Confirmation of the unwinding of the Japanese carry trade in the AUD can be seen in the recent rapid appreciation in the JPY.Australian, New Zealand Dollars Recover From Five-Year Lows
By Candice Zachariahs
Oct. 9 (Bloomberg) -- The Australian dollar rebounded from a 10 percent plunge yesterday after central banks around the world cut interest rates in a bid to ease the worst financial crisis since the Great Depression. New Zealand's currency also rose.
The South Pacific currencies strengthened from their lowest in six years against the yen as the interest rate cuts encouraged investors to buy higher-yielding assets funded in Japan.
``We've now had a round of coordinated central bank easing, at some point that should begin to have a beneficial impact on risk assets and the financial markets,'' said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp. ``If you start to see a wee bit more stability come through in Asian equity markets, the chances of a bit more stability in the Australian dollar is actually quite high.''
The Australian dollar rose for the first time in 12 days, gaining 1 percent to 66.53 U.S. cents as of 7:27 a.m. in Sydney from 65.85 in late Asian trading yesterday. It slumped to 64.51 cents yesterday, the weakest since September 2003. The currency climbed 1.3 percent to 66.37 yen, after dropping as much as 12.5 percent yesterday to 63.75, the lowest since September 2002.
New Zealand's dollar strengthened 1.4 percent to 60.16 U.S. cents from 59.36 cents late in Asia yesterday. It dropped to as low as 57.92 yesterday, the lowest since September 2003. It bought 59.97 yen from 59.07.
Global Action
The currencies advanced after the Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each reduced their benchmark rates by half a percentage point. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. China's central bank separately cut its key rate 0.27 percentage point.
Benchmark interest rates are 6 percent in Australia and 7.5 percent in New Zealand, compared with 0.5 percent in Japan and 1.5 percent in the U.S., luring investors to the South Pacific nations' assets. The risk in such trades is that exchange-rate fluctuations may erase profits.
Any gains in the Australian dollar may be limited by a government report on employment to be released at 11:30 a.m. in Sydney today. The median estimate of 21 economists surveyed by Bloomberg News was for no change in September, after the number of people employed rose 14,600 in August.
``A weaker print would merely pile on a currency that seems incapable of putting up any defense,'' wrote David Watt, a senior currency strategist at RBC Capital Markets in Toronto, a unit of Canada's biggest bank by assets, in a research note today.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
Last Updated: October 8, 2008 17:32 EDT
With the relatively small size of the Thai economy it is doubtful whether they were consulted with regard to the concerted rate cut by the Fed, BoE, ECB etc.Monetary Policy Committee’s Decision on 8 October 2008
Ms. Duangmanee Vongpradhip, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announces that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance. The main issues discussed were as follows.
The latest economic data up to August pointed towards a slowdown in the Thai economy, due to both domestic and external demand. In addition, risks to economic growth would increase going forward, as a result of the impact of the global financial crisis as well as domestic political factors. However, the MPC assessed that the marked rise in farm income and lower inflation would improve consumers’ purchasing power and support a continued economic growth.
Risks to inflation declined significantly compared to the previous meeting from lower oil prices. Nonetheless, inflationary pressures remained from the continued passthrough of costs and the gradual adjustment of prices under the authorities’ price administration measures.
The MPC therefore decided to maintain the policy interest rate at 3.75 per cent per annum. The MPC would closely monitor the risks to the world economy and stand ready to implement appropriate monetary policy should the impact on the Thai economy worsen from the current assessment.
Bank of Thailand
8 October 2008
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Thai Consumer Confidence Falls Amid Protests, Crisis (Update1)
By Suttinee Yuvejwattana
Oct. 9 (Bloomberg) -- Thailand's consumer confidence dropped to a 10-month low in September amid domestic political turmoil and a worsening global financial crisis. Sentiment may deteriorate further, an industry leader said.
The index fell to 69.5 from 70.5 in August, the University of the Thai Chamber of Commerce said in Bangkok today. The gauge, tracking a nationwide survey of 2,255 respondents, is at its lowest level since November.
Thailand's central bank yesterday kept its benchmark interest rate unchanged to bolster confidence after two increases since July quelled inflation. The nation's growth outlook is worsening after protesters vowed to step up efforts to oust the government as violent clashes with police this week left at least one person dead and 400 injured.
``We have to prepare for the worst,'' said Dusit Nontanakorn, secretary-general of the Thai Chamber of Commerce, which sponsors the survey. ``This will not only hurt confidence, it will deter foreign investors. What's happening in global finance will eventually hurt our exports.''
Thai Airways International Pcl, the nation's biggest carrier, yesterday said it's delayed some spending plans and may cut jobs as passenger traffic declines due to the political wrangling and global credit crisis.
Tear Gas, Riots
Police fired tear gas at protesters surrounding parliament on Oct. 7 as they tried to prevent Prime Minister Somchai Wongsawat from presenting his government's policies to lawmakers. Rallies since May 25 by the group seeking the government's ouster have polarized Thais and paralyzed policy.
Consumer confidence has dropped every month since the protests erupted, contributing to the first slowdown in economic growth in more than a year in the second quarter as domestic spending and investment cooled. Exports, the only engine of growth, may miss the government's target as global financial turmoil erodes demand, the Finance Ministry said Sept. 25.
The SET Index of stocks closed below 500 for the first time in five years yesterday. The baht is close to its lowest level against the dollar since February 2007.
