Baht What up with Dat?????

[JimboPSM]

Arjay, you are correct in your analysis, however the inflation report you refer to was released on 15th August so is already factored in.

Today, BBC have the retail sales details (see below) which came out lower than expected which would (in theory) reduce the likelihood of a rate rise in the UK, this was released in plenty of time to affect money markets in Thailand, but actually hardly caused a blip.

Unexpected fall in retail sales - 17th August

Retail sales suffered an unexpected fall in July, figures from the Office for National Statistics show.

UK High Street sales volumes fell 0.3% during the month, compared with forecasts of a rise of 0.2%.

A drop in electrical sales following the world cup was one of the main factors behind the fall.

But the annual rate of sales growth actually rose by 4% when compared to the same period last year, which was affected by the London bombings.

Most of this growth was driven by discounted prices - with price tags an average of 0.5% lower than at the same time last year.

Falling sales of household goods were largely behind the slowdown in July, with volumes down 3.4% as sales of flat-screen TVs tailed off following the end of World Cup football tournament.

Rates question

Experts suggested the figures could dissuade the Bank of England from raising rates in coming months.

Minutes published on Wednesday by the Bank's rates-setting Monetary Policy Committee suggested members planned keep a close eye on consumer spending in coming months.

Global Insight chief economist Howard Archer said the latest sales figures "revived doubts" about the strength of consumer spending, particularly in the light of rising fuel and household bills.

"While record high employment will provide some support, we believe that consumer spending is likely to be relatively muted over the coming months as the recent interest rate hike adds to the significant headwinds already facing the consumer," he added.

"As a result, we believe that the Bank of England may well hold off from any further interest rate increases until next year."

GBP, EUR & AUD all rose fairly substantially today, USD also rose but to a lesser extent. Final closing numbers that I use for charting (from Kasikorn TT buy rate) show following movements against yesterdays close:

• GBP: 71.10, + 0.96%
  USD: 37.53, + 0.70%
  EUR: 48.11, + 1.17%
  AUD: 28.66, + 1.02%

I can

[JimboPSM]

Just taken a look at USD / GBP / EUR rates at the end of the day and the USD has bounced back as sentiment has swung back towards another US rate increase.

[BKKSTAN]

Yuk!Talk in news today about the baht heading for 35.5:$1.I guess I should be grateful that I have savings in the USA to complain about!lol

[JimboPSM]

I am at somewhat of a loss to explain the Thursday & Friday movements on the Forex market; by and large the movements did not match up with my interpretation of the economic data and reports that were released (although there could always be something that I missed)

Yesterday I said I could not find any substantive reasons why GBP, USD, EUR & AUD had all risen fairly substantially against THB today I cannot find any substantive reason why they should all fall

TGIF

[BKKSTAN]

Nothing personal Jimbo!I hope your confusion continues to ''40''!

[JimboPSM]

Nothing personal Jimbo!I hope your confusion continues to ''40''!

Stan, nothing personal taken, my confusion is about two individual days movements which taken together more or less cancelled themselves out.

To get to your 40+ is fairly simple, you need at least one, but probably two or more, of the following:

• 1. Fall in BoT interest rate
  2. Rise in US Fed interest rate
  3. Reduction of the real US Budget deficit

There is a little bit more to it than that, but those are the basics

[nevket240]

Doona forget the pending doubling of the price of rice as a driver for falang speculation. This has only recently been highlighted in investment circles in the last week or so. After plundering the oil market speculators have to pillage somewhere I suppose. Rice futures (???) are expected to double, at least, over the next few years. Before 2010 anyway.

This is driven by the loss of rice fields in China and elsewhere for building homes and factories. As Thailand is the largest grower and exporter, expect to see a strengthening of the Bt.

Also, due to the ability to grow certain foods, the ones to make ethanol, expect to see more capital flow into the country making the exchange rate even worse.

[BKKSTAN]

Nothing personal Jimbo!I hope your confusion continues to ''40''!

Stan, nothing personal taken, my confusion is about two individual days movements which taken together more or less cancelled themselves out.

To get to your 40+ is fairly simple, you need at least one, but probably two or more, of the following:

• 1. Fall in BoT interest rate
  2. Rise in US Fed interest rate
  3. Reduction of the real US Budget deficit

There is a little bit more to it than that, but those are the basics

I understand what you are saying!Just hoping you are wrong Believe me,I am not challenging your expertise I watch my savings shrink in value as I sit on ''the hill of indecision''!I can afford it,just don't like it

[JimboPSM]

From Breaking News at Bangkok Post today:

Central bank unworried by strong baht

Bank of Thailand governor Pridiyathorn Devakula, in an attempt to dispel anxieties among investors and the business sector, said that the central bank was closely monitoring stability of the baht, inflation, and capital inflow and outflow.

