Baht What up with Dat?????

[aznyron]

the USD is getting stronger and the thai banks/government will not let the baht to go to 33
now you tell me if they are not scamming us

[JimboPSM]

The dollar may have increased in value recently but it is on a market correction to an excessive fall and on short term Forex mathematics related to interest rate sentiment - the structural problems which caused the fall over the last few years have not really changed and IMHO the trend is still down

Briefly what has happened so far this year is that due to a combination of positive sentiment about Asian currencies and negative sentiment about the USD it fell too far too quickly in the first quarter (or, depending on your perspective, the Asian currencies gained too much too quickly).

The dollar actually lost 7.3% against the THB between 1st January and its low on 19th March (annualised that would be over 30%).

Since the 19th March its value has risen by 6.7% which is mainly due to:

• 1. A market correction to the excessive fall
  
  2. The Forex market anticipating Fed interest rate rises.

The USD now stands only 1.1% below its 1st January 2008 value

[PopsIcafe]

Read this, think this might explain why the dollar has strengthen against the baht. Investors are dumping and getting what they can get now. This trend may continue until they see a stabilization between the government and the people.

http://www.bangkokpost.com/topstories/t ... ?id=128356

Pop's

[arjay]

Surely the increased political uncertainty in Thailand must be weakening the baht currently?

[saint]

pops, when you say stabilization, do you mean , yet another election, cuz from what i see this lot in power now dont give a rats a~se about the people.

[izzix]

UPDATE 1-Thai baht hit by political tensions - central bank
Fri Jun 20, 2008 4:35am EDT


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(Adds details)

BANGKOK, June 20 (Reuters) - Rising political tensions are causing the baht to fall too quickly, although there is no panic in the market, Bank of Thailand Assistant Governor Suchada Kirakul said on Friday.

She said that the fall in the currency is being prompted by capital outflows as foreign investors sell Thai shares.

"It is weakening too quickly, but there is no panic in the market yet. Exporters are still selling dollars and importers are buying," she told reporters.

The baht <THB=TH> was trading around 33.43 to the dollar at 0830 GMT. It dropped as far as 33.55 earlier, its lowest level in more than five months, as a major anti-government protest got underway in Bangkok.

"We are taking care of it as usual, but we don't have to do it too much at the moment," she said, using words that usually indicate the central bank has intervened in the market.

Currency traders said the Bank of Thailand has been intervening by selling dollars to defend the baht regularly in the past few weeks. The country's foreign exchange reserves fell by $4 billion in the week to June 13, suggesting reserves had been used to prop up the baht.

Thousands of protesters have laid siege to the government's headquarters in an attempt to force the five-month-old administration from power. [ID:nBKK283007].

Protestors view the coalition government elected in December as an illegitimate proxy of former Prime Minister Thaksin Shinawatra.

[arjay]

That seems to confirm/prove my point then, - that the baht is weakening, and that the BOT are intervening in the market to slow/restrict the baht's fall. That must be good news for most foreigners living here, particularly those on pensions or modest/fixed incomes.

[JimboPSM]

On a

[banpaeng]

Here is an interesting article. It makes sense but maybe Jimbo could give us his cut. I understand him better most times.

http://articles.moneycentral.msn.com/In ... 09.13.2.17

[aznyron]

it seems to me they are trying very hard to keep the baht under 33 to 1
I just wonder what they will do when the USD get strong again ?
which I hope happens real soon

[bumper]

They are saying 35 to one by the end of the year these days. Is he right, one thing I do believe he is right about is fortune tellers may be a good as anything these days. We got some really sharp guys on this forum. Some very well educated in economics. But they are guessing as well, seems norm' really don't apply at the moment. I have followed this deligently for a couple of years now. As I was thinking in terms of investing for my famalies future. Haven't made a move yet. Everytime I think I have a clue I find out I don't.

I seems to me there will be a rebound point, to maximise your money you need to invest before that happens. But where the heck is the bottom

Today's Top Stories
Volatile times ahead




There is little good economic news on the horizon. Thailand's political quagmire seems intractable, opening up downside risks that are difficult to quantify.



--------------------------------------------------------------------------------


By Supavud Saicheua,
head of research, Phatra Securities Public Co, Ltd.



There is much confusion about how things might develop in Thailand in the coming months.


At the risk of being wrong, I have identified three factors that I consider most important. These are, firstly, problems of US financial institutions which are again in the forefront. Inflation remains a worry for Asia and Thailand. Finally, the unpredictability of Thai politics has made the predictions of fortune-tellers as sought-after as the writings of political commentators.


