Baht at strongest level since floated in 1997

[Guest wowpow]

"Baht at strongest level since 1997 - Bangkok Post

 

 

The Thai baht has appreciated to 34.38-to-34.39 to the US dollar, its strongest level in a decade, as foreign funds continue to flow into the Stock Exchange of Thailand, according to a Thai money dealer.

 

A dealer from Kasikornbank Plc said the baht had risen to highest point since the currency was floated exactly 10 years ago.

 

He said this was mostly because Asian currencies had strengthened thanks to an inflow of large foreign capital into Asian stock markets including the SET, whose index has surged to a four-year record high of over 800 points.

 

However, the rise in the baht by 4.5 per cent since early this year remained close to that of other Asian currencies.

 

For instance, the Malaysian ringgit had appreciated by around 4 per cent, the Indonesian rupiah by 3 per cent, and the Philippine peso by 8 per cent.

 

On Monday (July 1), the peso broke through the 9,000 level, a new high, before dropping to stabilise at 8,980 to the US dollar.

 

The dealer said the strengthening of the baht is not cause for too much concern because the currency has been moved by market mechanism, driven by the foreign capital inflows.

 

Should foreign funds continue to flow into the country, the baht is likely to further appreciate." (TNA)

[billyhouston]

The title of this article should really be: "Dollar at its weakest level since 1997".

[Gaybutton]

The exchange rates, as of July 4 at 8:30 AM, are:

 

US Dollar: 34.05

 

Euro: 46.215

 

British Pound: 68.535

 

Australian Dollar: 28.9425

 

Canadian Dollar: 31.91

[Guest wowpow]

I think that Gaybutton's bank gives a good deal. Anyone remember which one it is?

 

Bangkok Bank today at 09.18 hrs

 

US 33.8

UK 67.8

Eur 46.0

[Guest fountainhall]

In theory, the Bt. 800,000 that retirement visa applicants must remit in advance should now be reduced around 20% to allow for the appreciation of the Baht over the last 18 months. Will it happen? Wishful thinking!

[Gaybutton]

I think that Gaybutton's bank gives a good deal. Anyone remember which one it is?

 

The rates I quote come from the Bank of Ayudhya web site. They update the rates several times each day, while Bangkok Bank publishes the rates only once per day. There is some minor variation between different banks, but not significantly so unless you are exchanging huge amounts of money.

 

I pay no attention to web sites such as Oanda and others because they quote offshore rates. I have yet to ever see the rates you actually receive when exchanging money within Thailand on those sites. The Bank of Ayudhya web site is quite reliable.

 

The URL for current exchange rates is: http://www.krungsri.com/thai/exchange01.aspx#

_____

 

BoT Urged to Actively Supervise Baht as it Strengthens

 

BANGKOK, July 4 (TNA)

 

The Bank of Thailand should attempt to manage the baht effectively to ensure it is not so strong that it negatively impacts the export sector, the Federation of Thai Industries warned Wednesday.

 

FTI chairman Santi Vilassakdanont said he had met with exporters to discuss the overly quick appreciation of the baht to its strongest level in a decade, which is not welcomed by the exporters.

Most expressed concerns that the stronger baht would affect Thailand's export competitiveness.

 

Should the baht currency continue to strengthen during the coming weeks, he said, FTI representatives would seek to meet with top BoT officials asking them to adopt measures to manage the baht to ensure it does not appreciate too rapidly.

 

He said the exporters understood that the baht appreciation stemmed from an inflow of foreign capital into Asian stock markets including the Thai bourse.

 

But they wanted the central bank to do something because they had been affected by the stronger baht since last year.

 

The exporters had attempted to maintain their customer base in the second quarter of this year by continuing to export, but they failed to gain profit from their shipments.

 

Should the situation last too long, he said, their business would be definitely hit hard.

 

Boonkit Chitngamplang, president of the FTI's Precious Stones and Ornaments Club, said the baht had strengthened too rapidly in the past two days.

 

The currency had already appreciated by 15 per cent since early this year.

 

So, Mr. Boonkit wanted the central bank to supervise and intervene in the baht's movements to ensure its stability.