On Saturday afternoon, despite a tiny weakening overnight, the baht remained close to a three-year high, at 37.57 per US dollar on international currency markets.

The current strong baht, capital inflow-outflow and stock market investment are being watched closely by the Bank, he said.

"If the baht is allowed to become too weak it could affect inflation and if it is too strong, Thailand could suffer a greater trade imbalance," he said, "as Thai products will become more expensive and less competitive in the international market."

He said it is better to maintain the currency value at an appropriate level as the baht is now not too strong and not too weak, and inflation rate is at a level acceptable to the BoT.

What needs to be watched is the overall situation as the country moves towards the Oct. 15 general election, and the fiscal and investment policies of whatever new government takes office.

Pridiyathorn projected that the Thai economy may be sluggish during the first half of 2007 and that the new government may come up with measures to boost the economy late in the year.

"Inflation is expected at an average of 4 per cent next year--which is acceptable to the BoT," he said.

"If inflation is too high, it could hurt economy. Most importantly," the BoT governor said, "fiscal and financial policies must go together in order to maintain Thai economic growth." (TNA)

[JimboPSM]

From Bangkok Post:

BoT asked to take lead on rates

DARANA CHUDASRI

Commercial banks say they won't hesitate to lower their interest rates, which executives believe are at a peak, if the Bank of Thailand leads the way with a reduction in its benchmark rate first. The bankers were responding yesterday to central bank comments on Thursday that it did not want to see interest rates rise more than the current levels.

Tanate Phutrakul, chief financial officer of TMB Bank, said the bank had slowed the pace of increases in its deposit rates during the past two months. Currently, deposit rates for big customers are 4% on average while individuals with smaller accounts receive around 3%.

''Our policy is that if the central bank raises its policy rate, we will lift our interest rates. But if the central bank lowers the rate, we will have to follow because it leads the money market,'' Mr Tanate said.

If the central bank wanted to see interest rates in the overall money market decline, it had to guide the industry with a significant reduction of its policy rate, unless other factors such as huge foreign fund inflows affected market liquidity, he said.

TMB has deposits of 600 billion baht or 12% of the total deposits in the industry.

''We don't want to raise more deposits the way we did during the past two years. Our policy now is to maintain our market shares in both deposit and lending areas,'' Mr Tanate added.

Currently, the loan-to-deposit ratio of TMB is about 95%, similar to those of Siam Commercial Bank and Kasikornbank.

Bunluasak Pussarungsri, manager of the Macroeconomic Analysis Centre at Bangkok Bank, said some banks may consider increasing their lending and deposit rates if they wanted to bring their loan-to-deposit ratio close to 90%, against the industry average of around 86-87%.

''But in the long term, the market mechanism will balance things out when debtors want to refinance their loans through other banks that offer lower rates,'' he said.

He forecast that the central bank would maintain its 14-day repurchase rate at 5% for a while as inflation remains high. The central bank's Monetary Policy Committee's next meeting will be on Sept 9.

''A cut in the policy rate may not be possible at the moment as the central bank wants to maintain a gap between local and US interest rates at 0.25 points,'' Mr Bunluasak said.

''In my opinion, the US Federal Reserve won't raise its rate more as the US economy has been growing at a slow pace.''

This is the first time I have seen reference to BoT keeping the interest rate differential at a specific level.

As this was a comment by the manager of the Macroeconomic Analysis Centre at Bangkok Bank not the BoT itself I'm not sure that it is BoT policy or just the Bangkok Bank perception of BoT policy

[nevket240]

Thailand's Baht Rally Curbs Inflation, Spurs Bonds (Update1)
Aug. 21 (Bloomberg) -- T

he biggest rally in the Thai baht in eight years is driving down inflation and helping the country's bonds outperform all other investment-grade emerging market debt in Asia.

Almost a decade after the 1997 devaluation of the baht triggered an economic crisis in Asia, Thailand's debt is posting the biggest gain among seven Asian countries included in indexes compiled by JPMorgan Chase & Co. Investors have reaped total returns of 3.6 percent this year, according to JPMorgan.

``We are bullish on the bond market because interest rates have peaked and inflation is slowing,'' said Jessada Sookdhis, who helps run the equivalent of $524 million in debt at Ayudhya JF Asset Management in Bangkok.

Central bank Governor Pridiyathorn Devakula said on Aug. 7 he would stop raising interest rates. Since the Bank of Thailand's last increase on June 7, the baht has gained 2.2 percent. Ten-year bond yields have fallen by a quarter percentage point in the past seven weeks.

Thailand will benefit from the lower yields when the central bank this week auctions 4 billion baht ($106.8 million) of 5.4 percent securities due in 2016. The 0.10 percentage point drop in yields since the previous sale on July 26 suggests the government will save an annual 4 million baht in interest. The bonds now yield about 5.47 percent.