How the US financial sector fares in the coming months will have an important bearing on the global economy. In the summer of 2007, the bursting of the US housing bubble caused financial damage to US banks because of high risk or "subprime" lending. Some thought that the damage would soon be contained, especially after various financial institutions made bold write-offs and aggressively sought new capital.



The generous participation of Sovereign Wealth Funds added to this confidence.



However, the emergency rescue of Bear Stearns in March this year made it clear that the problem has spread into various fixed income and derivative instruments.



The novel ways in which the US Federal Reserve made liquidity widely available to US financial institutions on top of the aggressive cuts in its policy rate from 5.25% to 2.0% meant that the situation was grim.



The latest financial emergency prompted the US Treasury to spearhead the rescue of Fannie Mae and Freddie Mac, two government-sponsored corporations (GSCs) that are too important to fail. The two GSCs guarantee or directly provide mortgage loans worth $5.2 trillion, nearly half the system-wide mortgages worth $12 trillion. They are highly leveraged with capital - only 1-2% of total assets. Such leverage is not a problem under normal circumstances given the perception (though not written in law) that GSCs are backed by the US government.



But with US home prices falling 15% and the prospect of more to come, the US Congress has no choice but to approve legislation that authorises the US Treasury to provide any amount of credit and equity that Fannie and Freddie may need, along with help from the Federal Reserve.



Approving a law authorising a "blank cheque" to rescue Fannie and Freddie has led to optimism that the worst may be over. Such a belief could prove premature.



Merrill Lynch now sees US GDP contracting by 2.5% in the 4Q08 and 2.3% in 1Q09. For all of 2009, Merrill Lynch sees a 0.5% contraction in US GDP, whereas others expect US GDP to expand.



The IMF's latest forecast sees the US economy growing 0.8% in 2009. The IMF considers its forecast "gloomy" because it sees global growth falling from 5.0% in 2007 to 4.1% in 2008 and weaker still to 3.9% in 2009.



Why will things not get better?



Merrill Lynch points out that US financial institutions have tightened credit significantly not just for home mortgages but for commercial mortgages, car loans, credit cards, etc.



Recently, Fannie and Freddie were the main source of additional lending for the system. The rescue of Fannie and Freddie, though dramatic, may not restore its ability to expand credit. Indeed, lending more when home prices continue to fall could prove difficult when it is clear that the bill for damages will have to be paid by US taxpayers.



Moreover, some analysts noted that the severe compression of US asset prices is likely to claim many more casualties, if past financial crises are a guide.



The Savings and Loans crisis of the late 1980s caused 1,500 US financial institutions to go under. The situation stabilised only after the establishment of the Resolution Trust Corporation to buy out and manage down bad assets.



So far, only six US financial institutions have failed, so it is feared that many more could follow suit in the coming months as the US economy heads towards recession.



Accordingly, futures markets now see inflation as less of a problem in developed economies. No US interest rate hike is expected until the yearend, while hopes of rate cuts in Europe are being revived.



The sharp fall in oil prices from $147 to $125 during the past two weeks likely reflects this increased pessimism as much as initiatives by US authorities to investigate speculation.



Meanwhile, foreign investors remain concerned about Asian inflation and the inability of our central banks to tighten monetary policy in a timely manner.



In sharp contrast to this, Asian governments and businessmen are more concerned about economic slowdown and therefore central bank tightening has been gradual and reluctantly accepted.



Asia's implicit peg to the US dollar increases the risk that Asians will find runaway inflation the unwelcome surprise for 2009.



US monetary easing risks increasing the dollar price of crude oil and other commodities, setting the global economy up for prolonged inflation, as was the case in the 1970s.



The correlation between the dollar price of crude oil and the dollar-euro exchange rate was 95% from January 2007 to July 2008. If the dollar depreciates to two US dollars to one euro, and if past correlation between oil and dollar/euro holds, the price of oil would be $219-233 per barrel.



Asia has been struggling to control inflation since 2007 and the pegging of its currencies to the US dollar increases the risk of inflation getting out of hand in 2009.



On the other hand, a US recession is necessarily deflationary. If it is severe and spreads, Asian inflation could be a minor concern in 2009.



But only one of these two scenarios is the correct one. It seems that the majority view favours the first scenario, but a slight shift is now taking place towards the second.



Further sharp reductions in oil prices could forewarn that the second scenario is becoming more likely.



Thailand's political instability means that the country's future growth is being diluted in two main ways.



First is the inability to undertake long-term economic reform and liberalisation. The Constitution Court's decision on Preah Vihear has impaired the country's ability to engage itself in the ongoing globalisation of the world economy.



In general, the government finds it difficult to push forward long-term investment projects because of general distrust and detailed oversight.