 

He said the stronger baht made operators in the previous stone industry earn less revenue.

 

In addition, they had been affected by the removal of the Generalised System of Preferences (GSP) by the United States and higher costs of raw materials.

 

Should the baht continue to appreciate without any action by the central bank, more business operators would be hard pressed to survive, he said.

 

(TNA)-E005

[TotallyOz]

I have not been in Thailand for many months and if does not look probable in the coming few months, but I do dread the value of the dollar when I get there. The same thing has happened in Brazil which has made my last 3 trips there less enjoyable than before.

 

My Thai boyfriend that I still support takes a certain amount out of the bank every day and it has added up to more deposits each week by me. I can really see the difference here. I can't imagine those of you that live there and what a pain this has been for you.

 

My question, does this appear long term? Do you think this trend will really keep going this way? Is there hope for the dollar for the near future?

[Gaybutton]

My question, does this appear long term? Do you think this trend will really keep going this way? Is there hope for the dollar for the near future?

 

I'm optimistic about it. I believe the strengthening of the baht is short term, but just how much longer this will go on is anybody's guess.

 

I just don't see how this trend can continue for very long. My interpretation of what I have been reading is that the primary reason for this is large amounts of money pouring in from investors. Sooner or later, I believe, the investors will feel that whatever profit-taking they can do has run its course. That's when they'll start pulling their money to invest elsewhere. When that happens, the trend will reverse itself. That's what I think, anyway.

 

I don't predict another Great Depression of 1929 hitting Thailand, but I do predict a major reversal of the value of the baht. I think the wheel will turn. I hope it will happen soon. People like me, living in Thailand and dependent on the exchange rates, are taking a real beating because of this. The dollar has lost 26% of its value since I moved to Thailand three years ago.

[Bob]

The US dollar has lost value to almost every other currency so I don't see this as only a baht/dollar issue.

And why? I'm not an economist but here's my guess:

(1) The dollar for 80+ years was the world's benchmark currency probably largely because ithe US has had the highest gross domestic product of any country in the world and expected other countries to quote everything in dollars. That is coming to an end......hello China.

(2) The US government has been complaining to anyone who would listen that the Chinese yuan was undervalued to the US dollar by 40-60% (mainly because China fixed the dollar/yuan exchange rate by decree). That also is coming to an end (albiet, slowly). In any event, it's US government policy that the yuan appreciate substantially against the dollar.

(3) China, economists have claimed, will have the highest gross domestic product in the world by approximately 2018-2020. It's my guess that, like the stock market, a lot of what is happening (the dollar diving against all other currencies) is anticipation of what will be happening a few years off.

(4) Ol' GW getting just about everybody (including some friends) to hate the US sure isn't helping. Some of any currency's value is pure speculation and psychology. If you think that Warren Buffett is a smart man, it should be noted that Berkshire Hathaway has had over 22 billion (in US dollars) hedged against the dollar for at least 3 years.

 

My guess is that most currencies in the world will be reacting more to what happens in the future to the Chinese yuan than to the US dollar. The China situation could explode some day and maybe there will be a few years at most that the US dollar will rise. But, long term, the inevitable is....inevitable (probably some old Chinese saying....hehe).

 

If you're willing to take a possible hit, the smart move might be to bet that the yuan will rise to the dollar. Hey, is it legal for falang to deposit money in Chinese banks??? Might be a good idea.

 

 

[Gaybutton]

It finally happened. The US dollar is now in the high 33s.

 

The exchange rates as of 8:00 AM, July 5 are:

 

US Dollar: 33.98

 

Euro: 46.115

 

British Pound: 68.35

 

Australian Dollar: 28.9525

 

Canadian Dollar: 31.925

 

 

The following appears in THE NATION:

_____

 

Baht 'May Hit 30 to $'

 

Experts Urge BOT to be Vigilant

 

 

A currency expert believes the baht could rise to 30 to the US dollar due to market mechanisms if the Bank of Thailand (BOT) does not intervene in the level of the currency, while exporters urged the central bank to slow the baht's appreciation.