The baht has climbed 9.5 percent this year, more than the Indonesian rupiah, Singapore dollar and 12 other Asian currencies. The last time the baht gained more was in 1998, when the currency surged 28 percent as it rebounded from the devaluation a year earlier.

Asian Crisis

Interest costs for Thailand have plunged in the past eight years. The government sold 10-year bonds in December 1998 at a yield of 8.50 percent. The country's local-currency debt rating was lifted one step since then, to A by Standard & Poor's. Debt rated BBB- and higher is investment grade.

Thailand has posted the biggest gains among the seven emerging-market borrowers in Asia with investment-grade ratings tracked by JPMorgan. Thailand has outpaced a 2.7 percent return by Hong Kong and 2.69 percent gain for South Korea. The group also includes China, Taiwan, Malaysia and Singapore.

The yield on 10-year securities may fall to 5.32 percent by Dec. 31, said Pongtharin Sapayanon, who helps oversee $1.6 billion including Thai bonds at Aberdeen Asset Management in Bangkok. That would hand investors a 3.1 percent return, including reinvested interest.

Investors at the Aug. 23 sale may bid for twice the amount of 10-year bonds the government plans to sell, said Pongtharin. At last month's auction, investors submitted offers for 2.44 times the amount issued.

The government also plans to sell 10 billion baht of 5.5 percent bonds maturing in 2008 tomorrow. Two-year note yields have fallen 22 basis points in the past seven weeks, the steepest decline since April.

Political Stalemate

Some investors may be reluctant to bid until after an Oct. 15 election, said Lee Boon Keng, a bond strategist at DBS Bank Ltd. in Singapore, Southeast Asia's biggest lender.

Prime Minister Thaksin Shinawatra, who dissolved parliament in February, called elections following demands he resign after his family sold a stake in Shin Corp., Thailand's biggest mobile- phone company, for $1.9 billion.

``You're not going to rush into the market now,'' said Lee, the DBS strategist. ``There's an absence of political clarity.'' Bonds may rally after the vote, bringing the 10-year yield down to 5 percent by Dec. 31, he said.

Slower Growth

Thailand's growth is weakening as a 16 percent increase in oil prices this year and the looming election damp consumer and government spending. The $169 billion economy may slow to a 3 percent pace in the last six months of the year, half the rate in the first quarter, Pridiyathorn said this month.

The central bank boosted its benchmark interest rate 13 times to rein in inflation, which slowed to 4.4 percent in July, the lowest rate since June 2005. Consumer prices in May climbed by 6.2 percent, matching the highest since September 1998.

The median forecast of economists surveyed by Bloomberg at the start of the month is for gross domestic product to increase 4.2 percent this year, the least since 2001.

``The economy's going to get weaker and that's going to provide some support for bonds,'' said Joel Kim, who helps oversee $8.5 billion of emerging-market debt at ING Investment Management Asia Pacific in Hong Kong. Kim bought 10-year Thai securities about a month ago.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net .

[JimboPSM]

The report on Bloomberg (IMHO) didn

[Bump]

Well Isn't reality a better picture this time, in the same period my retirement gained 9% I think I will quit complaining

[JimboPSM]

From breaking news in The Nation

Baht projected to rise 3-3.5% a year

Baht should appreciate in the 3.0-3.5 per cent range each year, a rate that will allow local businesses to adapt accordingly, Finance Minister Thanong Bidaya said Wednesday.

Thanong said the appropriate Baht per U.S. dollar exchange rate for this year is between Bt37.50 and Bt38.00, while that for next year is around Bt37.50.

I will leave you to decide how much credibility you wish to give this statement.

[arjay]

Did you spot this one Jimbo, from the Bangkok Post:-

Security concerns just one reason behind slight weakening of baht

The baht weakened slightly yesterday against the US dollar following reports that security services had foiled an attempted car bombing near the home of caretaker prime minister Thaksin Shinawatra. The baht was trading late yesterday at 37.66/69 to the dollar, against 37.60/63 on Wednesday.

Not much of a weakening though!

[JimboPSM]

Did you spot this one Jimbo, from the Bangkok Post:-

Security concerns just one reason behind slight weakening of baht

The baht weakened slightly yesterday against the US dollar following reports that security services had foiled an attempted car bombing near the home of caretaker prime minister Thaksin Shinawatra. The baht was trading late yesterday at 37.66/69 to the dollar, against 37.60/63 on Wednesday.

Not much of a weakening though!

I agree arjay, not much of a weakening and, as I don't have any intra-day charts or know when the news broke I can't verify if the market took it as good or bad news.

