Baht What up with Dat?????

[Jing Jing]

The PM should stay home and fix the potholes. He needs to quit going abroad and coming home with a new idea. He went to Cambodia and when he came home he proposed bringing casinos to Thailand. Now he goes to Singapore and wants to raise the average workers salary -- based on what economics Were is he going next?

[Bump]

Will this be the beginnings of a start towards a turn around?

ECONOMY
Trade deficit remains in February
Thailand has posted trade deficit in two consecutive months, with the deficit of US$688.9 million in February, according to the Commerce Ministry.

Thailand's trade balance first dipped into red ink for the first time in 17 months January 2008, when imports soared 49 per cent year on year against export growth of 33.2 per cent. January's trade deficit was at US$653.3 million.

The ministry revealed on Thursday that in February, export value reached $12.99 billion, a 16.4 per cent increase from the same period last year.


Import value in the month totalled $13.68 billion, up 33.1 per cent on year.


- The Nation

[Bump]

Just when I thought I was beginning to understand the dollar is making gains on the the GPB and Euro, but is losing agianst the Thai Baht and the P.I. Peso. so here I sit again confused

Are we starting to see the effect of removing the 30% rules?

[Bump]

I thought this group of exporters were doing great no matter what was going on wiht the baht



[quote]
Government urged to manage baht to limit vehicle export impact
BANGKOK, March 24 (TNA)

[Bump]

I realize this does not have th word baht in it anywhere, But I'm learning that many things effect exchange rates. There is also an article saying the Singapore is looking to Myrimar for rice imports a Thai imports are to expensive. Rice is so valuable in Thailand these day that there are a lot thefts going on. I believe inflation is becoming a real problem. I think that the value of the abht contributes to that, but I could be very wrong wouldn't be the first time, nor the last

Rising prices testing business confidence
The central bank yesterday said rising prices of oil and other commodities had impeded both private consumption and the recovery of investment in February and that the business sector was expressing continued concern over high operational costs.Published on April 1, 2008

It said it would keep an eye on prices, along with the impact of the US recession on Thailand's economy.

The Business Sentiment Index fell to 44.8 points in February, down from 45.6 in January, indicating worsening confidence among investors. Their level of confidence for the next three months was also gloomy, particularly regarding business costs, which showed an index figure of only 22 points.


Investors in the service, transport, commerce and manufacturing sectors had lower confidence in the country's economic outlook, because of increases in production and raw-material costs and continuing political uncertainty.


However, Bank of Thailand senior director Amara Sriphayak is optimistic that private investment will continue, because inflation will likely slow down in the second half of the year, and investors are able to adjust their prices to maintain their bottom line.


"Although rising costs will be an upside risk, the business sector still has a certain confidence," she said.


The Private Investment Index expanded 5.6 per cent year on year in February, higher than January's 4.7-per-cent year-on-year growth.


Imports of raw materials and capital goods continued to grow, by 25.5 per cent and 23.7 per cent, respectively, although this was a slower growth rate than in January.


The Private Consumption Index rose 6 per cent year on year in February, compared with an 8.5-per-cent rise in January.


Amara said she doubted that the Car Index, a key component in bolstering private consumption, would temporarily pick up. She expects momentum in domestic demand to continue, particularly if encouraged by the government's economic-stimulus package.


"But higher costs and inflation are factors to be closely monitored," she said.

Anoma Srisukkasem


The Nation

[Bump]

Well here we go again Bank of Bangkok today ATM 31.39, interesting bloomberg is showing the baht at 31.57 at the moment. This is less then I got last month

[Bump]

Asian Currencies: Korean Won Gains as Stocks Rally; Baht Falls

By Yumi Teso and David Yong

April 4 (Bloomberg) -- South Korea's won gained, completing its best week since April 2006, as overseas investors increased purchases of local stocks. The Thai baht had its biggest weekly loss in seven months.

The won advanced for a second week after a government report on April 1 showed export growth unexpectedly accelerated in March, improving the outlook for Asia's fourth-biggest economy. Overseas shipments are likely to rise more than 10 percent this month, the Finance Ministry said yesterday.