Second, any future returns expected from an investment project must be subject to a larger discount rate to reflect the increased risk that elected governments will come and go quickly in Thailand.



It is clear that the 2007 Constitution has many pitfalls and those wanting to amend it are being actively opposed.



Current political difficulties faced by this government means that its remaining lifespan could be measured in a matter of months.



The instinct that new elections may not resolve the underlying conflict is the right one.



The bottom line is that despite its lacklustre performance, the People Power party - or a reincarnation of it - may not see its seats in parliament dwindle. This is because the Democrats are likely to face difficulties in trying to win more seats in the populous North and Northeast.



Smaller parties such as Puea Pandin, Chart Thai and Matchimathipataya are at risk of being dissolved. If not, their lack of success in the last election could make it difficult for them to carry on.



But the return of PPP appears unacceptable to powerful groups in Bangkok. And the mechanics of what Thai academics call "judicial activism" and politics on the streets is likely to shorten the life of any elected government headed by populist leaders.



In conclusion, there is little good news on the horizon. Ironically, the sharper than expected slowdown in the global economy could help bring Asian inflation under control, allowing domestic expansion to offset the shortfall in global demand.



However, Thailand's political quagmire seems far more intractable, opening up downside risks for the Thai economy in a way that is difficult to quantify."

[polehawk]

35 to one? OK, that's better than the 30 to one they were predicting before the baht started weakening but "Tis Thailand" (TT), eh?

[BKKSTAN]

My check just cleared and was deposited in my Thai bank today!I received 33.45 for each dollar!The difference in the exchange rate today and 5 1/2 weeks ago ,when I wrote it was enough to cover 1 year of rent

[JimboPSM]

............. The difference in the exchange rate today and 5 1/2 weeks ago ,when I wrote it was enough to cover 1 year of rent

You must be getting a really good deal on your rent as the rate has only improved marginally in the last 5 1/2 weeks

The big movement in rates started on 20th March and finished on 9th June during which time it improved 6.6%, since then it has only improved 0.8%.

Daily USD/THB closing TT buy rate from 1st Jan 08 to today

[bumper]

It is really amazing what difference there is when you move thouands. I've picked up about 5K extra month, half the house payment. Hits 35 and the house payment is made.

[bumper]

It was interesting They had I believe the CEO of one of the big banks here in Thailand on Bloomberg this morning. It was a phone intreview. But, he had to be smiling I don't think he answered one question directly.

Since they were on the subject of exports, he was welcoming a bit of baht appreciation. On the other hand not real happy about the BOT raising interest rates.

Two things came out the intreview that 27% increase in exports 17% was rice and that price is falling. The other that I had no idea about. A big portion was from exporting processed fuel to other countries.

I find that interesting, on one hand they are trying to cut costs of fuel here and profiting by exporting it at the same time. No wonder PTT is doing well these days.

What effect is the fact that both of those commodities in those areas currently are coming down in price?

[LoveDaBlues]

It is really amazing what difference there is when you move thouands. I've picked up about 5K extra month, half the house payment. Hits 35 and the house payment is made.

That's why I'm going to get (hopefully) a loan here to build my house on the land I just bought. With the political situation in both countries (USA and Thailand) I'm predicting a much weaker baht in roughly 1 year. The US will have a new President; either JSM or BHO will be better than Dubya. Hopefully the housing market/banking fiasco will have bottomed and home values will be rising. At the same time Thailand should be in political turmoil as Samak's days are numbered. The fighting between PAD and anti-PAD forces is only going to get worse. These things add up to a weaker baht against the dollar. If I'm right I'll xfer a pile of money from the US to Thailand and pay off the house; if I'm wrong I'll just keep making the house payments (and the interest ) and be patient and wait for a weak baht.

The above is basically a WAG on my part as I could write thick books on what I DON'T know about currencies.

[bumper]

Sounds like a good plan to me hard to lose on that one.

[bumper]

I didn't know there was a change in the board

Thai FX policy has failed to keep baht stable
source: Reuters Jul 30, 2008

BANGKOK, July 30 (Reuters) - The foreign exchange policy of Thailand's central bank has failed to keep the baht stable relative to other Asian currencies, Finance Minister Surapong Suebwonglee told a business seminar on Wednesday.

"Nobody has a problem with foreign exchange rates as long as there is stability. But ours is still swinging compared with other countries, which have good management, so we need to have stability," Surapong said.

He attributed the baht's instability largely to increased volatility of foreign capital flows, which he said required more efficient currency management.

At 0407 GMT, the baht <THB> was trading at around 33.48 baht to the dollar, down from 33.44 at Tuesday's close.

It briefly fell to 33.52 per dollar and steadied after intervention by the central bank, dealers said.

