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[christensen]

grantbkk, on 2010-03-19 13:16:39, said:

I think the government bought stocks this week to perpetuate the myth that all is well in the Kingdom. Probably used the money normally used to stabilize the Baht. It depends on what set of criminals are running the show when it comes to economic priorities. The government thinks everybody is not as smart as they are and no one would not see through the manipulation and bs press releases.

I think it went even further Korn invited foreign friends to a sellout in Bangkok for the tourmoilperiod so they later can dump the rubberprices.

[jay1980]

Last week I moved £30,000 GBP to my Thai Baht account at a rate of 48.77438. I always seem to get the market wrong so I am expecting to see a movement in favor of the pound soon  

[phomsanuk]

bonobo, on 2010-03-19 11:02:35, said:

Thailand has strong reserves, and that tends to prop up currencies.  However, it has political uncertainty and neighbors who are become more attractive for FDI, and those tend to drive down currencies.

With weakening of the dollar, pound, and euro, the baht has gained against them.  But against the yen and yuan, it has weakened a little.  But it probably should still be a little weaker yet when future economic viability is considered.

The baht is where it is because the major currencies are weakening, has little to do with BOT or rice where Vietnam competes with lower production costs.

[hardy1943]

gotlost, on 2010-03-19 07:59:05, said:

Not short enough!

Lets blame that on the RED SHIRTS too.

[hardy1943]

phomsanuk, on 2010-03-20 17:11:54, said:

bonobo, on 2010-03-19 11:02:35, said:

Thailand has strong reserves, and that tends to prop up currencies.  However, it has political uncertainty and neighbors who are become more attractive for FDI, and those tend to drive down currencies.

With weakening of the dollar, pound, and euro, the baht has gained against them.  But against the yen and yuan, it has weakened a little.  But it probably should still be a little weaker yet when future economic viability is considered.

The baht is where it is because the major currencies are weakening, has little to do with BOT or rice where Vietnam competes with lower production costs.

The US$ index is at 80.74 the same as it was last year in July,
the low was Dec 1 2009 at 74.10  It make a different in the exchange rate with the Euro and the Pound but has never made any sense with the Thai Baht.You figure???

[lovelomsak]

When I look at a strong baht I donot ask how does it stay strong? I ask why is it strong? When i question why I look from present to future. Not past to present to future. Please keep that in perspective when reading. The past is the past. Donot over think.
  Ok now what is the advantage of a strong baht, being the strongest Asain currency? Could it be when dealing in the Asian market the baht becomes the one desirable? When asians are dealing in baht in the future perhaps they will consider it as the trading currency.If Thailand can maintain a strong consistant currency through these times maybe that tells the world something about there financial skills.
  Now as far as trade goes with Thailand with a strong baht can buy more goods from neighbouring countries.That would be nice for trade all around yes most would think. Now how does this apply to rice we say. Let me see if i can explain this so there will be little question in most people minds.
Say a country like Vietnam for instance wants to sell rice to the world. They want their best price and low costs for greater profits which is smart business yes. They can sell to anyone they please. The buyer can do what they want after they own it right. So Thailand now (remember now not last year or the year before) has a strong baht. Not only strong but can be used efficiently and easily with all neighbouring asian countries. Thailand can pay good value price because of the strength of the baht. With that baht the Vietnameses can buy Thai goods without currency exchange costs or worries. The Thais donot even have to receive the rice in Thailand they can sell to the rest of the world and ship direct from Vietnam. I know everyone says why doesnot Vietnam keep selling to the other countries themselves? Good question.I would like to think with the currency exchange Thailand maybe able to actually compete agressively purchasing. Without Vietnam needing to compromise on selling price. If Vietnam still receives good value for rice receives a currency they can quickly use or hold with no fear. A baht is a baht.
  Ok so now Thailand has a strong baht. It can purchase rice from its strongest rice growing competitor. But it must sell the rice competitively to the rest of the world and not embarrass Vietnam for selling to Thailand. Should not be too difficult with $80 to  $100 dollars american a tonne being the exchange difference.
  The really good part about Thailands Strong baht. Neighbouring countries will benefit  lot from trade.
  I look at Canada and the USA for years everyone dealt with USA not Canada. Why because their dollar was strong and Canadas wasnot. Canada had to trade with Japan and USA few other countries contributed to Canadas trade. I believe at one time 85% of Canadian trade was with Usa. ( I know I said present to future only but this is just an example from the past that these things do happen.) Ever hear of Nafta?
Anyways now everyone can tear this apart.
It will probably get buried quickly  with other posts anyways.