``South Korea is probably the most-sensitive to credit- market concerns, and when those ease, the won benefits the most among Asia's emerging currencies,'' said Tetsuo Yoshikoshi, an analyst at Sumitomo Mitsui Banking Corp. in Singapore. ``The stronger export number definitely supported the won.''

The won climbed 1.9 percent for the week to 973.80 per dollar as of the 4 p.m. local close of trading, according to Seoul Money Brokerage Services Ltd. The currency may advance to around 960 next week, Yoshikoshi said.

Fund managers outside Korea bought more local shares than they sold for a second week, according to stock exchange data. The Kospi index gained 3.8 percent this week, its third weekly advance. Shares rose after Federal Reserve Chairman Ben S. Bernanke said April 2 he doesn't anticipate the need for another rescue similar to the one for Bear Stearns Cos. two weeks ago.

Baht Declines

The baht had its largest weekly loss since August as oil importers took advantage of the currency's rally last month to buy the U.S. dollar and pay for shipments, Pongpen Ruengvirayudh, a senior director at the Bank of Thailand, said yesterday.

The baht fell 0.8 percent to 31.69 per dollar, according to data compiled by Bloomberg. That's the biggest weekly decline since the five days ended Aug. 17.

``For companies buying dollars, it is cheaper now,'' said Enrico Tanuwidjaja, currency strategist at Oversea-Chinese Banking Corp. in Singapore. ``They can potentially demand more dollars against the baht'' before the dollar rebounds further.

Malaysia's ringgit fell for a second day, losing 0.2 percent to 3.1935 per dollar on concern a slowing U.S. economy will damp demand for the nation's exports. It still gained 0.1 percent for the week.

The currency weakened before a U.S. government report that economists say will show the world's biggest economy lost jobs for a third month in March. The U.S. is Malaysia's biggest exports market. The ringgit also declined as Prime Minister Abdullah Ahmad Badawi fended off calls for his resignation after an electoral setback in March 8 general elections.

`Hit and Run'

``People are taking a hit-and-run approach in ringgit trades with the ups and downs in U.S. news,'' said Yahya Mohd Nor, head of currency trading at Affin Bank Bhd. in Kuala Lumpur. ``Right now, they are still a bit wary of risk given the uncertain political background.''

The U.S. may have lost 50,000 jobs in March, according to a Bloomberg News survey of economists before the Labor Department reports the figure today. First-time unemployment benefit claims by Americans rose to 407,000 last week, the most since September 2005, it said yesterday.

The Philippine peso fell after a government report showed inflation accelerated at the fastest pace in 20 months, damping demand for the nation's stocks.

The currency declined for a second day after the statistics office said the inflation rate for March rose to 6.4 percent, from 5.4 percent in February. The reading was above the 5.8 percent median estimate of economists surveyed by Bloomberg.

Inflation Report

``The peso is weaker because of the inflation report,'' said Lito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila. ``We're also seeing some correction in regional sentiment'' on the U.S. unemployment data.

The currency declined 0.3 percent to 41.755 versus the dollar, according to the Bankers Association of the Philippines. The peso still gained 0.1 percent this week.

Elsewhere, the Indonesian rupiah lost 0.2 percent today to 9,200 per dollar, Vietnam's dong fell 0.1 percent to 16,110 and the Singapore dollar advanced 0.2 percent to S$1.3837. Taiwan's financial markets were shut for a holiday.

To contact the reporters on this story: Yumi Teso in Singapore at yteso@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.

Last Updated: April 4, 2008 05:51

[JimboPSM]

I may be talking too soon, but this chart of THB/USD from 1st Jan 2008 to close of business in Thailand on 4th April (today) seems to indicate that the current round of appreciation of the THB (or depreciation of the USD) may have come to an end - hopefully

Unfortunately, the passage of time could well prove that I am wrong and that it is only a dead cat bounce

• 

[Bump]

Well all we can do is wait and see. Not so sure that it is the dollar but the baht itself this time around,

[Bump]

Bank of Bangkok ATM today 31.57 Better then a few days ago.

[JimboPSM]

From my observations and discussions over the last few months I find it difficult to give this report any credence - IMHO whoever is compiling the "figures" needs to do a comprehensive audit on the sources.

