Baht Weakens as a Result of the Coup

[Gaybutton]

I'm writing this at 6:40 AM. It's still too early to report on the actual exchange rates. I'll post what happens with the baht when the information becomes available.

 

Meanwhile, according to the following article, we can expect the baht to take a plunge as a result of the coup. Obviously there is no way to predict, at this point, how much of a hit the baht will take, but I have a feeling it will be short lived and start heading in its 'normal' direction once the dust settles from the coup.

 

Take advantage of the favorable rates while you can, guys . . .

 

The following appears in the BANGKOK POST:

______

 

Baht Records 4-Year Record Fall

 

New York (Agencies)

The baht suffered its greatest fall in four years this morning after news reached currency markets of the coup against Prime Minister Thaksin Shinawatra.

 

The baht fell 1.3 percent to 37.77 per dollar at 4 p.m. in New York, from 37.29 late on Sept. 18, the biggest decline since July 2002.

 

Thai bonds and a New York-traded fund of the nation's stocks also declined.

 

Bloomberg news agency quoted Nick Bennenbroek, a vice president of foreign exchange research at Brown Brothers Harriman & Co. in New York: "It's an issue of confidence. I would tend not to downplay the impact this could cause on Thailand's financial markets."

 

"We can probably see further weakness in the Thai baht," Bloomberg further quoted Bennenbroek. "I would not be surprised to see a very significant drop in the equity markets."

 

Marc Faber, founder and managing director of investment firm Marc Faber Ltd. in Hong Kong, was also quoted by Bloomberg:

 

"It appears that it's a military coup to basically oust the prime minister, and the implications are not obviously overly favourable because it creates a lot of uncertainty. It is far from certain that the coup will succeed and if it succeeds, we don't know exactly what kind of government will follow."

 

Investors said the coup was unlikely to trigger declines in emerging-market securities as happened after Thailand's devaluation in 1997, when bonds, stocks and currencies across Asia tumbled and economies in Thailand, South Korea and Indonesia slipped into recession.

 

The risk of owning Thai government bonds jumped to a two-year high, according to traders betting on the creditworthiness of countries in the credit-default swaps market.

 

The price of the contracts rose to more than $47,000 from $33,000 today, according to HSBC Holdings Plc. The contracts, which pay investors $10 million in exchange for the bonds should the government default in the next five years.

 

Yield premiums on Thailand's 7.75 percent bond due in April 2007 compared with benchmark Treasuries rose 2 basis points to 60 basis points, the highest in a month, HSBC prices show.

[Gaybutton]

Wednesday, September 20:

 

The exchange rate opened today as follows:

 

US Dollar: 37.45

 

Euro: 47.335

 

British Pound: 70.325

 

Australian Dollar: 27.97

 

Canadian Dollar: 33.0275

[Guest wowpow]

It does not seem to be a landslide as yet.

[Gaybutton]

As of 10:30 AM the exchange rate is as follows:

 

US Dollar: 37.30

 

Euro: 47.16

 

British Pound: 70.095

 

Australian Dollar: 27.90

 

Canadian Dollar: 32.925

 

I'm quite surprised. In less than three hours the baht has begun to regain some strength against all of these currencies. We'll just have to wait and see if this trend continues.

[Guest freeyourmind]

FYI

 

1056 Hrs. Wednesday morning (thailand time)

 

At 0930 Hrs. I just used the Kasacorn ATM (the old Farmers bank) without a problem. But I was only taking money from the Thailand bank, not from my overseas bank.

 

The Bangkok Bank ATM was completely shut off (as in no screen visable) and decided to use the Kasacorn ATM machine without a hitch. No problem.

 

Went for breakfast at Kiss food and drink (across from Mike's shopping mall) and everything seems normal so far.

 

Most Thais didn't realize what was happening until this morning....

 

Cable tv is up except for FOX NEWS.....blue screen. BBC and Asia news are broadcasting as

 

normal....Fm stations are working

 

Keep you heads down for a while guys......