 

Adisak Kammoon, vice president of KGI Securities (Thailand), said the movement of the baht would have to be closely monitored.

 

"The Bank of Thailand still doesn't let the baht move freely according to market forces, which is considered dangerous because it may quietly lead to another financial crisis," he said. "Thus, as long as the Bank of Thailand is not confident that the exporters will be able to compete on their own, it is unlikely that the 30 per cent capital control will be revoked. There is a possibility that there may be additional measures to prevent the baht from rising further. If the baht is allowed to move according to the market, the level of the baht should be Bt30."

 

His comments came after the baht turned stronger to a fresh 10-year high at Bt34.19-34.21 yesterday compared to the closing value of Bt34.33 on Tuesday, mainly due to inflows to the stock exchange. The Thai stock market has rallied for three days in a row, boosting the SET index by more than 20 per cent. The baht also appreciated by 0.51 per cent against the euro from Tuesday and 0.36 per cent from last month. The baht against Japanese yen was up 0.45 per cent from Tuesday and 0.15 per cent from last month.

 

The baht has turned dramatically stronger compared with major currencies. It opened yesterday at Bt34.20 to the greenback, up 0.47 per cent from Tuesday and 0.96 per cent from the end of June.

 

A trader said the baht rose further after it broke the Bt34.50 barrier. "Some Thai exporters sold dollars in big lots yesterday," said the trader, who asked not be named.

 

The Customs Department said it has so far lost Bt3 billion in revenue due to the baht appreciation, which has recently touched a 10-year high, as well as the country's obligation to follow the Asean Free Trade Agreement (Afta).

 

Customs Department director-general Chavalit Sethameteekul said yesterday the stronger baht and lower income from Afta will cost the department around Bt3 billion in lost revenue.

 

He said in the third quarter the department expected to collect around Bt20 billion in revenue or around Bt7 billion per month. The department is likely to collect around Bt88 billion in tax revenue for 2007 fiscal year, while revenue in the next fiscal year is forecast at a slightly lower figure of Bt87 billion. The department's income will fall next year mainly due to further tariff cuts following Afta obligations.

 

Meanwhile, the private sector has called on the BOT to find measures to curb the baht's appreciation after it was quoted yesterday at Bt34.17 per dollar.

 

The Federation of Thai Industries (FTI) will meet the central bank in a week or two if the baht keeps getting stronger, its chairman Santi Vilassakdanont said. He said the appreciation was caused by the flow of capital into Thailand's stock market and the influx of dollars from exporters.

 

He said the BOT has to consider whether the stronger baht was in line with other countries in the region.

 

Santi said the Thai currency market was more vulnerable to flows of foreign capital compared to other countries such as China, Japan and Vietnam due to the country's fewer regulations.

 

Although the total value of exports in the first half grew around 16 per cent, this does not mean that exporters will enjoy that growth, he said. On the contrary, they had to boost their exports in order to keep their customer base, while they could not earn any profit.

 

Nonetheless, Santi believes the country's export value will grow by 12.5 per cent - the same as the Commerce Ministry's target at the beginning of this year.

 

Boonkij Jitngamplang, chairman of FTI's Gem and Jewellery Industry Club, said operators in this industry were seriously affected by the stronger baht.

 

"If the BOT is unable to stabilise the baht, we will see a number of gem and jewellery operators close down their business this year," he said.

 

However, the central bank sees no need to intervene.

 

BOT deputy governor Atchana Waiquamdee said so far the baht has appreciated by four per cent from the beginning of this year but the central bank does not need to step into the market to halt the baht's movement.

 

"It is normal that the baht is stronger when there is demand for baht but we do not need to take care of it specifically," she said.

 

She conceded that the withholding reserve requirement could not prevent the appreciation of the baht as the measure did not cover portfolio investments by non-residents.

 

BOT governor Tarisa Watanagase said a large amount of capital has flowed into the country over the past few days but the baht movement remained in line with regional currencies. The baht rose by 5 per cent from the beginning of the year, compared to the Philippines peso at 6.7 per cent and the Indian rupee at 8.9 per cent.