In some ways, it's a bit like reporting the weather without actually looking out the window to see what it is really happening outside.

From the Nation:

No change to interest rates tipped

The Monetary Policy Committee (MPC) is expected to keep its interest rate policy unchanged when it meets tomorrow, as the economy appears to have picked up growth momentum.Published on April 8, 2008

A key positive indicator is the corporate investment loan sector, which returned to growth late last year after 10 months of contraction.

Bandid Nijathaworn, the Bank of Thailand's deputy governor, told a Nation Multimedia Group briefing last Friday that the latest figures are encouraging and hoped the momentum would be sustained.

Previously, corporate loans were mostly granted for working capital, not for investment in capital goods.

Figures show that corporate investment loans recorded a 0.6 per cent year-on-year growth in December 2007 after a negative growth rate of 1.2 per cent in June and minus 1.8 per cent in September 2007.

In terms of the overall credit market, February 2008 figures show a 5.3 per cent year-on-year growth, with a total of Bt7.2 trillion in loans outstanding.

The March 2008 growth rate was 4.5 per cent year-on-year.

In terms of imported capital goods, the year-on-year growth rates were 23 per cent in February and 60.5 per cent in January.

According to Bandid, domestic consumption also started to recover in the third quarter of last year after 2-3 years of extended weakness.

The retail, credit-card and housing sectors have enjoyed relatively strong growth over the past few months, he noted.

However, the central bank's deputy chief said authorities are closely watching the inflation trend as the March figure of 5.3 per cent is rather high.

On the effects of the US sub-prime loan crisis on Thai banks and financial institutions, Bandid said the negative consequences have been restricted due to limited exposure of assets.

In addition, the average capital adequacy ratio of Thai banks and financial institutions is currently quite high at 14.6 per cent.

As far as the interest rate is concerned, sources said the MPC is unlikely to cut its one-day re-purchase rate further from the current 3.25 per cent as expected earlier.

That is because of the ongoing growth momentum, as indicated by corporate loans for capital goods, and higher inflation, sources said.

Finance reporters

The Nation

[Bump]

As usual two sides to the coin, but this seems more accurate in our household

quote]
CONSUMER CONFIDENCE
Business leaders fear double blow
Worries over rising petrol prices and inflation Published on April 8, 2008

Top business leaders have expressed concern that unrelenting increases in petrol prices and higher inflation will weaken consumer confidence.


"We cannot say right now whether our business will be affected badly or not, but we need to do our best," said Boonkiet Chokwattana, president of ICC International, the manufacturing arm of the giant Saha Group.


Given the many media reports on skyrocketing petrol prices, consumer sentiment has been hurt, while their purchasing power has also been reduced.


ICC's sales target for 2008 is Bt13 billion, up 10 per cent from last year, when sales were flat.


Boonkiet said there were as yet no signs of growth for this year's first quarter.


Tesco Lotus senior vice president Darmp Sukontasap said it was unfortunate the country suffered both political and economic instability last year.


After the general election, some optimism and confidence on the part of investors and consumers had returned.


But despite some improvements, the economy is facing new challenges from a slowdown in the US economy, a weak US dollar and rising oil prices.


"I see inflation as the most serious threat to consumers and the economy at this point," Darmp said.


"Although people do not feel less secure about their jobs, they do not feel they are earning enough to make ends meet either. This could cause a slowdown in private spending, which could lead to a slowdown in manufacturing, investment and, ultimately, economic growth. When consumers can buy less with the money they earn, this may also result in a decline in household savings," he said.


The government must ensure that public and private investment recovers quickly while problems from external factors and inflation can be management competently.


He said it would be tough to achieve a growth target of 5-5.5 per cent in gross domestic product this year, because investors, manufacturers and consumers lack confidence.


Meanwhile, Central Pattana president and CEO Kobchai Chirathivat believes the overall economy could grow 6 per cent this year, as targeted by Deputy Prime Minister and Finance Minister Surapong Suebwonglee.


"The situation should be better than last year," he said, adding that the possibility of a political party dissolution was the only key risk factor for 2008.


Despite the US recession, Thai exporters have adjusted themselves by diversifying into other growing markets, such as Europe, South America, Africa, India and China.


