Thai baht dips after central bank rate cut, others lower

[snoop1130 4,738]

Thai baht dips after central bank rate cut, others lower

By Ambar Warrick

 

FILE PHOTO: Thai baht notes are seen at a Kasikornbank in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha

 

(Reuters) - The Thai baht extended losses on Wednesday after an interest rate cut by the Thai central bank, while most other Asian currencies dipped as markets awaited concrete details on China-U.S. tariff concessions.

 

The Bank of Thailand cut rates for a second time this year, with the benchmark one-day repurchase rate now at a record-low level as the bank attempts to shore up inflation and rein in a robust baht.

 

The bank also announced a further relaxation of foreign exchange rules, in particular allowing exporters to keep more foreign exchange proceeds abroad.

 

The baht <THB=TH> fell up to 0.63% after the announcement, touching its weakest level to the dollar in nearly three weeks. The baht is emerging Asia's best performing currency this year.

 

"Asia’s most hawkish central bank finally conceded to the fact that the economy needed lower interest rates to stimulate the domestic spending and also to rein in the rapid pace of baht appreciation that’s been dampening prospects of any near-term recovery," ING said in a note.

 

ING said the baht was likely to stretch its bull run into the year-end.

 

A strong baht has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

"With one more policy meeting to go before the year-end, and given the BoT’s reluctance to ease earlier this year, we expect no more rate cuts this year," ING said.

 

Broader markets tested gains made earlier in the week as investors digested a report suggesting that the United States was considering certain tariff concessions on China. [MKTS/GLOB]

 

China is also insisting that the United States remove tariffs imposed in September as a part of the "phase one" trade deal, which is expected to be signed this month at a yet-to-be-determined location.

 

The Philippine peso <PHP=> fell 0.32% after data showed its trade deficit widened in September from the previous month.

 

Markets however, expect a rebound in its third-quarter gross domestic product growth, according to a Reuters poll. The data is due on Thursday.

 

The Indonesian rupiah <IDR=ID> dipped 0.32%, to hold slightly below a level of about 14,000 to the dollar.

 

Bucking the trend, the Chinese yuan <CNY=CFXS> rose about 0.14% after the People's Bank of China set its yuan midpoint at a three-month high.

 

The currency was also trading below its crucial 7 to a dollar level, having marked strong gains on the perceived progress in Sino-U.S. trade negotiations.

 

-- © Copyright Reuters 2019-11-06

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[RotBenz8888 9,162]

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

[Chivas 1,529]

Hardly moved lol

Interbank is 30.29 at time of post

[Buddha Pist 16]

11 minutes ago, RotBenz8888 said:

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

Stop whining.
There's more to this than just chopping interest rates.

[sammieuk1 12,039]

The baht <THB=TH> fell up to 0.63% after the announcement, touching its weakest level to the dollar in nearly three weeks. The baht is emerging Asia's best performing currency this year.

 

Or a thimble full of wine 

[CNXexpat 1,387]

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

[kotsak 7,477]

We are saved..

 

[Youlike 1,368]

7 hours ago, RotBenz8888 said:

A has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

Yet they have waited and waited....

And the dip is gone already....nothing has changed.

[notmyself 3,076]

9 hours ago, CNXexpat said:

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

 

Yep

[J Town 1,385]

I just did my monthly Transferwise xfer, got a guaranteed rate of 30.29

[jarda 19]

What dip?

[moe666 4,683]

11 hours ago, CNXexpat said:

Not an easy job for the Bank of Thailand. On one side the strong baht is a problem for the economy, on the other side the Thai people , they have a very high dept rate will loan more money from the banks because it´s cheaper now and get more finance problems in the future. 

Your kidding right the local interest rates will not skip a beat

[saengd 714]

12 minutes ago, moe666 said:

Your kidding right the local interest rates will not skip a beat

Watch the banks MLR numbers, they will change. https://www.ceicdata.com/en/thailand/interest-rates-commerical-banks/prime-rate-minimum-loan-rate-mlr

Edited November 7 by saengd

[phkauf 578]

Playing the currency game is a dangerous game for Central Banks (Governments) and it looks like Thailand is going to learn a hard lesson in the near future. While they might have had a sugar high when the Baht was strong, it has come at the cost of killing the economy.

Exports are suffering - just the other day rice exporters are crying about how Thai rice is uncompetitive, which makes sense since it's basically a commodity with little differentiation. 

The hoped for benefit of the US - China trade spat is unlikely to happen now that is coming to an end. Plus with the high Baht, Vietnam and others are more attractive locations as an alternative to Thailand.

The tourism sector is bleeding out. While it's mostly anecdotal (more reliable than TAT), there are constant stories about how this is the worst season in years. I was speaking with a friend yesterday who wholesales high priced wine to hotels and restaurants in Bangkok and this year is horrible. Tourists are not spending on the luxuries like the used to.

Sadly, there is no easy solution to this mess. If they lower rates more to stimulate the economy, that could lead to an outflow of the hot money which would drop the baht but that could also get out of control as well. It looks like the BoT is about as well managed as THAI Airlines.

[hotchilli 6,166]

13 hours ago, snoop1130 said:

A strong baht has weighed on Thai exports and tourism, two crucial pegs for the economy.

 

They just caught on?