[Gaybutton]

BANGKOK, Sept 20 (TNA) -

 

It is premature to conclude possible impacts of Tuesday's bloodless coup d'tate staged by the Administrative Reform Council on the Thai economy and financial system, according to the Thai Bankers' Association chairwoman Jada Wattanasiritham.

 

She said it is too soon to estimate how much the economy and financial system would be affected by the military coup.

 

Still, Khunying Jada conceded she was concerned regarding the psychological impact of the coup on the tourism sector because such actions are not done within the context of the democratic process.

 

However, she indicated, if the incident settles quickly, it would benefit the overall economy.

 

Khunying Jada, who is also president of Siam Commercial Bank, said she had ordered all bank branches closed on Wednesday. However, bank branches in department stores and currency exchange rate booths are still open for service after she discussed the situation with the Bank of Thailand.

 

She said she could not tell how long banks will be closed because the Administrative Reform Council has not yet informed the banks of any decision.

 

Gornpot Asawinvijit, Director-General of the Government Savings Bank, said he believed the situation would return to normal soon.

 

He said in his opinion foreign investors would understand the Thai political culture.

 

(TNA)-E005

 

[Gaybutton]

Thursday, September 21:

 

Here are the opening exchange rates:

 

US Dollar: 37.44

 

Euro: 47.465

 

British Pound: 70.635

 

Australian Dollar: 28.13

 

Canadian Dollar: 33.0225

 

Not much different from the Tuesday exchange rates. It will be interesting to see where the baht goes. I'll keep you posted.

[Gaybutton]

 

Thursday, September 21:

 

Here are the closing exchange rates:

 

US Dollar: 37.36

 

Euro: 47.40

 

British Pound: 70.60

 

Australian Dollar: 28.015

 

Canadian Dollar: 33.04

[Guest PapaDavid]

Thursday, September 21:

Here are the closing exchange rates:

US Dollar: 37.36

Euro: 47.40

British Pound: 70.60

Australian Dollar: 28.015

Canadian Dollar: 33.04

 

Just like that great old band - STATUS QUO (in spite of the coup).

[Gaybutton]

Just like that great old band - STATUS QUO (in spite of the coup).

 

That is true. The question is whether it will remain that way. The baht was expected to drop sharply amid fears of what is going to happen in Thailand as a result of the coup. However, the coup has been benign and the generals have clearly stated that they are going to establish a new government as quickly as possible and then step down from control and resume their normal duties. Fears apparently have been allayed, but it is still far too soon to know exactly what to expect the baht to do.

 

There apparently was initial fear that the new regime was going to establish a Burmese style junta. No such thing has happened and, to date, I have seen nothing to indicate that it will happen. I fully believe that the new regime is going to do exactly what they have said they are going to do. I really do believe these are men of honor who did what they did because they thought it was right and not because they were hungry for power or any other reason that could be considered sinister.

 

I suppose whether they actually were right or not depends upon personal opinion, but so far Thailand is absolutely peaceful and there has been very little repression. I believe they truly want a peaceful and positive outcome for this and they want to try to do something about the problems Thailand has gone through. Others may disagree, of course, but that's the way I feel about it. I think the baht is going to remain relatively stable and is not going to dramatically plunge as a result of the coup. The next few weeks will tell the story.

[Guest PapaDavid]

That is true. The question is whether it will remain that way. The baht was expected to drop sharply amid fears of what is going to happen in Thailand as a result of the coup. However, the coup has been benign and the generals have clearly stated that they are going to establish a new government as quickly as possible and then step down from control and resume their normal duties. ................... The next few weeks will tell the story.

 

Fully agree with your sentiments. I think that exchange rates will remain relatively stable unless there is a counter-coup or violence from supporters of Thaksin.

 

It will also depend on whether Thaksin tries to cause trouble from London - he is reported to be contemplating a Government in Exile and is also reported to be weighing up what support he may have for such a move.

 

Given His Majesty the King's apparent support for the coup leaders I believe that Thaksin is whistling into the wind on that one.

[PattayaMale]

Several months ago, wasn't it reported that Thaskin said he would step down if the King "whispered in his ear"? This seems to be a strong whisper.