[lannarebirth]

^ Isn't rice sold internationally in $USD's?

[lovelomsak]

lannarebirth, on 2010-03-20 21:17:12, said:

^ Isn't rice sold internationally in $USD's?

Yes I think it is but is asian to asian international ? After sales would defintely be american dollars

[ray23]

If the BOT can't effect the value of the baht, why do we statements from the F/M calling on them to act to weaken the baht?

Why would see things like this if they can not manipulate the baht. Bot am I confused you guys told me they can't do things like this. When in fact over the past four years I have dozen of articles like this.

Of course it's Thai news and you know how I feel about that. Oh that's right Bloomberg and other International News ran similar stories a well. Buy was I lucky to find how simple this really is. I feel better now that I know they can't manipulate the baht rate in Thailand.

  
   Baht strongest in 22 months
  
BANGKOK, 20 March 2010 (NNT) – Kasikorn Thai Research Center has reported that during 15-19 March 2010 the Baht value was its strongest in 22 months.

As reported, Baht value was close to 32.25/ USD. The key factors to support the strong Thai baht was the inflow of foreign investment into Thai stocks despite the peaceful rally of the United Front of Democracy against Dictatorship (UDD). The weakness of US dollar was another constraint of such investment inflow. Meanwhile, there were some purchases of US dollar, which might be a measure of the Bank of Thailand (BoT) to slow down Baht strength for the currency stability. Baht value on Friday remained at 32.30 from 32.54/USD.

Next week, the currency has been forecasted to move in a frame of 32.10-32.50 per US dollar, with impacts expected from the following factors; the UDD's rally situation, the results of BoT in Baht stability control, the direction of other currencies and stocks in the region. The move of US dollar will depend on the conclusion in assisting Greece from its financial crisis, and other important economic figures in the United States.
  

Now what does that mean stability control if it does not include manipulation?

The reality they have stepped many many times in the past four years.

That means they can do it either direction, in the past four years it is my belief that they have done just that. Right now they are trying to weaken within the range they set.

Just because the Euro and the Pound are taking hits now. Does not mean this issue doesn't have history that goes beyond that.

Think about the time the baht had a two rate system one here in Thailand and one outside. Really wasn't that long ago.

I think some of you need to look at the past four years of history in this subject.

Ok guys it easy fill in the gaps between these two articles and you will have much better idea of just how active the BOT is in this country. Now me I have read those articles.

   Kasikorn Research Center : Baht will stay strong
  
The baht is likely to move within the range of 37.10 to 37.60 baht against the US dollar this week compared with 37.34 per dollar during late trade on Friday, according to a report issued by the Kasikorn Research Centre.

At mid-morning, the baht was quoted at 37.57 per dollar on international currency markets.

The report said the baht could strengthen this week due to the lack of positive factors to support the US dollar, and that traders are less worried now regarding a further hike in the interest rate by the US Federal Reserve Bank.

Traders are also awaiting new factors to stimulate trade apart from key US economic data--including housing sales and purchase orders for durable goods, it said, adding that the strengthening of the baht could be limited due to an intervention by the Bank of Thailand (BoT).

Several negative factors had hit the strong baht last week, the report said. They included a market intervention by the BoT to keep the baht from being too strong and strong dollar profit-taking by exporters.

The central bank said that it had intervened in the market after finding that the local currency was too strong. The baht edged down late last week, unlike the Japanese yen and other regional currencies which strengthened on the back of US inflation.

However, the baht rose later following an interest rate hike by the Chinese central bank which helped pushed up the yen and the local currency.
  

News ID: 254908200016

  
Reporter :
     News Date : 20 August 2006

Edited by ray23, 2010-03-20 20:43:40.

