About Face

[Guest wowpow]

Thailand to Lock Up 30% of New Fund Flows, Baht Falls (Update3)

 

By Anuchit Nguyen and Beth Jinks

 

Dec. 18 (Bloomberg) -- Thailand's regulators required banks to lock up 30 percent of new foreign exchange deposits for a year to curb currency speculation, causing the baht to slump by the most in almost three months.

 

Overseas investors buying baht starting tomorrow will only be able to invest 70 percent of what they transfer, and only recoup all of their funds if they keep the money in Thailand for more than a year, central bank Governor Tarisa Watanagase told a briefing in Bangkok today. Those who withdraw the reserved amount in less than a year will be penalized 33 percent of that 30 percent portion, she said.

 

``They're getting pretty aggressive, as when a central bank starts withholding money it's pretty serious,'' said Steve Rowles, a Hong Kong-based analyst at CFC Seymour Ltd. ``This is really going to put the brakes on the baht.''

 

full article via proxy http://www.myspaceproxy1.com/proxy.php?q=a...lcj1hc2lh&p=1e3

Bloomberg

 

courtesy liz on sawatdee

 

 

Last 5 days at Interbank rates

 

 

US Dollar

 

EURO

 

UK POUND

 

courtesy http://finance.yahoo.com/currency/convert?...&submit=Convert

 

[Gaybutton]

Quite right, Wowpow. I checked this morning's exchange rates at 8:40 AM, Thailand time. There were already three rounds of exchange. The rates as of this moment are as follows:

 

US Dollar: 35.70

 

Euro: 46.65

 

British Pound: 69.455

 

Australian Dollar: 27.6975

 

Canadian Dollar: 30.735

 

These are significant changes since yesterday and for the first time in months, the change is moving in favor of foreign currencies. Apparently this wil be quite an interesting week. I suppose we'll know soon enough where this is going.

 

The following appears in THE NATION:

_____

 

BAHT CRISIS

 

BOT Bid to Limit Currency Dealings

 

30% of Big Cash Sums will have to be Deposited in Banks, it Says

 

Foreign investors bringing in cash worth US$20,000 or more (approximately Bt700,000) would need to park 30 per cent of the amount in financial institutions. The money would be fully returned if the cash was taken out of the country after one year, the Bank of Thailand announced yesterday.

 

The 30-per-cent reserve requirement on capital will take effect today. Thus, foreign investors who bring in more dollars than the amount would only be able to exchange 70 per cent of their money into baht.

 

The reserve would be returned to them after 12 months.

 

Tarisa Wattanagase, the central bank governor, said at a press conference yesterday the measure would help curb speculation that has made the baht volatile and appreciated above its fundamental level.

 

"We think this measure will help slow down the short-term inflows as it would increase costs for speculators," Tarisa said.

 

Yesterday's move is the most stringent since 1997 to counter baht speculators, who have brought in billions of dollars in the past few months and pushed the baht to a level that has damaged Thailand's exports.

 

Last month, there were short-term inflows of US$300 million per week - that had tripled to $950 million per week this month, she said.

 

Yesterday, the baht shot up to a nine-year high - Bt35.06 - 16 per cent stronger than the value of the baht at the beginning of this year (Bt41). The Thai unit opened at Bt35.21 to Bt35.25 to the dollar before closing at Bt35.30 to Bt35.35 after news of the BOT's new measure. The measure will not apply to foreign direct investment (FDI), as the reserve would be returned to investors as soon they arrive in the Kingdom. Exporters and Thai investors paid out of their foreign investments would also be exempted from the move.

 

Foreign investors who bring in more capital than the criteria level and take it overseas before the end of one year would only be entitled to two thirds of the 30-per-cent reserve, or they would be charged 10 per cent of total capital inflow by Thai authorities.

 

The central bank has threatened to introduce more measures if the baht speculation persists. The speculative inflows have pushed the Thai currency up by 16 per cent so far this year.

 

Tarisa said the 30 per cent was calculated from profits expected to be generated by speculators. She said the new measure would effectively discourage speculative inflows and reduce baht volatility.

 

However, the central bank would closely monitor the baht after the measure is launched today. She said the central bank might cancel the measure, change the reserve amount, or change the time limit depending on the situation.

 

As a result, it is uncertain how long the measure will last for.

 

The governor also ruled out tax moves to tackle baht speculation, saying there was no need. Such moves too much time to introduce and were less flexible than the reserve measure.

 

Under the measure, financial institutions that withhold the reserve from foreign investors must submit the sum to the central bank on the 7th of every month. The BOT would make use of the capital to generate further returns.

 

Tarisa said the move may also affect the debt market but the BOT did not want to see speculative inflows in the debt market either.

 

Tarisa said several countries had implemented this measure to curb currency speculation. Chile used the 30-per-cent reserve for capital inflow for less than six months before cancelling the measure.

 

She insisted it was not against development of the capital market.

 

Meanwhile, Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula said before the BOT announcement that the new measure was positive news for exporters and investors. He admitted that the baht had been far too strong.

 

Anoma Srisukkasem

 

The Nation

[khaolakguy]

I wonder how this will impact on both those needing to show proper funding for retirement visas, and those looking to purchase property?

 

It won't be great to have 30% of your transferred money sitting somewhere, gaining little or no interest.

 

[Guest wowpow]

BBC WORLD

 

As a result of the draconian controls on capital the Thai stockmarket dropped 10% this morning. Trading was suspended for a time. After trading started a drop of a further 5%

 

had happened

 

==============================

 

Stock index still plunge after SET resume trading

 

The SET resumes stock trading at noon. The SET index fell further by 13.74 per cent or 100.37 points to 630.18 at 12.12pm. Bank of Thailand has asked all brokerage companies to discuss about the issue on 1.30pm.