Kobchai said in the industrial sector, local manufacturers had also quickly adjusted themselves to cope with skyrocketing oil prices. They have focused on reducing production and business costs.


"Although the government has yet to inject money into the economic system, I feel the economic situation is improving at a certain level. People have greater confidence, they've started spending money," said Kobchai.

Kwanchai Rungfapaisarn


The Nation
[/quote]

[JimboPSM]

Unfortunately the report in The Nation proved to be correct in so far as there was no change in interest rates today - FYI, the next meeting of the MPC is not until the 21st May.

I think that they are relying on what IMHO is very "dodgy" politically driven economic data and severely underestimating the combined impact of the subprime meltdown and its associated credit crunch on all the economies around the world.
[quote]Monetary Policy Committee

[Bump]

Well it ain't all bad news. Nice to see that the companies that followed sound business practices, actually produce and sell a product, may survive well. If sound business practices had been followed in the first place, the housing market and they themselves would not be such a mess.

Bernanke, Greenspan Agree Cash Arms Firms for Slump (Update1)

By Rich Miller

April 14 (Bloomberg) -- The U.S. economy has what Alan Greenspan calls one ``major advantage'' as it falls into a recession: Businesses are in far better financial shape than they were entering the past two contractions.

Corporations outside of financial services -- from Cisco Systems Inc. to Coca-Cola Co. -- have collectively socked away more than half a trillion dollars in cash. They have also reduced short-term debt and cut inventories to near record-low levels in relation to sales, leaving them better prepared than in the past to weather a contraction.

``We still have what, at the moment at least, appears to be a reasonably good real economy, as distinct from finance,'' the former Federal Reserve chairman said at an April 8 conference sponsored by Deutsche Bank AG and co-hosted by Bloomberg.

The current Fed chief, Ben S. Bernanke, sees it much the same. On April 2, he told lawmakers that aside from the banking and securities industries, corporate balance sheets are sound -- a ``positive'' for the economy.

Greenspan describes a ``tug-of-war'' between healthy non- financial companies on one hand and the crippled credit market and housing industry on the other. He says he isn't sure which will prevail, and the economy might continue to struggle well into the second half of the year.

GE's Decline

Greenspan's tug-of-war is evident at General Electric Co. The world's third-largest company last week reported its first quarterly profit decline since 2003 as disappointing earnings from its commercial-finance unit outweighed strong revenue from large-equipment manufacturing. Fairfield, Connecticut-based GE forecast a drop in financial earnings for the year and a gain of 10 percent to 15 percent in profit from other parts of the business.

Non-financial companies are well-positioned now because they kept firm control of spending during the expansion. That means ``there should be less of an imperative to reduce costs by cutting back on staff and capital spending,'' says John Lonski, chief economist at Moody's Investors Service in New York.

Behind the restraint are company executives' memories of the collapse in profits in the 2001 recession, when operating earnings per share for the Standard & Poor's 500 fell 30 percent.

``They really got hammered in the last downturn,'' says Nariman Behravesh, chief economist at Lexington, Massachusetts- based Global Insight. ``They learned their lesson.''

One advantage for businesses this time is what Lakshman Achuthan, managing director of the Economic Cycle Research Institute in New York, calls ``premature pessimism.''

``The forecast demise of the U.S. economy has been happening now for years,'' he said in an interview on April 7. ``Ever since 2005, the `R' word has popped up.''

`Recessionary Impulse'

Manufacturers in particular have responded by keeping inventories in check, Achuthan says, removing about half of what he calls the ``recessionary impulse'' of steep cuts in stockpiles that occurred during past declines.

Companies were rewarded for their discipline with 20 consecutive quarters of double-digit profit growth that ended only in the middle of last year. As a result, industrial corporations in the Standard & Poor's 500 have amassed $615.5 billion in cash and cash equivalents, says Howard Silverblatt, senior index analyst at S&P in New York, compared with $352.4 billion in 2001 and $95.5 billion at the time of the 1990-91 recession.

Irving, Texas-based Exxon Mobil Corp., the world's biggest oil company, leads the pack with $34.5 billion, followed by New York's Pfizer Inc., the world's largest drugmaker, with $25.5 billion, and San Jose, California-based Cisco, the world's biggest maker of computer-networking equipment, with $22.7 billion.

