Thai central bank worried about strong baht, ready to use necessary measures

[Trillian]

1 hour ago, smedly said:

your whole post is nonsense 

You should educate yourself as to which currencies use which type of currency management before being critical of other peoples posts!

 

"Managed float regime is the current international financial environment in which exchange rates fluctuate from day to day, but central banks attempt to influence their countries' exchange rates by buying and selling currencies to maintain a certain range. The peg used is known as a crawling peg".

 

https://en.wikipedia.org/wiki/Managed_float_regime

 

In 1997 Thailand had very little foreign currency reserves, what they had was tied up in long dated securities. Today they have over USD 220 bill. In 1997 Thailand had huge amounts of USD denominated debt, today less than 4% of government debt is in a foreign currency. The differences between 1997 and today are stark, there is hardly no similarity whatsoever.

 

The strength of THB comes mostly from Thailand's trade surplus, it exports more than it imports, even now in the bad times that is still true. For Thailand to weaken the Baht the country will need to open up and allow more imports and stop protecting favored countries supplies such as Japan and get rid of the mononopoly Thai business has over supply of goods.

Edited June 1, 2020 by Trillian

[Brunolem]

1 hour ago, CNXexpat said:

So many "experts" here they think it´s easy to bring a currency up or down by the government. Funny!

Not easy but possible, especially on the way down...follow the Swiss model...

 

The Thai central bank can start buying dollars, euros, yens by selling bahts that it can create at will.

 

This will depreciate the baht against these currencies...the law of supply and demand.

 

Then, with all the foreign currencies it will accumulate in the process, it will have the opportunity to buy foreign stocks, like the Swiss, or gold, like Russia.

 

A win win situation...

 

[Trillian]

4 minutes ago, Brunolem said:

Not easy but possible, especially on the way down...follow the Swiss model...

 

The Thai central bank can start buying dollars, euros, yens by selling bahts that it can create at will.

 

This will depreciate the baht against these currencies...the law of supply and demand.

 

Then, with all the foreign currencies it will accumulate in the process, it will have the opportunity to buy foreign stocks, like the Swiss, or gold, like Russia.

 

A win win situation...

 

That approach would work only if the currency was freely convertible and in unrestricted distribution globally which THB is not.

[webfact]

BOT worried as baht continues upward streak, vows ‘extra measures’

By THE NATION

 

Mathee Supapongse

 

The Bank of Thailand (BOT) is concerned about a swift baht appreciation in the past two weeks and promised to impose extra measures to address short-term inflows just as the currency rose again today (June 1).

 

Deputy governor Mathee Supapongse said today that the baht has been rising faster than economic fundamentals in the past two weeks due to the Covid-19 situation in Thailand being better than other countries and as economic numbers in the first quarter were better than markets had expected.

 

The central bank said the strengthening baht could worsen the economic weakness.

 

Numerous economic sectors have been impacted severely from the virus crisis, and this would show in second-quarter economic indicators, Mathee said.

 

Also, the increased gold price is partly contributing to the strengthening baht, he said, adding that the bank will monitor transactions by gold traders to see whether trading is in line with BOT guidelines to reduce the impact on the baht exchange rate.

 

The country’s relative success in fighting Covid-19 may encourage investors to buy baht and regional currencies as a means to park their short-term funds, he noted.

 

“The Bank of Thailand does not want investors to use the baht as a tool for parking their short-term funds and we are ready to introduce extra measures to guard the fragile economy, which will suffer more by a baht appreciation,” he said.

 

The bank warns that the virus situation and global financial markets as well as public and private investment could change rapidly and force the baht to reverse course.

 

It advised foreign currency traders to protect themselves from exchange rate volatility, in which the baht could move up or down against other currencies.

 

The baht rose to 31.81 to the US dollar this morning, strengthening from Friday’s close of 31.83.

 

The Thai currency is expected to move between 31.70 and 31.90 today and between 31.50 and 32 this week, Krungthai Bank’s money market strategist Jitipol Puksamatanan said.

 

He said a decrease in confidence in the dollar would be a main problem. If the market this week views the euro positively, the dollar will weaken even more. However, this could strengthen the baht.

 

The United States will report its ISM non-manufacturing PMI this Wednesday, and the European Central Bank will hold a meeting on Thursday. US non-farm payroll data will come out on Friday.

 

Jitipol also advised investors to monitor the political situation in both the US and Hong Kong.

 

Source: https://www.nationthailand.com/news/30388861

 

-- © Copyright The Nation Thailand 2020-06-01

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[worgeordie]

What Thailand needs is a Brexit like problem,then the Baht would fall,

just like Sterling, Maybe someone should go to the vaults and find that

there is not so much foreign reserves as they thought .and they have not

put aside the Submarine money.............anything really........something.

regards worgeordie

 

[Trillian]

2 minutes ago, worgeordie said:

What Thailand needs is a Brexit like problem,then the Baht would fall,

just like Sterling, Maybe someone should go to the vaults and find that

there is not so much foreign reserves as they thought .and they have not

put aside the Submarine money.............anything really........something.

regards worgeordie

 

A simpler solution that would benefit everyone, except Thai business in general is to open up the country to competition, allow foreign products of a high quality, without being subject to tariffs.  Competition would make local business improve their product quality and would increase import value, at the end of the month there would not be any foreign currency for BOT to buy and the baht would become competitive.

