Baht Appreciates to Strongest Level in 8 Years

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BANGKOK, Nov 14 (TNA)

 

Thailand's baht currency unit appreciated to plateau at 36.39 to the US dollar Tuesday morning, its strongest in eight years, boosted by a dumping of the greenback and a capital inflow into the Thai bond market, according to a Bangkok money dealer.

 

Pattaravadee Chinkulkitniwat, the money dealer of Kasikornbank Plc, said the baht had continued to strengthened in the same direction with the Japanese yen, which appreciated to 118 from 117.55 to the US dollar since the economy expanded more than expected.

 

The strengthening of the Thai currency also stemmed from capital inflow into the bond market in large amounts.

 

The next scheduled support levels of the baht is 36.30, 36.20, and 36 to the US dollar.

 

"Today, the baht has appreciated in the same direction with other regional currencies including the Philippine peso, Singapore dollar, Taiwan dollar and South Korean won, which is the strongest in nine years," Ms. Pattaravadee said.

 

However, she said, the Bank of Thailand would not remain passive in response to the current baht movement because the currency had appreciated too rapidly.

 

The central bank had closely monitored the baht' s movement in the past. So, she believed it would come up with a measure to curb the stronger baht.

 

Under the current circumstances, Ms. Pattaravadee said, she wanted exporters to count on financial tools such as forward or spot contracts to hedge against the currency exchange rate volatility.

 

(TNA)-E005

 

 

[PattayaMale]

There is a prediction that the dollar is in for a vary hard time as the housing market in the US crashes and massive debt of the government continues. The Thai baht may become one of the best currencies....we must wait to see. Any predictions from those that may understand this better than I do?

[Gaybutton]

There is a prediction that the dollar is in for a vary hard time as the housing market in the US crashes and massive debt of the government continues. The Thai baht may become one of the best currencies....we must wait to see. Any predictions from those that may understand this better than I do?

 

I don't understand any better than you or anyone else, but if I've learned nothing else through observations of what the currencies actually do compared to the predictions, it's that it seems nobody is ever able to accurately predict anything.

[Guest jomtien]

I don't understand any better than you or anyone else, but if I've learned nothing else through observations of what the currencies actually do compared to the predictions, it's that it seems that nobody is ever able to accurately predict anything.

 

 

I can accurately predict that if the Baht strengthers OR if the Baht weakens, I will not have enough of them.

 

 

 

 

[Gaybutton]

The following appears in THE NATION:

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All Calm as Baht Nears 8-year High

 

Exports Should be Only 'Slightly Affected'

 

The baht climbed close to an eight-year high yesterday, but the government's financial chief saw little to fear in regard to Thailand's competitiveness.

 

"The strong baht will slightly affect exports, but there is still no concern. I believe exports will continue to grow as they have done so far. Currency appreciation has been common in the region," Finance Minister and Deputy Premier MR Pridiyathorn Devakula said.

 

The baht opened at 36.50/36.52 to the US dollar before climbing to the day's peak of 36.38, a level unseen for almost eight years. It closed at 36.40/36.42, breaking the key resistance level of 36.50.

 

Investors have sold the dollar in offshore markets after several countries said they would diversify their international reserves rather than hold mainly greenbacks.

 

Dealers said the baht would edge up almost every day and likely pass Bt36 by year's end.

 

Pridiyathorn said it was not that the baht was that strong, but rather that the dollar had weakened. The central bank has already taken good care of the baht's value, he said.

 

Exports will expand 11-12 per cent in value next year, he said.

 

Kirida Bhaopichitr, an economist in the World Bank's office in Bangkok, said the baht would appreciate further next year by 1-1.50.

 

Usara Wilaipich, senior economist at Standard Chartered Bank (Thai), believes the baht will top 36 this year and continue upwards until the middle of next year.

 

Kirida also said the economy would grow 4.6 per cent next year, slightly higher than 4.5 per cent this year, due to a slowdown in exports and moderate pick-up in domestic demand.

 

The economy is likely to grow 4.5 this year, the slowest pace among Southeast and East Asian countries, except Japan.

 

She said the high oil price, slowdown in global trade and uncertainty surrounding the government's policies could threaten the economy next year. Although the oil price has retracted, it remains high and is expected to average US$60 (Bt2,200) per barrel. The global economic slowdown, with growth of only 3.3 per cent predicted for next year, should cause world trade volume to improve 7.3 per cent.

 

Private investment next year is likely to increase only 5 per cent, compared with 4.6 per cent this year, because business confidence has not fully recovered, due to high production costs.

 

Kirida said investors, particularly foreign investors, had become more cautious and postponed their investment decisions until the government's policies became clearer.

 

The Business Sentiment Index of Japanese companies operating in Thailand, put out by the Japan External Trade Organisation, has been in negative territory since May and declined last month. The Board of Investment saw net applications by foreign firms and joint ventures for the first 10 months of the year drop by half from the same period last year, to Bt260.4 billion.

 

Kirida said public investment was expected to accelerate next year, due to the 11-per-cent increase in the central government's investment budget and 4.5-per-cent hike in state-enterprise investment for fiscal 2007. But next year's mega-project investment will be Bt366.1 billion lower than planned.

 

Aberdeen Asset Management deputy CEO Robert Penaloza said most foreign investors felt more conformable going forward after key ministers explained the government's economic policies during their road show last week.

 

Aberdeen is still overweight in the Thai market, with $1.6 billion worth of investments earning an average annual return of 14-15 per cent. From next Monday to December 1, his company will introduce the open-ended Aberdeen European Growth Fund.