[asiawatcher]

bellagrego, on 2010-03-19 10:47:02, said:

It is incredible that you folks thing the BOT can "control" the exchange rate of the baht.  Economics 101 or a short course on currencies would enlighten you obviously over-inflated ideas of Thai power in that arena. The markets call the shots. Thailand and the BOT don't have enough reserves to buy and sell any quantity of currencies to cause a shift up nor down.  Dream on. The answer is not Thailand's actions but the devaluation of the power currencies , The US DOLLAR and EURO, due to gross overspending and debt.  Thailand, even though it too has economic woes, s just too insignificant a player in GDP, vs debt, that it has not felt the pressure against its baht. Lucky for Thailand. Your strong baht is killing my finances but that too shall pass from normal fluctuations and shifts. Thailands non-stop, head in the sand, non-competitive practices, will at some point cause loss of market share in many areas and the rise of stock in it's neighbors economy.

... and hopefully weaken the Baht ...

[mommysboy]

Fletcher, on 2010-03-19 15:06:17, said:

Thai Baht is not necessarily strong, but other currencies are displaying weakness. Watch for the sovereign debt crisis that is brewing in Europe and will eventually hit the US. All fiat paper currencies are in a race to devalue against each other which inevitably leads to the value of the only true currency at a minimum maintaining its value ...i.e. Gold Bullion

Compared to what? Compared to the YEN perhaps not, but but every other currency well, heck, it's strong.

[spirit47]

Fletcher, on 2010-03-19 15:06:17, said:

Thai Baht is not necessarily strong, but other currencies are displaying weakness. Watch for the sovereign debt crisis that is brewing in Europe and will eventually hit the US. All fiat paper currencies are in a race to devalue against each other which inevitably leads to the value of the only true currency at a minimum maintaining its value ...i.e. Gold Bullion

That's right...
Now it's time to change, I hope so, the Euro-Bath chart is on a strong resistant at 43, the dollar shows a resistant point too, but not so strong at 30. Whatever you think about Chartanalysis, it works because a lot of professionals use Charts for rulings...
So I look frindly into the future and my income will be much more in the next months.
You see in this thread that fundamentals not able to explain what happens. The big-boys making the game, maybe they push sometimes stronger to make more money by higher risk.
80% that the Euro on his deepest point now...

[ray23]

To really understand the process you need to recognize the strength of the BOT. It's been trough three Governments thus far and at some point told them all no. They are still there, could be because they are not appointed by Politicians.

Their stated goal has been to keep it stable. The have done that for the most part through the economic mess. At points they have drawn lines in the sand. Then made efforts to keep the baht in that area. No matter what the Western Currencies are doing within limits.

At times that has meant appreciating or depreciating the baht.

It's going to move a to Western Currencies. But, as slowly a possible.

My belief for the last few weeks they were anticipating violence in the protests. they let the baht gain strength to off set the risk of what appeared to be a valid risk. So far no violence as it was expected. Then you had a change of policy, making it easier to move money out of Thailand.

This has all been recent activities, things really didn't go as the they thought it would. The baht became much stronger then they  or most people expected. Now they are trying to weaken the baht. In the end they do have to compete in the export market.

The BOT has been under constant and great pressure from the business people and the the politician's. But they don't answer to any of them. They have followed the marching orders as they have been given. Based on that they have in  fact did a good job. Although none of us like it.

If there is change it will be slow and controlled.

Edited by ray23, 2010-03-21 10:01:56.

[Abrak]

ray23, on 2010-03-21 09:37:36, said:

Based on that they have in  fact did a good job. Although none of us like it.

If there is change it will be slow and controlled.

I dont think the BoT has done a particular good job of sterlization. It is short baht and long US$70bn. That sound like a pretty crummy trade.

I think the baht will be determine by 3 factors.
1) Chinese Yuan
2] Sterilization pretty much out of ammo.
3) A trade off between rising inflation and an aprreciating currency.

I never know whether the Bot uses core (things that done go up in price) or CPI.

The extent of strerilization of C/A and capital inflows has been pretty large over the last two years and sterilization is effectively reverse QE (I think). C/A inflows would cause massive appreciation where BoT swaps into local baht bonds (running Bt600bn) a month. Or of cause it would cause massive inflation. I think the BoT has say US$70bn of bonds financed by cash doing nothing but sitting at the BoT

Edited by Abrak, 2010-03-22 03:57:08.

[ray23]

Good Point. But, staying in their marching orders is where they did a good job. That was all I was referring to. It ha been amazing to watch they have been pressured from every side in the past four years, they never flinched.