Cash Hoard

The cash hoards mean companies aren't so dependent on battered banks for money to finance their operations. Debt as a percentage of net worth for non-financial companies outside of farming was 61.3 in the fourth quarter of last year, compared with 68 at the start of the 2001 recession and 93.6 in the 1990- 91 contraction, Fed figures show.

``Cash flows are more than adequate, and the amounts of monies that they need are very readily financed in the weakened credit markets,'' Greenspan said at the April 8 conference.

U.S. multinationals have also benefited from stronger growth abroad. Their global profits in 2007 were 142 percent higher than in 2000 and 507 percent more than in 1990, says Joseph Quinlan, chief market strategist at Bank of America Corp. in New York.

That should continue this year, helping to limit the drop in operating profits for the S&P 500 to about 1 percent in 2008, says Steven Wieting, managing director of economic and market analysis at Citigroup Global Markets in New York.

Showing Restraint

The restraint companies showed means they may find themselves saddled with less excess capacity and fewer surplus workers than in past recessions. Investment in buildings and equipment grew at an annual 3.3 percent during the expansion that began November 2001, compared with 7.8 percent in the 1991- 2001 upswing and 4.6 percent in the 1982-90 recovery.

``The non-financial corporate sector had a very cautious expansion,'' Wieting says.

Some companies are even adding capacity as the economy slows. Corning Inc., the biggest maker of glass for liquid- crystal displays, intends to increase capital spending this year to between $1.5 billion and $1.7 billion from about $1.2 billion last year. The Corning, New York-based company is boosting production of screens for large flat-screen televisions.

Companies have also been conservative about adding workers, especially at the start of the expansion. Nonfarm payrolls have grown by an average of 86,400 a month since November 2001. In the two previous periods of growth, the monthly gains averaged 196,750 and 224,510.

Unwanted Inventories

What's more, ``most firms have been able to avoid unwanted buildups in inventories,'' Bernanke told the Congressional Joint Economic Committee on April 2. One indication is a decline in the inventory-to-sales ratio, which measures how long it would take companies to sell stockpiles they have on hand. The ratio showed a 1.28 months' supply in February, close to a record low, and down from 1.3 months a year earlier.

In the run-up to the 2001 recession, the ratio rose to 1.44 from 1.39. It was 1.53 at the start of the 1990 contraction.

Like Greenspan, Silverblatt of S&P says the overall health of non-financial businesses doesn't insure the economy will have a quick recovery. Indeed, business bankruptcies increased 16 percent in the first quarter, according to court records compiled by Jupiter eSources LLC. And the total of distressed corporate bonds, an indicator of potential bankruptcies, jumped to $206 billion this year from $4.4 billion last March, according to a Merrill Lynch & Co. index.

While non-financial corporations are still ``in the best position they've been in years to ride out a storm,'' Silverblatt says, ``the question is, is it a storm or a hurricane that we're in for?''

To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net.

Last Updated: April 14, 2008 11:26 EDT

[Bump]

CIMB's Suresh Says Thailand Is ``Grappling'' With a Weaker Baht

By Shanthy Nambiar

June 6 (Bloomberg) -- Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd., comments on the Thai baht, interest rates and oil prices.

He spoke in a telephone interview from Kuala Lumpur. CIMB is Malaysia's largest investment banking group.

On baht, rates:

``A lot of energy-related companies are buying dollars and hedging their positions on the back of rising crude prices, and that's exerting pressure on the baht. The Bank of Thailand is grappling with a weakening baht, on the back of regional currency weakness. Investors are liquidating their positions in stocks and bonds, and getting out of the market.

``There is no clear signal from the Bank of Thailand where inflation is headed by year-end, or whether it will even hike interest rates. The risk has increased tremendously for a rate hike. We need a clearer consensus from the central bank. There is also no clear indication if they want the baht to strengthen. Rising crude oil prices and energy-related demand is pushing the dollar up against the baht, distorting the picture.

``If the central bank indicates it wants a stronger baht or that inflation can be controlled with a stronger baht, then that will induce a lot more offshore investors to take positions in the market,'' helping the baht appreciate, Suresh said. ``If you look around the region, raising interest rates isn't going to help when you have supply shocks. When you have supply shocks like this passing through the domestic economy, the key to flexibility is through the exchange rate.