 

The foreign funds flocking to the Thai bourse reflected the Kingdom's sound economic fundamental factors with a low P/E ratio.

 

Tarisa said despite the amount of foreign inflows into portfolios earlier, the baht had been stable due to demand for dollars from importers. The appreciating baht, however, does not translate into an absolute disadvantage for Thailand as it also indicated an increase in the Kingdom's purchasing power for imported goods.

 

She said the BOT would intervene in the foreign exchange market whenever the baht swung too much, just like in December last year when it appreciated by one per cent a week.

 

The BOT has encouraged institutional investors to invest abroad in order to increase investment choice and reduce pressure on the strong baht. However, they have exercised their rights to only 27 per cent of the approved ceiling. Last year, such investments increased sevenfold compared with 2005.

 

Deputy Prime Minister and Industry Minister Kosit Panpiemras attributed the rise of the baht to the fact that the business sector has began to become convinced that the Thai economy will be resolved for the better.

 

Anoma Srisukkasem,

 

Chalida

 

Ekvitthayavechnukul

 

The Nation

[Guest wowpow]

As far as I can see the inflow of capital into Thailand has had only marginal effects on the US$ to the THB. All S E Asian currencies have risen to the US$ and Thailand has followed suit. The UK£ is now over US$2.

 

The USA Balance of Trade seems to the the major factor and the US Government seem to be content to see the value of the US$ fall. THis does not effect the folks at home very much but does make imports more expensive. Oil is traded in US$ so is this a reason or is it already factored into the oil prices?

 

Is it a wise move? I don't know. The UK has been allowing the UK£ to devalue for most of the 20th Century and especially so post war. The economy seems pretty good at the moment.

[Guest wowpow]

Thai baht has continued its appreciation, with the new peak Tuesday morning at Bt33.47 against US dollar.

 

 

As of 10.45am (Bangkok time), the Thai baht recovered to Bt33.59-Bt33.62, according to a dealer at Siam Commercial Bank.

 

It is believed that the upcoming election has raised confidence among investors aside from the strong export growth as well as capital inflows to the stock exchange.

 

The Stock Exchange of Thailand on Tuesday remained bullish, with turnover so far at Bt14 billion. The SET Index has gained 2.97 points up, to 847.16 points.

 

- The Nation

[Guest wowpow]

Offshore baht stronger at 31.36

 

Frankfurt/New York (dpa)

 

The dollar fell on Tuesday to a record low against the euro and slumped against other major currencies, amid optimism about the economy in Europe and concerns about growth in the United States.

 

In New York, the euro jumped more than 1 US cent to close at a record 1.3746 dollars. The greenback slipped against the Japanese currency to 121.78 yen, down from 123.4 yen on Monday.

 

Currency dealers in New York quoted the baht at 31.36 to the dollar, up 35 satang against the greenback in 24 hours.

 

In Europe, the pound hit a 26-year high of 2.0231 dollars.

 

The euro's rise against the dollar follows concerns about the US economy, keyed by continuing weakness in the housing market along with falling productivity, the US trade deficit and renewed inflationary pressures.

 

The common currency's previous record of 1.3682 dollars was set in April. Since then, economic data has continued to point to the 13- member eurozone remaining on a growth track and shaking off slowing US economic growth.

 

The rate-setting US Federal Reserve Board left its monetary policy unchanged last month with a benchmark interest rate of 5.25 per cent. Meanwhile, the European Central Bank appeared to prepare the ground at its meeting last week to deliver another rate hike in September, which would lift the ECB's benchmark refinancing rate to 4.25 per cent.

 

This would be the ECB's ninth rate hike since the bank launched its current cycle of tighter monetary policy in December 2005.

 

"The area is at the moment the only one of the major economic regions of the world where a rate rise is not expected," said Carsten Fritsch, currency analyst with Commerzbank AG.

 

At the same time, strong British retail sales data added to expectations that the Bank of England will continue hiking rates, after announcing last week that it was raising rates in Europe's second biggest economy to 5.75 per cent. ....

