Thai Baht hits highs, BoT to take measures

[Spitfire]

As we all know, this is a continuing problem for tourism (along with other glaring problems) and exports and many articles keep popping up all the time on this subject. There are a couple of things that just don't add up though.

Firstly, it is often mentioned that Thailand has large foreign currency reserves and that there are large amounts of "hot" money coming in, OK, probably true ... but this is ambiguous as for one we never seem to get to know from where it is coming from and what Thailand does with said foreign reserves. Let me have a guess, it's mostly Chinese money and it's being laundered in the property market (with Bangkok and Beijing looking the other way) so they have large reserves of Yuan which conveniently fits in with the junta wanting to buy all things Chinese (like subs/tanks/infrastructure projects etc.). This will obviously make the Baht appear Teflon in nature.

Secondly, the Bank of Thailand is scared of being labelled a currency manipulator by the US and seems they only just escaped it last time round, which I'm still trying to make sense of what the US actually thinks it should be worth as most folks think it is over valued ... unless they are going to be accused of manipulating it to making it too valuable, which would be weird.

Thirdly, the Bank of Thailand may want to lower the Baht but it has been suggested that the bank governor is just following his orders so that a select few can gain foreign assets and enrich themselves and when it it is allowed to fall again they can cash in again when repatriating it. Jury still out on that but it's happened before although the Baht wasn't a free floating currency then as it is now.

It seems like there is some skulduggery going on as most currency experts/economists don't believe it's a natural situation. Currencies like the Euro and Pound are doing badly because of uncertainty, not because of bad economies and markets hate uncertainty. Once the UK has decided on it's course, there is a deal or no deal/WTO and the path of the EU can be seen for the next 5 years then these two currencies should bounce back ... at least somewhat.

We'll see.



Edit - Typos

[lomuamart]

I live in hope.

Having just come back from the UK and just getting a feel for things I'd expect the GBP to drop to about 35.

I'm not looking forward to that but unfortunately I see that as the weakness of the UK.

[oakdale160]

How could the Central Bank act so as to lower the value of the Baht, short of a formal devaluation??

[malcolminthemiddle]

How could the Central Bank act so as to lower the value of the Baht, short of a formal devaluation??

Sell baht to buy cheap foreign currency, lots of it.

[nil]

They could cut the interest rate, which they will have to soon anyway. But they are at an advantage compared to western economy’s where interest rates are close to 0 so that monetary tool is ineffective in the next downturn.

[Spitfire]

They could also restrict/limit further the max amounts of non Thai short-term money inflows which they dabbled with the other week and as a result the baht fell a bit. They didn't drop the amount much and could go further ... technically, the same limits could also be imposed on Thai investors but that might not go down too well with some powerful local types. Conversely, along with this, then they could ease the rules on money outflows too which there are reports they are planning to do. Finally, the BoT could reduce the availability of bonds plus, as mentioned, lower interest rates. If a bit of all of them are done then it could reel it in a bit as just doing one on it's own won't do much. If the Chinese also policed the outflows of crazy amounts from China as well, it would probably help.

[buksida]

Curb baht, industry minister begs central bank
The new industry minister on Monday urged the central bank to intervene more in foreign exchange markets to help private companies suffering from the strengthening baht.

Suriya Juangroongruangkit also said at the Bangkok Post Forum that he will seek to discuss baht strength soon with Bank of Thailand governor Veerathai Santiprabhob.

"If I can beg... the central bank governor to pay particular attention to the appreciation of the baht," he said.

"The benefit for the private sector will be more than the cost spent by the central bank in intervening in the market".

Businesses want the baht to be 32 per US dollar, he said.

The baht was trading at 30.78 at 2.53pm. It has gained 5.7% this year, becoming Asia's top performing currency.

The baht's strength is further threatening exports, which are already under pressure from slowing global demand.

https://www.bangkokpost.com/business/17 ... ntral-bank

[Spitfire]

He is begging to the wrong person.

[buksida]

World-beating currency gives Thailand major economic headache
Thailand’s effort to revive economic growth with more than 316 billion baht of stimulus faces an obstacle from its surging currency.

The baht has strengthened more than 6% against the dollar in 2019, the most among major Asian currencies, and its appreciation leads the world over the past five years, according to data compiled by Bloomberg.

The climb has hurt tourism and exports, contributing to the weakest economic expansion since 2014 as the US-China trade spat also hits home. The baht is seen as a safe haven and officials will be wary of intervening too much in foreign-exchange markets as the United States closely monitors countries’ currency policies, according to Australia & New Zealand Banking Group Ltd.

“Tourism is one of the keys for reviving Thai economic growth, because the industry can turn around quickly,” said Komsorn Prakobphol, a senior investment strategist at Tisco Financial Group Plc in Bangkok. “But it faces tough challenges as long as the baht strengthens faster than regional peers.”

Bank of Thailand governor Veerathai Santiprabhob said Tuesday the baht’s appreciation is a big concern for Thai exporters. He’s signalled the central bank may cut its 3.3% economic growth estimate for 2019.

https://www.bangkokpost.com/business/17 ... c-headache


So they're finally admitting tourism is in the pan ... has anyone told TAT yet or are they still expecting record numbers

[buksida]

KBank: Baht can go higher
The baht is likely to appreciate further as the local currency is less sensitive towards global risks, with limited room to manoeuvre Thailand's monetary policy seen as an attribute, says Kasikornbank (KBank).

The baht's value is less prone to external volatility compared with other currencies in Asian emerging markets because the local currency's fundamentals are backed by Thailand's current account surplus, low inflation and high foreign reserves, said Kobsidthi Silpachai, head of capital markets research at KBank.

The Bank of Thailand's limited policy space for further monetary easing also adds to the baht's strengthening outlook, said Mr Kobsidthi.

The baht is Asia's best performing currency year-to-date, appreciating 6.41%, according to Reuters.

https://www.bangkokpost.com/business/17 ... -go-higher

[fft100]

Why not just ease currency restrictions ? Why not allow people to take baht out of the country (or exchange to GBP and take out) ? When money arrives in an acct in the UK if it is more than a few 1000 GBP I always get asked where the money has come from and paperwork to back it up, so the Thais can't claim in that case to be avoiding money laundering. Actually, I am not clear at all why the Thais have restrictions. Normally it would be when a country has a run on it's currency, but it is the complete opposite here.

BTW - if some one has run out of credit advices what is the best way to get money out ? Ta.

[pitsch]

Somewhere was said that the U.S. does not allow a devaluation of the Baht, but I think this is only an excuse. Maybe some politicians have no interest in a lower Baht. Then all the military expenses for buying weapens in foreign countries would be higher.

[HHTel]

U.S. does not allow a devaluation of the Baht,

It has nothing to do with the U.S.

[buksida]

Most Asian and South American countries have capital controls so their central bank has a tighter grip on finance flow. Western ones do it in the name of 'money laundering' or 'terrorism financing'.

Maybe some politicians have no interest in a lower Baht. Then all the military expenses for buying weapens in foreign countries would be higher.

That is closer to the truth, the junta wants to buy cheaper military hardware from China and real estate elsewhere abroad - nothing to do with the US. Politicians/bankers/the elite in highly corrupt countries try to keep their currency strong because they're the ones that benefit the most from it - not the populace as we can clearly see.

[pitsch]

Thailand’s central bank is fretting over how to cool the world-beating surge in the baht just as the U.S. keeps a watchful eye out for signs of unfair currency policies.

There were several hints in former posts, that the U.S. will have an eye on currency manipulations. The Chinese don't care about this, but Thailand is afraid.