They said the currency was under pressure due to political uncertainty and the appointment of a new Bank of Thailand board by the government on Tuesday.

Some analysts said the make-up of the board might lead to a watering down of the central bank's efforts to fight inflation.

Surapong did not directly criticise the Bank of Thailand on Wednesday, but he has criticised it in the past for raising interest rates by 25 basis points to 3.5 percent this month, its first rise in two years.

Surapong, who has pushed pro-growth policies, has said raising rates might not be the best way to deal with inflation running at a 10-year high.

Inflation would slow in the second half as oil prices were easing, he said on Wednesday.

His comments and policy priorities have raised concerns about political interference in monetary policy and have led to speculation that the government wanted central bank Governor Tarisa Watanagase to resign.

The new central bank board, which has the power to change the composition of the central bank's Monetary Policy Committee, has raised concern as the new members, making up half of the board, are reported to be close to Surapong.

However, Surapong said the new board would be able to operate independently.

"The board will be independent, but we want to see cautious management of monetary policy," he told reporters.

(Reporting by Trisanat Kongkhunthian; Writing by Orathai Sriring; Editing by Alan Raybould)
_________________
.

[bumper]

You know If I didn't have so much faith in the governemnt it would sound to me like they have just turned the keys over to the vault, to some people who may have some very different ideas

Public debts at 36.10% of GDP in May
source: The Nation

Public debts as of May stood at Bt3.4 trillion or 36.10 per cent of gross domestic product, according to the Public Debt Management Office.

The office's statement showed that of total, Bt2.2 trillion were direct loans to government agencies, Bt949.6 billion being guaranteed loans to non-financial state enterprisers, Bt91.5 billion to financial state enterprises, Bt157.3 billion to the Financial Institutions Development Fund, and Bt20.97 billion to other state agencies.

Compared to April, the public debts were down by Bt1.2 billion. While financial state enterprises and the FIDF's loans dropped month on month, the government's direct loans as well as the loans to non-financial state enterprises rose.

_____________________________________________________

Financial Institutions Businesses Act comes into force
The Nation July 28, 2008

Weak prudential regulations stemming from inappropriate and outdated laws contributed partly to the financial crisis of 1997.

After 10 years of waiting for legislative endorsement, Thailand will welcome the Financial Institutions Businesses Act (FIBA) on Sunday. Now, we have a law that encompasses more complex business transactions of financial institutions and, more importantly, eliminates various drawbacks of previous financial institution laws in use since 1962.

Among several important aspects of the FIBA, which was enacted in February, five core objectives have been emphasised. They are designed to enhance prudential measures, increase the efficiency of the financial system, encourage integrity and good governance, promote fairness and maintain a sound macro-prudential environment.

The ultimate goals are to strengthen financial institution stability, prevent financial crises and enhance competitiveness.

Although most of the prudential regulations under the FIBA are not entirely new for financial institutions, consolidated supervision regulations, with legal enforcement, will be introduced for the first time. They are expected to correct numerous flaws of previous laws.

Under the new consolidated supervision regulations, financial institutions will be supervised collectively. This means that they have to identify their subsidiaries and affiliated companies, such as credit card or leasing companies, as well as seek approval for their group's structure from the Bank of Thailand.

Supervision from a group-wide perspective will let regulators fully and legally assess group risk exposures that may not be completely captured by supervision on a stand-alone basis.

Key regulations include capital-adequacy requirements, intra-group transactions and large exposures.

This new mode of supervision will enhance prudence in examination to reflect the financial positions of financial groups more accurately.

The FIBA has been made more responsive to more complex financial transactions, a more rapidly changing financial environment and more sophisticated financial instruments, such as structured products and credit derivatives.

Potential financial crises will also be more effectively prevented through prudential measures that focus on the responsibilities of boards of directors and senior management as well as on risk-management functions.

Financial institutions with high-risk profiles may be required to set aside extra capital reserves to cushion against their risk exposures.

Early warning systems have also been developed to promptly signal regulators about the status of a financial institution.

The central bank can now consider and approve the composition of directors as well as the checks-and-balances systems of financial institutions. The directors will also be required to participate actively, exercise due care and comply with applicable laws and regulations.

The FIBA will also improve consumer protection through rules focusing on information disclosure, especially for interest rates and fees. Sufficient information and market discipline will be powerful tools for consumers to use in dealing with financial institutions.

Overall, this new law will increase the safety and soundness of financial institutions and the financial system as a whole.

This is vital because a strong and efficient financial sector is a crucial force for advancing economic development and people's welfare.
__________________________________________________

BBL frets over rising NPLs in Vietnam
source: Bkk Post July 29 2008