``The other thing that could put a lot more pressure on the currency is if the U.S. begins to hike interest rates.

``People are getting out of their positions in the short- end. They are pricing in an immediate hike in interest rates and that is exaggerating the pressure. The whole yield curve, from the two-year to the 10-year, is moving higher.''

On intervention:

``The Bank of Thailand is going to be very aggressive in intervening to keep a lid on the currency from breaking 33. They wouldn't want it to weaken too much from these levels'' because of inflation. ``If crude oil prices come down, they want the currency to reflect that. If crude oil prices decline, the baht needs to strengthen.''

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net or

Last Updated: June 6, 2008 01:55 EDT

[Bump]

Inflation seen peaking in Q3, warning over 2nd-round effect
By Siriporn Chanjindamanee,
Wichit Chaitrong
The Nation
Published on June 7, 2008


Headline inflation is likely to peak in the third quarter and is expected to rise to 8.3 per cent or higher this month after reaching a 10-year high of 7.6 per cent in May, according to Prapas Tonpibulsak, chief investment officer of Ayudhya Fund Management.


He said yesterday that the inflation rate this month might be higher than the expected 8.3 per cent as the price of US light sweet crude had surged above the previous assumption of US$120 (Bt3,970) a barrel.


If average oil prices rise to $130 per barrel, the inflation rate in Thailand will be higher than 9 per cent before peaking in the third quarter, Prapas said. He added that foreign fund-managers in Europe and the United States were studying the possibility and impact of the depreciation of the Vietnamese dong.


The premiums of currency swap and one-year bond yields have risen by more than 40 per cent, which is a record high. The global market has been expecting the depreciation of the dong, since the Vietnamese economy has been sluggish. Its stock market recently plummeted from more than 1,000 points to 400 points.


"The Vietnamese dong is the hot issue we need to monitor, but I think it won't be as serious as the 1997 financial crisis as Vietnam doesn't have much in foreign debts. Most of the inflows have been direct investment," he said.


He added that if the dong needed to depreciate, it would affect Asian currencies, including the baht. He predicted that the baht might fall to Bt34 per dollar if the dong depreciated.


Prasarn Trairatvorakul, president of Kasikornbank, said inflation was rising because of cost-push, not demand-pull factors, so increased interest rates could have an influence. Aware of this, the Monetary Policy Committee might not increase the policy interest rate too much, he said.


Meanwhile, Deepak Bhattasali, lead economist at the World Bank, suggested Thailand and other countries needed to balance monetary polices to both deal with inflationary pressure and maintain export competition.


Countries in Asia do not want to appreciate exchange rates because they want to support export industries, he said.


Global economists warned yesterday that second-round inflation effects - rising prices for goods and wages across the board - would be become a major threat to the Thai economy and those of other developing countries.


The first-round effect of inflation caused by sharply rising fuel and food prices will soften next year, but a second-round effect is more dangerous, said Hans Timmer, manager of the World Bank's Development Prospects Group. "If inflationary pressure builds it causes rising prices of goods, services and wages, in turn causing inflation to spiral upward."


Timmer suggested countries that had a current-account surplus should appreciate their currencies while countries that had previously implemented loose monetary policy should tighten those policies.


Thailand and other Asian countries have run current-account surpluses for many years, while countries such as Argentina and Bolivia have run expansionary policies.


Stronger currencies would allow cheap imported goods and capital for investment in bottleneck infrastructure, and that plays a part in pushing inflation up, as with inefficiency in transport systems, he said. However, he admitted that there were no clear-cut answers to problems in all countries as they each faced different circumstances.


Romuald Semblat, senior economist at the International Monetary Fund, suggested that policies were needed to prevent second-round inflation and dampen inflationary expectations.


He advised the removal of subsidies on oil prices, allowing high oil prices to pass through to consumers to encourage energy conservation and efficiency. "At the same time, the most vulnerable groups should benefit from well-targeted policy support," he said.


He went further and said that countries should reduce their levels of protection and subsidies for biofuel production in order to prevent further increases in the prices of food products.