 

Full story http://www.bangkokpost.net/topstories/tops...s.php?id=120056

 

 

[Guest wowpow]

Baht strength fuels imports

PHUSADEE ARUNMAS 0 Bangkok Post

 

Benefiting from the strong baht, a number of luxury products have flooded into the Thai market after the appreciation reduced import prices. In the first five months this year, Thailand spent US$4.47 billion on luxury items, electronics, watches, perfumes and cosmetics, expensive clothes and shoes, the Commerce Ministry reports.

 

Luxury imports have been rising substantially this year, with growth in January at 11.45% year-on-year, rising to 18.57% in May, said Apiradi Tantaporn, director-general of the Foreign Trade Department

 

Increased imports would have a stronger impact on local operators that make similar products such as shoes and apparel, while harming Thailand's exports.

 

Officials note that even with the import influx, Thailand has showed a $5.32- billion trade surplus over five months.

 

To deter import growth, the department plans a campaign to promote the use of made-in-Thailand products. It will be launched in the media and will encourage state agencies to purchase locally made equipment to substitute for imports.

 

Bangkok Post

 

 

 

[Guest fountainhall]

It is perhaps useful to put the baht's rise into perspective. Last week, Hong Kong's South China Morning Post compared the appreciation of several currencies against the US dollar since mid-July 2005 (when the Chinese government started to let its currency rise). The results -

 

Thailand - 32.1%

Philippines - 21.09%

Canada - 16.21%

Sweden - 15.98%

Britain - 15.16%

Korea - 12.51%

Euro - 12.49%

Australia - 12.31%

Malaysia - 10.48%

China - 8.9%

 

Some commentators have been saying that the Baht has been rising in common with other regional currencies. That may be true over the last few months - but it is certainly not borne out by the longer term trends.

[Gaybutton]

The following editorial appears in the BANGKOK POST:

 

http://www.bangkokpost.com/News/16Jul2007_news16.php

_____

 

Unprepared for Strong Baht

 

The sudden emergency over the value of the national currency displays deep and alarming problems in both the political and economic establishments. Ten years after the 1997 devaluation triggered a regional recession, the reversing fortunes of the baht threatens a similar result.

 

A large factory has slammed the doors on its workers, and thousands of small businesses are said to be on the edge of insolvency. Ministers are rushing between meetings and press conferences. Most lamentably, taxpayers are once again seen as the only way out of a problem that was foreseeable and mostly preventable.

 

Once again, authorities and the business community seem to have turned a possible opportunity into a deep crisis. The lack of preparation for a rise in the value of the baht is particularly stunning given the fact the currency has been on a steady increase for well over two years.

 

In July of 2005, the value of the baht was hovering at around 42 to one US dollar. Figures show that the value of the baht has increased gradually and without drama. Through political crises and a military coup, the baht kept rising. Yet now, authorities seem flabbergasted to discover that the national currency has ''suddenly'' climbed in value.

 

Phongsak Assakul, president of the Thai Textile Manufacturing Association, claimed that the garment industry could lose 300,000 of the one million existing jobs. Hundreds of important companies could be ruined. Mind you, this is the same association that warned in 1997 that the baht devaluation could cost half the industry jobs because the cost of importing raw materials had risen too fast.

 

The public must be forgiven if it is sceptical about this. What seems to have happened is that a highly profitable business refused to adjust to reality and plan for the future. The fact is that in 1997, textile moguls and economists alike widely criticised the garment trade as a sunset business. The Thai textile industry was founded more than 30 years ago with the strategy of high-intensity assembly lines staffed by tens of thousands of low-paid workers. Hundreds of thousands of poorly educated workers, primarily young women, put Thailand on the world map as the producer of low-cost pants, shirts, socks and coats for countries around the world.

 

Since then, little has happened. A handful of bright young business people have moved their factories and workers up the evolutionary chain. Their educated, motivated workers and managers produce high-class goods, and receive salaries and bonuses accordingly.