 

Anoma Srisukkasem,

 

Somruedi Banchongduang

 

The Nation

 

 

[Gaybutton]

BANGKOK, Nov 15 (TNA)

 

Thailand's central bank --The Bank of Thailand --should take stricter measures to oversee the movement of the baht, after the local currency appreciated to 36.39 to the US dollar, the strongest in almost eight years, on Tuesday, the Kasikorn Research Centre said Wednesday.

 

The leading think tank reported although the central bank only recently came up with additional measures to curb speculation on the baht (early this month), Thailand's currency continued to strengthen.

 

So, money dealers and market observers expected the bank would come up with new measures to more closely supervise the baht's stability.

 

KRC believed the baht would probably continue to appreciate, and rapidly, particularly if the American economy slows down considerably.

 

Under the circumstances, the Bank of Thailand is likely to -- and should -- take additional measures to maintain the stability of the baht. One measure is to reduce the policy interest rate.

 

The strengthening of the baht stemmed in part from a foreign capital inflow into Asian countries including Thailand due to the weakening of the US dollar.

 

Another reason behind the stronger baht is that local interest rates remain higher than those of most countries in the region.

 

So, should the bank cut the policy interest rate, it would help narrow a gap between local interest rates and those of other countries. It would help ease the foreign capital inflow into the country to a certain extent.

 

KRC conceded the implementation of the interest policy might neither help slow the foreign capital inflow nor ease the strengthening of the baht if foreign investors had confidence in the economic and political stability in Thailand.

 

It suggested that added measures to be taken by the bank to oversee the baht not be too strict because it could affect foreign investor confidence.

 

Kasikorn viewed the bank should gradually increase the degree of controls to curb speculation on the baht, such as controlling more kinds of business transactions and seeking cooperation from financial institutions

to report information in detail and with greater caution.

 

(TNA)-E005

 

 

[Gaybutton]

The following appears in the BANGKOK POST:

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Exporters Seek Action to Curb Baht

 

Interest-Rate Cut Could Ease Impact

 

POST REPORTERS

 

Ten leading food and farm product export groups have called for the Bank of Thailand to arrest the surge in the baht, saying they have been losing market share to rivals in other countries with more attractive exchange rates. One thing the central bank could do, they say, is cut interest rates, which could lead to depreciation in the baht.

 

The baht was trading yesterday at 36.52/55 to a US dollar _ its strongest level in almost eight years, but down slightly from 36.40/43 on Tuesday.

 

Tarisa Watanagase, the central bank governor, said yesterday that the baht had appreciated rapidly due to steady capital inflows, but maintained that over the past two years, it had been competitive with other currencies.

 

''The baht has appreciated sharply this year. But last year it was surpassed by regional currencies. So up until now, the baht is not stronger than regional currencies.''

 

Dr Tarisa insisted that the central bank would stick to its managed float policy and let market forces determine the baht's value. The central bank would intervene in the foreign-exchange market only to prevent the exchange rate from changing too rapidly.

 

''The central bank can look after the baht, but only to a certain extent. We cannot withstand the market trend. The private sector needs to hedge against risk and beef up efficiency, such as through cost-cutting.''

 

She said baht volatility was expected to persist for a while as it resulted from depreciation of the dollar.

 

The central bank, she said, would introduce new rules to facilitate offshore investment by local businesses, focusing on easier documentation and relaxed rules on holding foreign currencies.

 

''The pressure on the baht would be reduced if the central bank facilitates capital outflows. As well, these measures would help improve local firms' efficiency.''

 

Export groups plan to brief central bankers on their members' problems today. They include the Thai Frozen Foods Association, Thai Broiler Processing Exporters Association, Thai Fruit and Vegetable Traders Association and the Thai Food Processors' Association. The groups represent businesses with combined exports of 400 billion baht a year.

 

Poj Aramwattananont, president of the Thai Frozen Foods Association, said SET-listed seafood export companies had reported losses from third-quarter operations, partly because of the baht.

 

Pornsil Patcharintanakul, the deputy secretary-general of the Board of Trade of Thailand, said exporters could not raise their prices to cope with losses because of heavy competition in the marketplace.

 

As well, their problems were compounded because most orders are placed three months in advance and they had to bear the burden of currency changes.

 

Dej Pathanasethpong, chairman of the FTI's garment industry club, said the currency value was controllable if the government decided to act. ''The baht would depreciate if the government decided to reduce interest rates by 1%,'' he said.

 

In the electrical and electronics sector, revenue losses linked to a strong baht could reach 30-40 billion baht this year, said Katiya Greigarn, chairman of the electrical, electronics and allied industry club of the Federation of Thai Industries (FTI).

 

''If government cannot do anything, all we can do is to pray for yuan appreciation,'' said Mr Katiya, noting that cheap goods from China were the Thai industry's main competitors.

 

Luckchai Kittipol, president of the Thai Rubber Association, said baht appreciation had pushed down domestic prices of rubber sheet to the lowest point of the year, 53 baht a kilogramme compared with 100 baht a year ago.

 

A Finance Ministry official said the baht was now 10.2% stronger than the average of the currencies of 11 major trading partners due to external and internal factors, the latter being linked to capital inflows.

 

In relative terms the baht is now 7.9% stronger than the Korean won. Other comparison figures are 7.8% against the Indonesian rupiah, 7.2% against the pound, 6.9% against the Philippine peso and 6.2% against the Singapore dollar.