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James Eckardt on Senator Obama's victory ..News update for June 5..The 43-year-old fresh Samyan market is moving to a new zone on Monday. Here is a..

[aznyron]

Vietnam dong is 16600+ to 1 USD today it small loss but not critical for the dong

[aznyron]

http://wwp.greenwichmeantime.com/time-z ... rrency.htm

[aznyron]

today it 16701 dong to 1 USD the way I see it the government is not playing with there currency like thailand does Bump you know it looks like I was correct all along about the baht

[JimboPSM]

Three articles from the Bangkok Post today that may help to add some context to some of the recent movements:

The currency slide

By dpa correspondents

When inflation goes up, currencies tend to come down, economists say. That rule of thumb has proved true in Southeast Asia this month which has seen inflation across the region pushed to the highest levels in a decade by rising fuel and food prices.

In May, year-on-year inflation peaked at 7.6 per cent in Thailand, 9.6 per cent in the Philippines, 10.4 per cent in Indonesia and a whopping 25.2 per cent in Vietnam, leading to depreciations against the not-so-mighty dollar of the Thai baht, the Philippine peso, the Indonesian rupiah and, most recently, the Vietnamese dong.

Vietnam's State Bank on Wednesday lowered the official exchange rate of the Vietnamese dong almost 2 per cent, while raising the prime interest rate from 12 to 14 per cent to stem inflation.

Further depreciations are anticipated in Vietnam and throughout Southeast Asia in coming months.

"The big issue in my mind is, are they going to be able to get away with just gradually devaluing the currency, or should they just go 'whack' and do 20 per cent at one time?" said Peter Ryder, CEO of asset and real estate group Indochina Capital, referring to Vietnam's central bank.

Vietnam, a darling of foreign investors over the past two years, has suddenly run in to a host of macroeconomic problems, including rising inflation, a widening trade deficit and slowing growth.

While it may be have taken a lead, Vietnam is hardly alone in its fading fundamentals in the region, and the trend spells the end to almost two years of Asian currencies appreciating against the greenback.

"That's changed, and it's changed rather quickly," said James McCormack, head of Asia-Pacific Sovereign Ratings at Fitch Ratings in Hong Kong.

"All we need to do is look at how the trade flows and investment flows are going, and for Asia they are going to get worse," he said. "Based on these two trends we would expect Asian currencies to continue to weaken, or at least not return to their previous strengths."

After two years of steadily appreciating Asian currencies against the dollar, ramped up by foreign money pouring in to the region because of its impressive growth, strong exports and stable macroeconomics, a shift towards depreciating currencies is a sign of the changing times.

"The Philippine peso is a good example of how things have changed in 2008," said an economic assessment report of the DBS Bank of Singapore. "This year, growth is expected to slow while inflation has surged."

"Although (the) US dollar and peso (exchange rate) has stopped rising of late, we are mindful that it could still head higher," the report said. "History has shown that the US dollar and peso can return up to 44 per cent of its past three years' move."

The depreciation of Southeast Asia currencies has little to do with a strengthening dollar, but much more to do with the region's ongoing dependence on the US economy, analysts said.

"We're starting to see now virtually every Asian country's export growth to the US is in decline, and in some countries may even be negative year-on-year," McCormack said.

"There is no way that Asia can avoid a slowdown, because we're really looking at a synchronized global slowdown," he said. "Decoupling from the US economy was the buzzword a while ago, but nobody seems to use that term anymore because everyone realizes its not going to happen." (dpa)

MOUNTING ANXIETY OVER VIETNAM

Exports stable as dong faces drop

Rice sales could drop on currency disparity

PHUSADEE ARUNMAS

Thai exports are expected to remain intact although Vietnam, one of the country's exporting rivals especially for rice, has cut its official dong rate by almost 2% against the US dollar in what analysts called an effective devaluation.

''It will take about one or two months to see the real impact of the dong devaluation or whether it affects our exports,'' said Rachane Potjanasuntorn, the director-general of the Department of Export Promotion.

''Vietnam's currency devaluation is targeted at addressing its domestic problems, particularly skyrocketing inflation of 25%, and mounting trade and current account deficits. Despite the devaluation, we believe the production costs of Vietnam will not be much cheaper because of oil price pressure.''

