on short-term capital flows, which subsequently flattened the stock market and sparked howls of discontent from foreign investors, Thai authorities' primary motivation for the fateful policy was left unnamed, but clearly it was China rather than the US.

The rapid appreciation of the free-floating Thai baht against the fixed-rate Chinese yuan rather than the US dollar had in recent months severely eroded Thailand's overall export competitiveness, particularly in the crucial electronics sector, which accounts for about 35% of Thai exports. If the baht-yuan gap had widened further, Thai central bank authorities feared that a stronger baht would have bankrupted its exporters and severely crimped economic growth.

It's not the first time that China's rigid exchange-rate policy has sent ripples of financial instability through Southeast Asia. In retrospect, some economists believe that Beijing's decision in 1994 to peg the yuan to the US dollar at the artificially low rate of 8.2 per greenback was a crucial determining factor in the 1997-98 Asian financial crisis, which devastated the region's currencies, bourses, banks and broad economies....

China has firmly emerged as an important new destination for the region's natural-resource exports, a supplier of cheap goods and services and, increasingly, a source of badly needed foreign direct investment. Southeast Asia's growing economic reorientation toward China is expected to accelerate into 2007, as the United States' appetite for the region's exports tapers off because of slowing economic growth.

Geographical pull means Southeast Asia will increasingly look toward its giant northern neighbor for new trade and investment opportunities, a trend that should accelerate as regional business seeks ways to make up for lost sales to the US. That's already happening: Sino-Southeast Asia trade surged to $130 billion in 2005 and is on pace to grow even faster this year. The two sides are now negotiating a free-trade agreement that would potentially form the world's largest free-trade area in the world by 2010.....

China's fast rise and the United States' slow fade from Southeast Asia is unmistakably undermining the region's often tumultuous but at the same time highly important experiments with democracy, economic openness and financial liberalism. This represents a significant course shift, one that threatens to undermine the region's once bold, now fading, democratic aspirations....

Beijing's mix of political repression and economic success has sent a bold new message to the region's leaders that democracy and financial openness are not necessarily preconditions for economic prosperity.

As China gains more economic and political influence in Southeast Asia's less developed peripheral states, the US is increasingly abandoning the democratic high ground and subordinating its regional diplomacy to plain economic and strategic interests - that is, the US is contesting the region on China's terms, not its own.

...........

All this means that the US has lost a significant step to China - economically, politically, and strategically - in Southeast Asia's increasingly important strategic theater. All indications are that the region is moving toward more Chinese and less US influence, and as US hegemony gradually comes to an end, so too it seems are Southeast Asia's short-lived experiments with democracy and financial liberalism.

I think it explains things a lot more than just unstability of US dollar !

may be SEA will unite after all as they discussed it - in the same fashion as EU, and create their own single currency. or they'll eventuall be absorbed into China's dominion.

Edited January 3, 2007 by aaaaaa

[OlRedEyes]

Methinks that the cultures in Asia, all much more deeply rooted and current than in the West, are simply not suited to democracy. The people are far happier in a controlled semi-democracy. They just seem totally suited to being 'guided' and 'looked after'.

[aaaaaa]

now guys are talking about similar measures taken by other SEA countries:

Thailand triggers another Asian contagion

By David Fullbrook

"There is a general question about who might be next in following Thailand's move and so people are focusing on, could it be the Philippines, Malaysia, perhaps Korea?" Adrian Mowat, JPMorgan Chase & Co's regional equities strategist in Hong Kong, was quoted by Bloomberg as saying....

What may well be worrying the BoT is not so much the baht's strength, but the country's vulnerability to external shocks if speculators suddenly find cause to bail out of their baht holdings, either in currency or stock assets.

.....

Thai exporters, whose competitiveness has been undermined by the appreciating baht, reacted favorably to the central bank's intervention. "Customers are citing currency as a key obstacle to proceeding with orders," said Paul Spencer, business development manager of Panda Thai Industries, a leading furniture exporter. "What concerns us the most is our industry is sliding into greater non-competitiveness as compared to other Asian producers, which have seen half the currency appreciation as compared to the baht."

What could come next is that other export-dependent regional countries facing an appreciating currency may follow Thailand's lead if the measures prove effective.

[LaoPo]

now guys are talking about similar measures taken by other SEA countries:

Thailand triggers another Asian contagion

By David Fullbrook

"There is a general question about who might be next in following Thailand's move and so people are focusing on, could it be the Philippines, Malaysia, perhaps Korea?" Adrian Mowat, JPMorgan Chase & Co's regional equities strategist in Hong Kong, was quoted by Bloomberg as saying....

What may well be worrying the BoT is not so much the baht's strength, but the country's vulnerability to external shocks if speculators suddenly find cause to bail out of their baht holdings, either in currency or stock assets.

.....

