Thai Baht May Hit 30 To The Us Dollar

Baht 'may hit 30 to $'
Experts urge BOT to be vigilant

BANGKOK: -- 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.

--The Nation 2007-07-09

As far as I am aware, the baht is not that strong against other major currencies. Let the dollar fail and let those gem & jewellry stores fall. It won't matter a pennysworth to most Thais.

(IMG:style_emoticons/default/blink.gif) Strange, it's almost 20 minutes after this is posted and I'm the only reader ? (IMG:style_emoticons/default/wink.gif) sorry IJWT, just saw your post....

1. I said that a few times already. Thai shares were/are cheap. But that doesn't say anything [yet] about the fundamental factors...if they're good or not. Nevertheless, the huge funds flowing into the stock market drives the Baht to high records, since the shares are noted in Baht, so the $'s Yen, Euros etc. have to be converted.

2. (IMG:style_emoticons/default/blink.gif) Imports declined dramatically so, personally, I don't see the point of her remark that she is NOT concerned about the expensive Baht.

3. "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."

Bumpy times ahead for the Baht & Thailand... (IMG:style_emoticons/default/sad.gif)

LaoPo

LaoPo, I agree. You can't throttle this like a Ferrari.

crisis , what crisis (IMG:style_emoticons/default/whistling.gif)


there ya go 'diver that ort to put a few more points on the SET for ya .........................................

(IMG:style_emoticons/default/laugh.gif) Anybody, driving a Ferrari, laughs about a crisis... (IMG:style_emoticons/default/laugh.gif)

LaoPo

437 users now reading this topic. Including one angry retired Yank....

I'll break the silence...I'm speechless...

To me it is very clear that so long as the chinese yuan continues to appreciate, in the absence of other factors such as political problems surounding the forthcoming eleections, the baht will follow suit. The yuan is expected to stregthen 10% vs the $ over the coming year.

This "currency cleansing" is problematic. The Baht via the dollar would appear to be rising not quite inline with other regional currencies.

That aside, any opinion on just who is making money here? We can certainly see who is losing money in the short term.

IMHO it's much more that the Dollar is weak rather than the Baht is strong. From a British point of view there's been little change vis-a-vis the Baht/Pound rate. (That's not gloating, BTW, simply a view of the situation)

This post has been edited by VBF: 2007-07-09 17:14:20

Enjoy your VERY short day in the sun. Don't forget your sunscreen.

The way I see it, the question is what currency isn't appreciating against the greenback?

For example, here's a snapshot of current mid-market rates:

USD-THB: 31.6796
USD-GBP: 0.496343
USD-EUR: 0.733553
USD-JPY: 123.415
USD-CAD: 1.04588
USD-AUD: 1.16158

There's more than one 10++ year record there, so it's fair to say that we're seeing a dramatically failing US currency, not particular strength elsewhere.

This post has been edited by BlissfullyIgnorant: 2007-07-09 17:19:07

Exactly what was predicted in the "Get out of $dollars$ now" thread, which started on here about twelve months ago (if I remember aright).

Thailand's fundamentals are excellent (it can feed all its people without imports, house them, and has a warm climate and doesn't have to heat them---excellent during the future times of ever-increasing energy costs and the dwindling of industrialisation worldwide).
Hence the biggest players, the big Central Banks of countries with inflow money to invest (and the obvious ones are China, Russia, Gulf States and Brunei) can be expected to be steady buyers of bahts and the longterm trend of the baht will be upward.

There is nothing that BoT can do about that long term trend.. Companies that can't live with it will fail.

But, also, nervousness (and the subprime fiasco is generating it so much that even staid bankers are talking about the possible coming of "the big one") will make for volatility in all currencies.
The BoT can tweak things a bit to reduce the highest peaks and avoid the deepest lows for short-term fluctuations, but that is all.

Excuse me? Not sure what you mean by that (IMG:style_emoticons/default/sad.gif) - I was simply pointing out that the Dollar has dropped rather than the Baht having strengthened. The £ is still 68-70 against the Baht, much the same as it was 2 months ago. I repeat - I'm not gloating, merely observing.

Meaning if the dollar keeps tanking everyone is in trouble.

where is this Thailand of which you speak ??

I agree that the problem is not so much the growing strength of the Thai baht; rather it appears to be the decline in buying power of the U.S.$. When I began travelling to Thailand about two years ago, I was getting an exchange rate of about 40 baht to the dollar. I'm now retired here in Thailand and have had to tighten my purse strings considerably. Oh well..mai pen rai...can't afford living single in the states these days anyway. Living in Thailand is still a bargain and a pleasure.

It doesn't make me happy to say it, because my pensions originate as pounds, but I can't see reason to believe that the pound won't go down more-or-less as much as the $US.

In twenty years time what services will the Brits be able to sell to any foreign countries to earn money with which to pay for imports? People presently coming through the massively-increased educational systems of countries where it is less expensive to live will be able to undercut the Brits on every bid.

The Canadian and Australian dollars may hold up their purchasing power much better as those countries have ores etc that will be in demand for export.

No, it is sitting around 64 at the present, as I wired money over from a sterling account last month and that was the rate given, so it is not just the dollar that is weakening the pound has also fallen in stregnth. Last year, was getting about 71 - 73 when wiring money over, so ithe difference is noticeable.

It may be my lack of experience of FX markets but I would have thought
fundamentals would come into this equation somewhere ? This whole thing just seems
so "disconnected " ?
Doesn't it seem even a bit strange for there to be an expectation of 30 thb when
there is still so much talk of :-
( a) growing fears /concerns regarding freedom of speech leading up to the elections
i.e. even if the Constitution is passed ?
( b )failure of the referendum to pass the proposed constitution and thereby
lead to more uncertainty ?

Yep the US dollar will continue to slide as long as you have a w*nker for president and such a mismanaged economy, would never have happened under Bill C. Yep it is NOT the strong Baht at all but why oh why do we keep hearing this, very little difference against the £ and Euro which ARE strong currencies and no not gloating just sorry for my yankee friends who have to put up with a shite US economy which is hitting them in their pocket even those that did not vote for George Dubla. Get rid of Bush and his cronies and things just may start to get back to how they should be with a good dollar as well as Sterling and Euro. Sure the Baht is just a little stronger than a year ago but nothing too significant, just the weak and currently naff US dollar right now. If I was a yank I would sure be wanting some changes to my government and real quick !! No not knocking the US here at all just trying to be realistic and not bury my head in the sand like many here in Thailand seem to do until a disaster happens and then oh so full of surprises (IMG:style_emoticons/default/whistling.gif)

It is not rocket science just look at the exchange rates now and a year ago and you will see the rogue currency is the US dollar, most the rest of the main currencies against each other and against the Baht are not a lot different. Speaks for itself.

This post has been edited by rayw: 2007-07-09 17:41:43

It is all the North, Northeast, South and Central (except Bangkok and the Seaboard).

Sorry about them, but their present populations can come back to the villages.
There is enough land for them to work intensively and have their necessities and a bit over to sell for cash to buy some extras.
They may find it a wrench---but (as my grandmother used to say): "Needs must, when the devil drives".
(Actually, there will still be a bit of a role for some to stay in Bangkok and service the port etc.)

what happened did everyone forget to go to work today 663 users reading this topic GO AND DO SOME WORK

It's after 5PM in LOS, the working day is over for most.