At the moment inflation is my biggest fear. The value of your income down, the cost of living up, that's not a good combination.

Thailand created funding in many ways. not just he exchange rate. Import duties all of sudden they started seizing motorcycles. Not because they were being used on the roads illegally, but to get the tax revenues up. The ATM fees.

Not fun but dollar holders have seen it lower as little as 29.

Ok here is where you can educate me. When they got the dollar at 29 are those dollars worth more today?

If the dollar gets some of it's value back over the next five years, will they gain?

[ray23]

http://www.bangkokpo...baht-fluctuates

Sorry couldn't resist, tell me one more time the BOT doesn't do this.

[chiang mai]

ray23, on 2010-03-22 17:34:02, said:

http://www.bangkokpo...baht-fluctuates

Sorry couldn't resist, tell me one more time the BOT doesn't do this.

The operative phrase is highlighted - it's long been BOT policy to prevent wild, erratic and sudden movements in the currency, that doesn't mean anything more than just that.

"BOT governor Tarisa Watanagase always said the central bank will have to prevent the baht from fluctuating too much as that may create difficulties to exporters," he said. He said the central bank had no policy to maintain the baht's value".

[ray23]

Your right Chaing Mai, but many seem to think they could not have an effect and that is simply wrong.

What I'm curious about, why did we see so much money into the stock market last week. I know about Thailand relaxing their law about taking investment money back out. However given the facts on the ground last week, wouldn't seem prudent to be investing here now.

There were no riots a good thing, but no one could have really known that last week. It was huge amount of money flowing in, anyone understand that one?  I will leave that to the guys who have a better knowledge of this sort of thing, shut my mouth and learn.

It did in fact effect the rate exchange.

[chiang mai]

ray23, on 2010-03-22 18:42:43, said:

Your right Chaing Mai, but many seem to think they could not have an effect and that is simply wrong.

What I'm curious about, why did we see so much money into the stock market last week. I know about Thailand relaxing their law about taking investment money back out. However given the facts on the ground last week, wouldn't seem prudent to be investing here now.

There were no riots a good thing, but no one could have really known that last week. It was huge amount of money flowing in, anyone understand that one?  I will leave that to the guys who have a better knowledge of this sort of thing, shut my mouth and learn.

It did in fact effect the rate exchange.

I think you have to separate the two issues: currency risk resulting from political unrest is very capably managed by the BOT, as we saw last week - this is/was a downside risk. I personally don't believe that any ammount of political upheaval short of outright civil war is likely to unhinge THB in a way that BOT can successfully manage.

The second issue of increased capital inflows also represent a currency risk but is an upside risk, in the past BOT has implemented currency controls (no longer in place) to mitigate this risk. Why have capital inflows increased? Simply because the Thai economy, on the surface at least, is in far better shape than many of its Western counterparts hence it is attracting funds that would otherwise have been targeted at Western markets.

Edited by chiang mai, 2010-03-22 18:55:47.

[ray23]

chiang mai, on 2010-03-22 11:54:05, said:

ray23, on 2010-03-22 18:42:43, said:

Your right Chaing Mai, but many seem to think they could not have an effect and that is simply wrong.

What I'm curious about, why did we see so much money into the stock market last week. I know about Thailand relaxing their law about taking investment money back out. However given the facts on the ground last week, wouldn't seem prudent to be investing here now.

There were no riots a good thing, but no one could have really known that last week. It was huge amount of money flowing in, anyone understand that one?  I will leave that to the guys who have a better knowledge of this sort of thing, shut my mouth and learn.

It did in fact effect the rate exchange.

I think you have to separate the two issues: currency risk resulting from political unrest is very capably managed by the BOT, as we saw last week - this is/was a downside risk. I personally don't believe that any ammount of political upheaval short of outright civil war is likely to unhinge THB in a way that BOT can successfully manage.

The second issue of increased capital inflows also represent a currency risk but is an upside risk, in the past BOT has implemented currency controls (no longer in place) to mitigate this risk. Why have capital inflows increased? Simply because the Thai economy, on the surface at least, is in far better shape than many of its Western counterparts hence it is attracting funds that would otherwise have been targeted at Western markets.

Thanks Chaing Mai great explanation.