 

Key Democrat Party member Korn Chatikavanij urged the Bank of Thailand to immediately reverse the recently-introduced measure to intervene the currency, saying that it would cause the damages to the capital market for years.

 

Today, Thai share prices plunged by 10 per cent at 11:30 am after the central bank took the most stringent measures since the 1997 Asian financial crisis to curb the baht's rise.

 

The Stock Exchange of Thailand implemented the circuit breaker measure for the first time in history to deal with the drop by suspending the trading for 30 minutes at 11:30 hours.

 

At 11:30, the SET nosedived to 656.49, the lowest point of the day so far. The Stock Exchange of Thailand (SET) composite index nosedived 64.62 points or 8.85 per cent to 665.93 in the first minutes of trading and the bluechip SET 50 index fell 53.10 points to 458.90.

 

Korn said: "The measure causes the damage to the capital market. The Bank of Thailand should immediately reverse this policy, because no investors who will want to spend Bt100 just to have Bt30 withheld. And if they will get only Bt90 if they want to remit the money in less than one year."

 

Starting from Tuesday, financial institutions would be required to withhold 30 per cent of foreign currencies bought or exchanged against the baht, except those related to exports, said BOT governor Tarisa Watanagase.

 

Korn said that the damage caused by the measures could be overwhelming. Besides, there's rule from the financial institutions that they cannot invest in countries with capital control. He said the capital market in Chile for instance was damaged by 10 years while Malaysia was damaged by 3 to 4 years.

 

He said Bank of Thailand should implement the separate measures to deal with money and financial capital markets. Speculators are mostly in the bond markets. Bank of Thailand should separate the measurement in money and capital markets speculators are mostly bond market.

 

The Nation

[Gaybutton]

So far, today, the baht has been steadily plunging. It is now a little after 5:00 PM in Thailand, so the closing rates today are as follows:

 

US dollar: 35.74

 

Euro: 46.73

 

British pound: 69.575

 

Australian dollar: 27.7075

 

Canadian dollar: 30.7175

 

To avoid any confusion, when I publish exchange rates I am not publishing the bank rates. I am posting the actual rate you will receive when you exchange money at banks or pull money from an ATM.

 

If you wish to keep track of the exchange rates yourself, you can find the latest rates at http://www.krungsri.com/thai/king.htm .

 

 

[Guest BKKvisitor]

For those with more than a casual interest in the fate of the dollar (and exchange rate mechanisms in general). this article from today"s Wall Street Journal sheds some light:

 

http://online.wsj.com/public/article/SB116...ff_main_tff_top

[khaolakguy]

CNN reports that the Thai Government has announced a reversal of the new policy after major losses on the Thai Stock Market, saying that overseas investors in Thailand will not be penalised.

[Guest kenrfc]

Some people never learn.

In 1997 they tried to keep the Bhat from falling. Now they are trying to keep it from rising.

Dumb, dumb, dumb....

 

But then as an American I shouldn't throw rocks. We are economically, militarilly and morally bankrupt.

And we have the stupidist President in the history of the universe.

 

 

[Gaybutton]

Dumb, dumb, dumb....

 

Why won't you tell us how you really feel?

 

It's too soon to predict where this is leading. Personally, I hope the baht fals further because it's costing me a fortune. Apparently it is also dcostin g Thai businesses a fortune. Several months ago we were reading about how the baht is expected to move to about 42 to the US dollar and stay there. Everyone, Thai and 'farang,' seemed quite comfortable with that. I hope that's where this is leading, but it's just too soon to make any predictions.

 

Actually, making predictions about the baht seems to be an exercise in futility. Not one of the predictions I have ever read, including my own, has ever come to pass.

 

However, here's a bit more:

_____

 

BANGKOK, Dec 19 (TNA)

 

Despite the Thai stock market plunges, the new reserve measures imposed by the Bank of Thailand on Monday and aimed at curbing short-term capital inflows will remain intact, according to Thailand's Deputy Prime Minister and Finance Minister Pridiyathorn Devakula.

 

Capital inflows in the form of short-term debt instruments during the past three weeks amounted as high as Bt100 billion as foreign investors believed that the Thai economy was quite strong while the P/E ratio was considerably low, said M.R. Pridiyathorn.

 

Both the stock and debt instrument markets would be affected if no measures were imposed, he said, adding that the central bank's new measures which became effective Monday had helped weaken the Thai currency which would assist the country's exports.

 

The first measure launched by the central bank earlier this month had failed to soften the Thai bah, so it was necessary to introduce harsher measures, he said.

 

Under the new measures, financial institutions must deduct 30 per cent as a reserve requirement from short-term foreign exchange transactions against the baht.

 

Customers whose funds have been withheld can request a refund of the reserve if the money has been in Thailand for at least one year.

 

M.R. Pridiyathorn said it would be better to allow the Thai stock market to move along its mechanism and that he would not worry even if the market index would plunge almost 100 points because Thailand's economic fundamentals are still strong.

 

He said he believed both stock brokers and investors could adapt themselves to the market movements while the government would concentrate on helping exporters.

 

(TNA)-E111

[Guest GaySacGuy]

But then as an American I shouldn't throw rocks. We are economically, militarilly and morally bankrupt. And we have the stupidist President in the history of the universe.

 

Unfortunately, That is a major understatement!!