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Finance Minister vows more action if baht continues rapid appreciation

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Finance Minister vows more action if baht continues rapid appreciation

By The Nation

 

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Finance Minister Uttama Savanayana said the central bank and the Finance Ministry had together come up with the measures announced on Wednesday.

 

The baht on Thursday closed at Bt30.32 to the dollar in onshore trade, maintaining Wednesday’s level when the central bank cut its policy rate and issued key measures to rein in the rapid appreciation of the Thai currency.

 

Finance Minister Uttama Savanayana said the central bank and the Finance Ministry had together come up with the measures announced on Wednesday.

“It is the first step, and we will do more in the future,” he said in response to scepticism about the effectiveness of the measures to rein in the rising baht in the long run.

 

The central bank announced several measures including allowing exporters to park more money abroad, allowing retail investors to invest directly in foreign securities, increasing the aggregate investment limit regulated by the Securities and Exchange Commission, facilitating easier transfer of money out of the country for individuals and allowing foreign currency settlement for onshore gold trading.

 

“We don’t believe that the rate cut and the measures to boost capital outflows would be effective in weakening the baht,” said Jitipol Puksamatanan, chief markets strategist at Krung Thai Bank.

 

“Market participants believe the baht is a safe haven asset and hence there is high demand for the Thai currency,” he added.

 

He, however, agreed that it was an important step in increasing liquidity in the foreign exchange market, which may lead to less market intervention by the central bank in the long run. Gold traders will also enter the currency speculation turf, he added.

 

Phacharaphot Nuntramas, senior director at Krungthai Compass research, predicted that the baht may continue to appreciate and even rise to Bt29 to the dollar by early next year. This is because the steady increase in tourist arrivals would bring in more earnings in foreign currencies. It is also the season for exporters to repatriate their earnings back home, he noted.

 

Meanwhile, Visit Limluecha, vice chairman of the Thai National Shippers’ Council -- an exporters’ club -- said that exporters were satisfied with the latest measures to curb the baht’s rise. However, it remains to be seen whether these measures will be effective. “If the baht is going to continue to rise, the central bank may need to impose drastic measures to deter short-term inflows aimed primarily for speculation,” he said. 

 

Somprawin Manprasert, chief economist and executive vice president at Krungsri Bank, said the rate cut and capital outflow measures demonstrated that the central bank was moving in the right direction. The baht is unlikely to appreciate rapidly as it did in the past, he said, adding Thailand could achieve economic growth of 2.9 per cent this year, down from the 3.8 per cent growth forecast early in the year.

 

“The economy will not slide further,” he said, sounding optimistic.

 

He, however, suggested that the Bank of Thailand should communicate more with the market.

 

Source: https://www.nationthailand.com/business/30378166

 

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-- © Copyright The Nation Thailand 2019-11-08
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The guy who said too little too late was spot on. Everyone who was on the fence of where to visit on vacation during high season has shifted to the much higher exchange locations. So the rest of asia. I see a lot of farang in phuket this year though. More than in about 7 years.

I see them in villa market. Thats my farang measuring device.

Chinese are almost invisible compared to past 4 years.

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3 hours ago, webfact said:

baht may continue to appreciate and even rise to Bt29 to the dollar by early next year. This is because the steady increase in tourist arrivals would bring in more earnings in foreign currencies. 

Makes more sense the other way: the more the Baht rises, the more tourists will arrive.

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5 minutes ago, Assurancetourix said:

The Bank of Thailand does  have to do like some Swiss and German banks: negative interest;

The inflow of foreign capital will stop and the speculators will withdraw their billions of dollars or renminbi from Thai banks to see if the grass is greener elsewhere.

 

Is it too much to ask some senior officials to have b.alls?

America won't like that, "currency manipulator", the big guys can get away with it but not little Thailand, the US likes to club the little guys.

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15 minutes ago, Assurancetourix said:

The Bank of Thailand does  have to do like some Swiss and German banks: negative interest;

The inflow of foreign capital will stop and the speculators will withdraw their billions of dollars or renminbi from Thai banks to see if the grass is greener elsewhere.

 

Is it too much to ask some senior officials to have b.alls?

Most of the capital inflows goes into bonds or into businesses here, almost none of it is here just because of the interest rate!

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Thai baht goes down after interest cut. If you come out prior the interest cut, I believe you. You are saying something already happen in the market.

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