[Abrak]

chiang mai, on 2010-03-22 18:10:42, said:

ray23, on 2010-03-22 17:34:02, said:

http://www.bangkokpo...baht-fluctuates

Sorry couldn't resist, tell me one more time the BOT doesn't do this.

The operative phrase is highlighted - it's long been BOT policy to prevent wild, erratic and sudden movements in the currency, that doesn't mean anything more than just that.

"BOT governor Tarisa Watanagase always said the central bank will have to prevent the baht from fluctuating too much as that may create difficulties to exporters," he said. He said the central bank had no policy to maintain the baht's value".

Chiang Mai absolute complete bollocks.

How much does it cost to 'stabilize' your exchange rate. Would US$5bn to US$10bn be enough? Afterall they are not try to influence the underlying value of the baht.

The BoT has a short position in baht of US$60bn. They have spent twice as much suppressing the baht as they did supporting in 1997. It is a bit annoying really - you have really good currency so you go and short it. And everybody could see them do it so they kept going long until they eventually started allowing it to appreciate so that the country now has the costs of a less competitive currency along with an ever increasing loss on their short.

I do think that comment of not having a policy to maintain the value of the baht is a plain lie when you have used 25% of the value of GDP to suppress it. And it wasnt as though nobody noticed.

I just wish they would show some financial irresponsibility and had done it to begin with. Which Ray is why many of the new funds are attracted into the stockmarket. Because the next step (which should have been the first step) is too loosen monetary policy and boost inflation expectations.

[chiang mai]

Abrak, on 2010-03-22 20:08:36, said:

chiang mai, on 2010-03-22 18:10:42, said:

ray23, on 2010-03-22 17:34:02, said:

http://www.bangkokpo...baht-fluctuates

Sorry couldn't resist, tell me one more time the BOT doesn't do this.

The operative phrase is highlighted - it's long been BOT policy to prevent wild, erratic and sudden movements in the currency, that doesn't mean anything more than just that.

"BOT governor Tarisa Watanagase always said the central bank will have to prevent the baht from fluctuating too much as that may create difficulties to exporters," he said. He said the central bank had no policy to maintain the baht's value".

Chiang Mai absolute complete bollocks.

How much does it cost to 'stabilize' your exchange rate. Would US$5bn to US$10bn be enough? Afterall they are not try to influence the underlying value of the baht.

The BoT has a short position in baht of US$60bn. They have spent twice as much suppressing the baht as they did supporting in 1997. It is a bit annoying really - you have really good currency so you go and short it. And everybody could see them do it so they kept going long until they eventually started allowing it to appreciate so that the country now has the costs of a less competitive currency along with an ever increasing loss on their short.

I do think that comment of not having a policy to maintain the value of the baht is a plain lie when you have used 25% of the value of GDP to suppress it. And it wasnt as though nobody noticed.

I just wish they would show some financial irresponsibility and had done it to begin with. Which Ray is why many of the new funds are attracted into the stockmarket. Because the next step (which should have been the first step) is too loosen monetary policy and boost inflation expectations.

Abrak: I'm having difficulty understanding what it is that I wrote that you think is complete b******s, can you explain? I mean yes, I understand that BOT is spending Baht and buying USD but that's entirely consistent with their stated aim of "preventing wild, erratic and sudden movements in the currency", if they didn't do that then the value of THB would strengthen and exports would get hurt.

[Abrak]

chiang mai, on 2010-03-22 20:25:31, said:

Abrak: I'm having difficulty understanding what it is that I wrote that you think is complete b******s, can you explain? I mean yes, I understand that BOT is spending Baht and buying USD but that's entirely consistent with their stated aim of "preventing wild, erratic and sudden movements in the currency", if they didn't do that then the value of THB would strengthen and exports would get hurt.

Sorry, Chiang Mai. What I meant was you highlighted 'preventing wild erratic movements' rather than the statement that the BoT has 'no policy to maintain the value of the baht.'

Preventing wild erratic movements suggest a smoothing of the underlying trend in the baht. It shouldnt  be an expensive process - so maybe US$5-10bn. Actually the really key operative phrase here is 'no policy to maintain the value of the baht'. They had a massive intervention policy to suppress its value. US$60bn dollars worth - equivalent to 25% of GDP. And they basically run out of money or shall we say it reach the stage that it was counter productive. You have to admit US$60bn is not an erratic movement prevention exercise.