[JimboPSM]

From Bangkok Post:

ECONOMY / GLOBAL SHIFT AWAY FROM DOLLARS

BoT: Get used to a stronger baht

PARISTA YUTHAMANOP

Thai businesses need to prepare for a stronger baht that will reflect a growing shift in foreign investment away from dollar-denominated assets, according to the Bank of Thailand. M.R. Pridiyathorn Devakula, the central bank governor, also said that the economy of Thailand would experience greater volatility in foreign capital flows until the end of 2007.

Global investors, he said, were growing increasingly wary about the dollar because of the huge US trade and current account deficits.

''The United States current account deficit is now $2 billion per day, equivalent to nearly $800 billion annually. Its economy is being financed by as much as $7 trillion worth of external borrowing,'' he said.

Investors' worries over the sustainability of the dollar triggered huge inflows to Asian markets earlier in the year.

''The magnitude of the volatility will be less later this year and in 2007. But it will occur more frequently during the period,'' M.R. Pridiyathorn said at a dinner hosted by Chulalongkorn University's Engineering Alumni Association on Thursday night.

He said the central bank was ready to intervene in the currency market not to let the baht appreciate too much.

''The central bank will take care of the baht as best as possible, but businesses need to make up their minds that the baht will not stay weak as it used to do.''

M.R. Pridiyathorn said private investment would recover in the second half of the year and be the leading driver of economic growth in 2007.

''Capacity utilisation, which stood at 76% on average in the first half of the year, was higher than the pre-crisis level. Some industries had full capacity utilisation, several have 80-90%. That, coupled with the fact that inventories have been low, will underpin the turnaround in private investment in the future.''

Easing political uncertainties following the Oct 15 election would be another positive factor for private investment.

M.R. Pridiyathorn said domestic consumption was expected to remain stable, though export growth could decline, due to a slowdown of the world economy.

He said this year's political troubles had not resulted in a decrease in fiscal spending by as much as had been expected. Fiscal spending is expected to speed up in the fourth quarter due to the government's attempts to accelerate disbursement of tied-over budget funds.

In any case, he said business should take leading role in the driving growth, as 70% of gross domestic product was generated by the private sector.

''Businesses should carry on, regardless of the political situation. Don't be afraid of the ghost,'' M.R. Pridiyathorn said.

The central bank expects economic growth to stay above 4.5% this year, and has set a broad range of 4-5.3%, assuming that the oil prices average $71 per barrel for Dubai crude.

Yet another article on a stronger baht with some interesting comments by the BoT Governor on the US Economy (I have not been able to verify these on the BoT site).

[JimboPSM]

From breaking news in The Nation:

Govt lower revenue forecast for fiscal year '07

The government has cut its revenue collection projection for fiscal year 2007 to Bt1.40 trillion from Bt1.476 trillion, Finance Minister Thanong Bidaya said Tuesday.

The reduced forecast for fiscal year 2007, which begins October 1, is due to lower economic growth and higher inflation predictions, Thanong said after the weekly Cabinet meeting today.

For the fiscal 2007 budget, the finance ministry now expects gross domestic product will grow by 3.9 per cent next year, from the 5 per cent forecasted earlier, while inflation should be around 3.7 per cent, compared to 3.5 per cent forecasted earlier, Thanong added.

To save you doing the math, this is a 5.1% fall in the revenue projection - quite a drop!

This may be why there has been some talk of deficit funding for next year - this revenue shortfall must have been known for some time and governments just hate to stop spending money even when they have none.

[BKKSTAN]

From breaking news in The Nation:

Govt lower revenue forecast for fiscal year '07

The government has cut its revenue collection projection for fiscal year 2007 to Bt1.40 trillion from Bt1.476 trillion, Finance Minister Thanong Bidaya said Tuesday.

The reduced forecast for fiscal year 2007, which begins October 1, is due to lower economic growth and higher inflation predictions, Thanong said after the weekly Cabinet meeting today.

For the fiscal 2007 budget, the finance ministry now expects gross domestic product will grow by 3.9 per cent next year, from the 5 per cent forecasted earlier, while inflation should be around 3.7 per cent, compared to 3.5 per cent forecasted earlier, Thanong added.

To save you doing the math, this is a 5.1% fall in the revenue projection - quite a drop!

This may be why there has been some talk of deficit funding for next year - this revenue shortfall must have been known for some time and governments just hate to stop spending money even when they have none.

So if I have been reading you right,this would favor a weakening of the baht I appreciate your seemingly expertise ,as I don't have a ''clue''

The other thing I like about this topic is that Ray spelled ''dat'' right

[Bump]

Worked Foot Hill division LAPD of course I can spell Dat, it's the english words I have a problem with.

Kind of sounds like what we have been seeing may just be have been smoke and morrrs, but that never happens here