Thai Baht Likely to Appreciate to 36.50 per US Dollar

[Gaybutton]

BANGKOK, Aug 22 (TNA)

 

The Thai baht is likely to strengthen to 36.50 a US dollar due to the expected further weakening of the greenback and the appreciation of the Chinese yuan, according to an economist.

 

Ussara Vilaipitch of Standard Chartered Bank (Thailand) said on Tuesday that there is a room for the Thai baht to further strengthen since the US dollar tends to weaken against other main currencies, including those in Asia.

 

As well, the rather heating economic expansion of China has fueled concerns that Beijing may opt to raise interest rates to slow its growth.

 

The move would make the yuan strengthen further, she projected.

 

She said the weakening of the greenback and the strengthening of the Chinese yuan are key factors behind the foreign capital inflow into Asian countries, including Thailand, due to attractive returns from the currency exchange rates.

 

Under the circumstance, the Thai currency might appreciate to 36.5-37 baht a US dollar, she forecast.

 

Still, the baht has a key resistance level at 37.20, given the fact that the Bank of Thailand (BOT) has periodically intervened into the local currency movement.

 

The Thai baht has appreciated by 9.5 percent since early this year, the strongest when compared with other regional currencies, including the Singapore dollar, which is up 5.6 percent, and Japanese yen, which is up 2 percent.

 

She said local entrepreneurs should closely monitor the currency exchange rates because the baht had sharply appreciated.

 

However, she believed that the strengthening of the Thai baht would begin to slow in the rest of the year because the central bank would try to prevent it from being too volatile.

 

On the BOT's 14-day repurchase rate (repo) trend, Ms. Ussara said, the central bank is less likely to raise the repo because an inflationary pressure had declined.

 

She viewed that the repo, which now stays at 5 per cent, is considered suitable for the country's current economic conditions.

 

(TNA) - E005

[Up2u]

Could go even lower than that. From the Nation:

 

 

Experts see baht at 35.50 per dollar

 

 

The Thai baht is expected to strengthen further - even test the Bt35.50 resistance level against the US dollar - because the Bank of Thailand (BOT) is unlikely to buck the global currency trend and seeks only to ensure that the baht's adjustment to the dollar's depreciation is consistent with other Asian currencies, experts said yesterday.

 

Robin Wilkin, a JP Morgan Chase technical strategist in London, was quoted by Reuters as saying the baht could potentially rise a further 5-6 per cent against the US dollar before meeting resistance on the charts.

 

He said he expected a move towards between Bt36.50 and Bt35.50, representing the baht's strongest point since 1998-99. After breaking through the Bt37.44 level last week, the baht should be stronger and the US dollar's bearish position confirmed.

 

 

Meanwhile, DBS Group Research said recent intervention by the Thai central bank did not mean the BOT wanted to dictate the baht level against the US dollar.

 

 

"What the BOT wants is to ensure that the US dollar's downward adjustment is consistent among the baht's Asian peers," it said. This explains why the US-dollar/baht rate has been tracking the US-dollar/Singaporean-dollar rate, with a 91.7-per-cent correlation, more closely than the US-dollar/yen rate, showing only a 40.2-per-cent correlation.

 

 

"In other words, the BOT may just be complaining about the divergence between the US dollar/baht [rate] and the US-dollar/Singaporean-dollar [rate]," said DBS.

 

 

The baht closed yesterday in Asian trading at Bt37.58 to the US dollar, after reaching a six-year high on Friday.

 

http://www.nationmultimedia.com/2006/08/18...ss_30011336.php

 

[Gaybutton]

The actual amount you would receive per dollar closed at 37.39 today.

 

I don't know what to make of all this and I'm no economics expert, but only a couple of months ago the predictions were that the exchange rate would be close to 41 to 42 baht per dollar by now. Instead, it's 37.39 and predicted to get worse.

 

It is difficult to know just what to expect because these predictions have yet to be right. If the baht becomes too strong, then the export and tourism business will suffer. If it becomes too weak, then more rounds of inflation will hit the Thai people. Where all this is going to end is anybody's guess.

 

The bottom line, at least for now, is that you get close to 25% less baht per dollar than you got three years ago. That's quite a hit, especially for us retirees who depend on the exchange rate.