Thailand's baht has also shown some weakness against the dollar, with the current rate standing at about 33.1 baht compared with 31 baht early this year, he added.

According to Mr Rachane, Thailand is also expected to face a trade deficit this year given the expected increase in imports, particularly of fuel oil, equipment and machinery for production.

Thailand posted a $1.8-billion trade deficit in April, the largest since June 2005, due largely to soaring oil prices.

Imports were worth $15.39 billion in April, up 41.5% from the year before, against exports of $13.63 billion, up 27.7%. Oil imports alone rose 80% in value in April.

The current account deficit widened to $1.66 billion for April, compared with a surplus of $342 million in March, due to repatriations by foreign investors.

Dej Pathanasethpong, president of the Thai Garment Manufacturers Association, shared the same view, saying Thai garment exports were unlikely to be affected. Vietnam has maintained restrictions on production capacity due to a tight labour supply and relatively high inflation.

The association expects Thai textile and garment exports to grow this year by at least 15%, helped by increased prices, from US$72 billion last year.

CP Group, Thailand's largest agribusiness concern, also foresaw no impact from the dong devaluation, since food will always sell regardless of economic conditions, according to Adirek Sripratak, president and CEO of Charoen Pokphand Foods Plc (CPF), the group's listed flagship company.

On the contrary, he said, a weaker dong could be a boon for the group, as CP is also exporting from Vietnam.

He added that the sectors likely to be the hardest hit were real estate and financial and banking businesses.

The CP Group entered Vietnam 16 years ago and now has 16 projects in the country. CPF has seen revenue growth of 20% in the country from businesses ranging from seafood, processed food and poultry to animal feed.

CP said late last year that the group would invest at least $3.6 billion (123.60 billion baht) over the next five years in Vietnam, eyeing a wide range of businesses from telecoms, property and banking to retailing and wholesaling.

But rice exporters are bracing for a blow because the dong devaluation would enable Vietnam to quote lower prices for its grain shipments.

''Although the rate is only 2%, the impact will be felt. It offers a competitive edge over Thai rice,'' said Chookiat Ophaswongse, the president of the Rice Exporters Association.

Baht volatility could increase

PARISTA YUTHAMANOP

The baht could see increased volatility if Vietnam is forced to devalue the dong, according to Amara Sriphayak, a senior director for the Bank of Thailand.

Any move by Vietnam to adjust its foreign exchange regime could affect investor confidence throughout the region and trigger capital outflows, she said yesterday.

''If the dong is devalued, chances are that we will need to look after the baht so that it is not excessively volatile. Our actions will be based on effective exchange rates,'' Dr Amara said.

The baht closed yesterday at 33.08/12 to the dollar, down slightly from 33.00/05 on Tuesday. The baht has fallen by more than 3% against the dollar this month and less than 1% since the beginning of the year, due largely to an increase in the trade deficit on soaring oil prices and a shift in investor sentiment because of domestic political uncertainties.

Dealers said the central bank was continuing to intervene in the currency markets in an attempt to slow the depreciation of the baht.

The Vietnamese economy, however, is in much more dire straits, given a trade deficit of nearly $15 billion baht for the year to date and the sharp decline in property and equities prices over the past several months.

The central bank in Hanoi has lifted interest rates sharply and imposed curbs on bank lending to help slow economic growth and inflation, which reached 25% year-on-year in May.

Dr Amara said the economic turmoil in Vietnam, particularly its spiralling problems with inflation, offered an important lesson for Thailand about the primacy of focusing on sustainable growth rather than short-term gains.

''Just last year, some analysts noted that Vietnam's economic outlook was more promising than Thailand's more modest growth,'' she said.

''But it's quite proven that high economic growth with 25% inflation is not sustainable. ... Thailand should see this as an example.''

Dr Amara said interest rates should not remain low in light of rising inflationary pressure, as low rates would only offer incentives for investors to shift funds from banks to speculate on stocks and property.

The central bank's Monetary Policy Committee will meet next on July 16. Many expect the committee to raise its one-day repurchase rate by at least a quarter point from 3.25% now to help ward off growing inflationary pressure.