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net
Last Updated: October 9, 2008 00:33 EDT
Sound Banking SurveyBobHelm wrote:Bob, The Aussie government had to loan the Aussie banks a load of dosh the other day. I believe they haven't got an issue with sub-prime, it is just there is so little cash being lent between banks they were having liquidity problems.
GBP = 58 baht....
Last year The pound -Baht was 68 baht! Now 57.56!I am "losing" 10,000 baht a month! Everyday, it gets worse.Were all doomed! 
MARKETS
SET halts trading
Fri, October 10, 2008 : Last updated 15:35 hours
The Stock Exchange of Thailand has suspended trading for 30 minutes after the SET composite index plunged to more than 10 per cent five minutes after the afternoon trading session when the index plunged to 449.91.
At 449.91, it was the lowest since June 2003.
After the 30-minute halt, the SET Index recovered slightly, losing 9.25 per cent to stay at 453.73 points at 3.15pm.
This was the second time that the exchange opened the "circuit breaker" since the SET was established more than 30 years ago. The first circuit breaker was on in December 2006 when Thailand's central bank implemented the 30-per-cent capital reserve requirement.
The second level of the circuit breaker is to suspend the market for one hour once the index plunges by more than 20 per cent in a day.
European stocks also plunged Friday, with London and Frankfurt each losing more than 10 per cent and Paris more than nine per cent as the global financial crisis deepened further.
London's FTSE 100 index of leading shares nosedived 10.20 per cent to as low as 3,873.99 points - the first time below 4,000 points since July 3, 2002 -- before pulling back slightly.
Frankfurt's DAX 30 also shed more than 10.0 per cent before paring losses and in Paris the CAC 40 dived 9.68 per cent.
Japan stocks plunged, capping the Nikkei 225 Average's biggest weekly decline in its more than 50- year history, as the deepening credit crisis stoked concern that company failures will increase.
Indonesia also suspended trading on the local stock exchange for a third day running Friday on fears of following Asian markets on their nightmare downward slide.
nationmultimedia.com
Thai Government May Face Collapse on Legal Challenge (Update1)
By Daniel Ten Kate and Rattaphol Onsanit
Oct. 10 (Bloomberg) -- Thailand's 10-month-old government may face collapse after prosecutors said they will seek to dissolve the ruling party for vote buying, and a deputy leader who resigned this week called on the army to stage a coup.
``How long we can stand against these moves or maintain democracy is hard to predict,'' said Kudeb Saikrajang, a spokesman for the governing People Power Party. ``People at the grassroots level will not accept a coup. That will bring true chaos to the country.''
Prime Minister Somchai Wongsawat's grip on power is weakening after a court dropped treason charges against Bangkok- based protest leaders who have campaigned for five months to oust the government and dilute the electoral influence of its rural supporters. The political paralysis comes as Thailand reels from the global financial crisis, which today triggered a temporary trading halt on the local stock exchange.
The Constitutional Court, which forced Samak Sundaravej to step down as prime minister last month for hosting a cooking show, must now decide whether the ruling party should be dissolved after an executive was found guilty of vote buying. Samak and 36 other party officials could be banned from politics for five years, said Thanapich Mulpruek, a spokesman for the Attorney General's office, which filed the charges.
``We will present our proof to the court and respect its decision,'' said party lawyer Kamnuan Chalopathum.
Somchai Cancels Trip
Somchai canceled his trip to Laos and Cambodia scheduled for Oct. 12 and 13 to ``monitor the political situation in Thailand closely,'' Surapat Narkbunnum, a government spokeswoman, said today. The People Power Party controls 233 of 480 parliamentary seats. Two other parties in its six-member coalition face disbanding for the same offense.
Chavalit Yongchaiyudh, who stepped down as deputy leader three days ago after clashes between protesters and police left two people dead and 470 injured, called for a coup in an interview with the Bangkok Post. The former general was unavailable for an interview, according to an aide who didn't dispute the content of the article.
Thailand's military last seized power in 2006, ousting Thaksin Shinawatra, Somchai's brother-in-law. The ruling party was formed from the remnants of Thaksin's Thai Rak Thai, which was dissolved last year by a military-appointed court for bankrolling minor parties to contest a boycotted election.
Constitution Rewrite
The military voided the reformist 1997 constitution that strengthened political parties and rewrote the constitution last year. Drafters included a clause that calls for a party to be dissolved if an executive member is found guilty of fraud. That's led to battles between the government, which wants to change it, and protesters who say it deters vote buying.
``The ruling party believes the court will dissolve it, so the prime minister will probably call an election before a judgment is made,'' said Prinya Thaewanarumitkul, a constitutional law lecturer at Bangkok's Thammasat University.
The Bangkok protests are being led by the People's Alliance for Democracy, headed by Sondhi Limthongkul, a former Thaksin business associate. Nine detained protest leaders were released on bail this week charged with the lesser offense of causing a public disturbance.
The People's Alliance, which continues to occupy the prime minister's office compound, has said it will oppose any party with links to Thaksin. It is seeking a new political system where professional groups represent half of parliament, reducing the number of seats elected by the general public.
Thailand's benchmark SET index plunged by the 10 percent limit today, triggering a 30-minute trading halt. The index tumbled 23 percent this week as the deepening credit freeze forced governments worldwide to bail out financial institutions.
To contact the reporters on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net; Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net.
Last Updated: October 10, 2008 06:06 EDT