 

Most factories, however, have stuck stubbornly to their old ways. Their workers are still low-paid, their production is unimaginative and mostly unattractive. Technology, modern marketing and quality control is so bad that Thailand is being replaced by other countries able to produce such low-quality goods at even lower prices. Vietnam, Cambodia and China are among the nations eager for the work.

 

As unprepared as a grasshopper in the rainy season, the textile business now is crying crocodile tears. The baht is rising, all is lost. Last week, a Bang Phli factory locked out 5,000 workers and then came running to the government for help. Everyone conferred and helped the company raise 500 million baht for the sake of those workers. This is no way to do business.

 

Nor can taxpayers afford to support tens of thousands of workers victimised by basic business errors of their bosses.. Finance Minister Chalongphob Sussangkarn, effectively this government's economic tsar, has been relaxed in this crisis. The Bank of Thailand, especially Governor Tarisa Watanagase, has appeared perplexed and puzzled about just how to proceed.

 

But Mrs Tarisa is also right. The country cannot afford to try to fight the world's currency market trends. The US dollar has continued to fall, and the baht is destined to rise, along with most other world currencies. Since 1997, successive governments have ignored warnings to ease dependence on exports. Industry has refused to move up the quality supply chain, or to put up provisions for the inevitable rainy day.

 

It is disappointing, to say the least, that the country is being let down so badly by both our political and business leaders.

[Gaybutton]

Thailand's Prime Minister has vowed to prevent the baht from reaching 30 to the US dollar. As of 3:25 PM, Wednesday, July 18 the exchange rate is:

 

US Dollar: 33.27

 

Euro: 45.835

 

British Pound: 68.165

 

Australian Dollar: 29.0225

 

Canadian Dollar: 31.79

 

For the dollar, that's better than we saw just a few days ago when it nearly got into the 32s. Keep your fingers crossed. Maybe this trend will continue. Since the Prime Minister has pledged to intervene, maybe some of these speculators will decide that it's time to profit-take. If they do, that would force the baht down and the dollar up. We'll see.

_____

 

BANGKOK, July 18 (TNA)

 

Thailand's Prime Minister Surayud Chulanont on Wednesday reiterated that the baht volatility would proceed only for the short run, saying that state agencies concerned are in position to cope with it.

 

Commenting on a recommendation by some parties that the problem of the surging baht be put as a national agenda, he said the Finance Ministry had worked together with the Bank of Thailand in dealing with the baht fluctuation all along.

 

The central bank is directly responsible for overseeing the baht movement and adjusting its management of the currency while the Finance Ministry had a duty to monitor the overall picture and coordinate efforts.

 

As a head of the administration, Prime Minister Surayud said, he had acknowledged the matter and closely monitored it all along.

 

The premier said he saw no need to elevate the problem as a national agenda because it is not beyond the ability of state agencies concerned to cope with it.

 

Asked whether the ministry and the central bank had informed him of measures to help rein in the baht volatility yet, he said Deputy Prime Minister and Industry Minister Kosit Panpiemras will meet Thursday to discuss measures with parties concerned.

 

The deputy premier will discuss with the prime minister the next day if he believes the measures should go before next Tuesday's cabinet meeting.

 

Regarding an expectation by some analysts that the baht would further appreciate to 30 to the US dollar, Gen. Surayud said his government does not believe the currency would surge to that level.

 

"Should that happen, it will cause severe repercussions," the prime minister said. "So, we have already prepared measures to prevent it."

 

The government believed the baht would strengthen to a certain extent and that state agencies concerned would effectively attempt to maintain its stability.

 

The premier also defended Bank of Thailand governor Tarisa Watanagase, who is under heavy criticism by many parties for the central bank's untimely solutions to the baht volatility, saying the governor had done her best to cope with the problem.

 

"Now, it is time for us to help each other to weather this difficult time. We should not 'pass the buck' to anyone else, but we should respect one's performance. Otherwise, no one will want to accept the job (in the future) because he or she is afraid of being verbally attacked when doing something wrong.

 

"What we should do now is to give useful advice or ideas to those responsible for supervising the currency movement.," the prime minister said. "It is not useful to criticise without giving any advice because it undermines the morale of performers," he said.

 

(TNA)-E00