And Chiang Mai they didnt have to do it and it was a massive waste of money. I hope you can see that Thailand's underlying fundamentals are infinitely better than the US. Bernanke is one of the world's most experienced devaluers. If you believe that shorting the baht was likely to be a good trade to stop the baht appreciating against the dollar you are highly optimistic (I personally would call it pretty stupid.) The more you short, the bigger the hole you are digging yourself and very soon everyone is helping you dig. So a country with great fundamentals and an undervalued currency now has the added attraction of a Central Bank massive short position.

And Chiang Mai if you are trying to maintain your currency against a crappy US$ and Ben Bernanke you really have to start with an underlying philosophy that you need to show at least as much irresponsibility as him and you should start by trying to make your currency less attractive rather than even more. Boosting inflation and committing to low rates is perhaps a good start. You get more leverage - through increasing future inflation expectations than the loss of competitiveness of a currency appreciation.

The policy was complete nonsense.

Do you really believe that spending US$60bn was a good idea or 'capably managed' by the BoT? Personally I think she should have been sacked.

Edited by Abrak, 2010-03-22 21:21:48.

[chiang mai]

Abrak, on 2010-03-22 21:14:41, said:

chiang mai, on 2010-03-22 20:25:31, said:

Abrak: I'm having difficulty understanding what it is that I wrote that you think is complete b******s, can you explain? I mean yes, I understand that BOT is spending Baht and buying USD but that's entirely consistent with their stated aim of "preventing wild, erratic and sudden movements in the currency", if they didn't do that then the value of THB would strengthen and exports would get hurt.

Sorry, Chiang Mai. What I meant was you highlighted 'preventing wild erratic movements' rather than the statement that the BoT has 'no policy to maintain the value of the baht.'

Preventing wild erratic movements suggest a smoothing of the underlying trend in the baht. It shouldnt  be an expensive process - so maybe US$5-10bn. Actually the really key operative phrase here is 'no policy to maintain the value of the baht'. They had a massive intervention policy to suppress its value. US$60bn dollars worth - equivalent to 25% of GDP. And they basically run out of money or shall we say it reach the stage that it was counter productive. You have to admit US$60bn is not an erratic movement prevention exercise.

And Chiang Mai they didnt have to do it and it was a massive waste of money. I hope you can see that Thailand's underlying fundamentals are infinitely better than the US. Bernanke is one of the world's most experienced devaluers. If you believe that shorting the baht was likely to be a good trade to stop the baht appreciating against the dollar you are highly optimistic (I personally would call it pretty stupid.) The more you short, the bigger the hole you are digging yourself and very soon everyone is helping you dig. So a country with great fundamentals and an undervalued currency now has the added attraction of a Central Bank massive short position.

And Chiang Mai if you are trying to maintain your currency against a crappy US$ and Ben Bernanke you really have to start with an underlying philosophy that you need to show at least as much irresponsibility as him and you should start by trying to make your currency less attractive rather than even more. Boosting inflation and committing to low rates is perhaps a good start. You get more leverage - through increasing future inflation expectations than the loss of competitiveness of a currency appreciation.

The policy was complete nonsense.

Do you really believe that spending US$60bn was a good idea or 'capably managed' by the BoT? Personally I think she should have been sacked.

It's tempting to look at the issue of the $60/70 billion with the benefit of hindsight and of course if we do that we can now see that it was perhaps not the most cost effective strategy, but if we go back in time and look at the problem from a "now" perspective I think the approach that was adopted stands up to the test of reasonableness. In light of the knowledge that their currency was going to strengthen, exports were at risk and the degree of recovery in the global recovery uncertain, taking pre-emptive action that cost 60/70 billion was probably not a wholly bad idea, actually I think it was probably a substantially risk averse one. Does that strategy delay the inevitable? Well yes, to some degree but things have now moved on and the risk picture is somewhat different, Thai GDP has improved, exports are on a more positive footing and Chinese growth is more solid, so allowing the inevitable now is arguably a better approach than doing so whilst the economic picture was fuzzy.

[Gobbledoc]

edit, I removed post, cant be bothered with the non believers, re BOT intervention.

Edited by Gobbledoc, 2010-03-23 08:19:22.