Thai exporters, whose competitiveness has been undermined by the appreciating baht, reacted favorably to the central bank's intervention. "Customers are citing currency as a key obstacle to proceeding with orders," said Paul Spencer, business development manager of Panda Thai Industries, a leading furniture exporter. "What concerns us the most is our industry is sliding into greater non-competitiveness as compared to other Asian producers, which have seen half the currency appreciation as compared to the baht."

What could come next is that other export-dependent regional countries facing an appreciating currency may follow Thailand's lead if the measures prove effective.

Interesting articles, aaaaaa, from the Asia Times !

Thailand can't protect their exporters with the steps they took. It's the exporters themselves who should monitor their own position and Baht in respect to competiveness with other countries/producers.

They should )have) investigate(d) the possibilities for production (or buying) in neighbouring countries like Cambodja, Laos, Vietnam and even China if production costs, due to the expensive Baht, are too high.

The business people themselves should monitor what's going on in the world and especially what's happening inside giant countries like India and China; after all, Thailand is just a small country in comparison with those two and they (businesses) have loads of opportunities to continue and grow.

Due to the expensive Baht, Thailand lost a significant piece of the cake...the export-business cake.

Unless Thailand (BoT/Government) takes drastic steps to lower the Baht and therefore will be able to compete (again) with neighbouring countries I fear the production/export-business in Thailand will be gone forever; and thus Thailand has to look for other options for their economical growth.

LaoPo

[PeaceBlondie]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

[aaaaaa]

yeah, I agree - Asia Times often provides quite a different outlook than most of Western or Westernised media (like I feel about The Nation for example). perhaps because they are themselves Asian or at least Asia based and therefore might know better what's going on in here? also may be because they are not close-mouthed as local Thai media, and not as unconcerned and opinionated as Western media. and lastly - I think they are mostly business minded specialists and professinals rather than typical sensation-hungry average journalists....

I don't know - however it is good sometimes to have some alternative and more detailed info.

[LaoPo]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

BoT ?

LP

[aaaaaa]

nope - BoT will keep it a secret!

[aaaaaa]

here is an interesting source which might be usefull for whatever analysis or at least to see the history of exchange rate within past 3 years:

Previous Currency Exchange

[sfokevin]

The past few trading days have shown the Baht/USD spiking back and forth.... Seems like there is a tug of war going on - assume the BOT is one player - wonder who is the other?

[Tim207]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

The theory being people will move money to other places that offer higher interest rates. Money going out means sale of baht for other currencies. Higher supply of baht for sale means lower sale price.

[Naam]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

this is work for prophets and prophets are extinct species.

Edited January 4, 2007 by Dr. Naam

[LaoPo]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

this is work for prophets and prophets are extinct species.

Nostradamus

LaoPo

[OlRedEyes]

As a country develops and its economy grows, surely its currency will strengthen. I'd imagine that while this development is taking place its population should develop in parallel. Especially the education level. And with it its competitiveness, innovation and efficiency.

With the growth of the past decades there has been an obvious lack of growth in the human capital here. So the country still cannot afford to compete on anything other than price, which is now being constrained by the strengthening of the currency and lack of efficiency. The opportunity to grow in a sustainable way has been pissed out against a wall by corruption and lack of leadership.

Cannot see how Thailand's growth can now be sustained. The population now expects a fairly high standard of living, but there is no real expertise to back it up.

[Meerkat]

While we're on the subject of baht depreciation, would some genius please explain to me how, and how quickly, the baht's value would depreciate if the central bank decreases the interest rates?

How? Other things being equal, money will gravitate towards a higher interest-bearing currency.

How quickly? Pretty much instantaneously. In fact it'll usually start before the actual rate cut happens in anticipation of a cut so there may well not be much of a movement as it finally occurs. It's only interest rate movements which come out as surprises that cause large currency movements. "Buy the rumour, sell the fact" is an old market cliche.

The problem with Thailand's current case is that:

1. Rates here are already lower than in most competitors' currencies, but money is still coming in. One of the reasons for this being that some assets here are perceived as undervalued; the stock market is trading at a lower P/E than any other major Asian bourse, and the BOT's unintended damping of the market actually makes it all the more attractive (forgetting the recent bombings, which everyone will, soon enough).

2. Everyone is expecting a slowdown this year in the US, which would probably prompt the Fed to cut USD rates, thus negating any cuts in the THB (against the USD anyway).

3. Because inflation here is higher than in the US, that gives the BOT less leeway to cut rates here without putting additional pressure on inflation. Along with the shortage of workers (the electronics industry here recently stated that it needed another 50,000 workers here over the next couple of years and didn't know where to find them), this all brings the worry of inflation to the forefront - something that has the potential to do far more damage to the economy than a high THB. For expats suffering under a higher baht now, cutting rates might prove counterproductive too, as the cost of living increase may well outweigh any marginal improvement in the FX rate.

And then on top of everything else, in spite of exporters and the government bleating about a strong currency, exports here are going from strength to strength. Much of Thailand's export industry uses imported raw materials, so whilst their selling prices have gone up due to the strengthening dollar, their costs have gone down allowing them to lower those selling prices and still retain margins.