[worgeordie]

1 minute ago, Trillian said:

A simpler solution that would benefit everyone, except Thai business in general is to open up the country to competition, allow foreign products of a high quality, without being subject to tariffs.  Competition would make local business improve their product quality and would increase import value, at the end of the month there would not be any foreign currency for BOT to buy and the baht would become competitive.

That would be the last thing ever to happen, everyone knows they would never

be able to compete against real service, competitive prices,and real competition,

regards worgeordie

[yimlitnoy]

5 hours ago, colinneil said:

WOW....they are finally waking up to the fact that keeping the baht artificially high is damaging the economy.

Most people have known that for ages, oh well better late than never.

For Thailand to act otherwise risked to be labeled a currency manipulator by the US, in an open economy exchange rates are dictated by market forces.

[CNXexpat]

58 minutes ago, transam said:

Well then enlighten us all, but in a nutshell eh... ????

Did I wrote that I am an expert? Please show me this part in my one sentence I wrote. 

[fruitman]

4 hours ago, kevin612 said:

No tourists, no problem. Thai baht is still rising, Thai Currency is the god.

The Baht is still better than the chinese RNB....guess that's the problem for it.

[NCC1701A]

22 minutes ago, webfact said:

promised to impose extra measures

maybe they can buy all the bars in Pattaya and Bangkok. 

 

 

[jacko45k]

Relax guys, I transferred some money today, the Baht will surely lose value now.

[Traubert]

13 minutes ago, fruitman said:

The Baht is still better than the chinese RNB....guess that's the problem for it.

Nope, the Yuan is pegged to the  Dollar too.

[kevinsan]

Who needs tourism? Conjure some communist insurgency. Ramp up opium production. Drive it to 20. Like the old days. Afghans are going offline. Someone needs to pick up the slack.

Edited June 1, 2020 by kevinsan

[Brunolem]

46 minutes ago, Trillian said:

That approach would work only if the currency was freely convertible and in unrestricted distribution globally which THB is not.

So they should open the financial gates and let Thai people buy assets abroad, like the Chinese do...

 

Anyway, the actual problem is more about the dollar than the baht.

 

Against the euro, for example, the baht has not performed well in 2020.

 

There is a lot of volatility around the dollar and this could last for a long time..

 

[Trillian]

4 minutes ago, Traubert said:

Nope, the Yuan is pegged to the  Dollar too.

I believe the Yuan is pegged to the value of a basket of foreign currencies since 2006.

 

Since 2006, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. 

 

https://en.wikipedia.org/wiki/Renminbi

[Trillian]

Just now, Brunolem said:

So they should open the financial gates and let Thai people buy assets abroad, like the Chinese do...

 

Anyway, the actual problem is more about the dollar than the baht.

 

Against the euro, for example, the baht has not performed well in 2020.

 

There is a lot of volatility around the dollar and this could last for a long time..

 

Yes and yes. In the first part, BOT has been relaxing the rules that govern the export of funds, that move is designed to open up the currency to foreign markets.

 

In the second part, this is indeed much more about USD and not about THB.

 

[Brunolem]

1 minute ago, Trillian said:

I believe the Yuan is pegged to the value of a basket of foreign currencies since 2006.

 

Since 2006, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. 

 

https://en.wikipedia.org/wiki/Renminbi

In practice the Yuan is pegged to the decisions of the politburo in Beijing...

[Trillian]

5 minutes ago, Brunolem said:

In practice the Yuan is pegged to the decisions of the politburo in Beijing...

Only in the context of the narrow range and the basket of foreign currencies, Yuan value is not completely discretionary.

[grumpy 4680]

      With all the economic woes in Thailand, why doesn't the Bhat go down, The UK Pm, gets a dose of CV, and the pound goes down, so no wonder of all the theories of manipulation.

      Its the big financial tycoons running the UK economy, but here its the military  ?????????

[tlandtday]

Cut down on the money laundering going on here.

[Trillian]

3 minutes ago, grumpy 4680 said:

      With all the economic woes in Thailand, why doesn't the Bhat go down, The UK Pm, gets a dose of CV, and the pound goes down, so no wonder of all the theories of manipulation.

      Its the big financial tycoons running the UK economy, but here its the military  ?????????

Current account surplus derived from trade, high foreign currency reserves and low government debt.

[Kullstar]

We definitely need another bloodless coup???????? That'll fix it.

[Isaan sailor]

10-year average USD/Baht: 32.40

April 2 2020 USD/Baht: 33.08

Todays USD/Baht: 31.68

i’d say they have a problem.  And they need to take some action—not just worry about it.  

This begs the question: who is dumping USD?  We know the major holders of US debt:  The US Treasury, the Bank of Japan, the Bank of China.

[hotchilli]

6 hours ago, webfact said:

"The BOT is worried that a rapid rise in the baht may not be in line with economic conditions which remain fragile," he said.

Amazing Thailand.... tourism now at zero, economy and tourism that was on the slide for 12 months prior to Corvid coming along, and yet the Baht can rise?

[Trillian]

2 minutes ago, Isaan sailor said:

10-year average USD/Baht: 32.40

April 2 2020 USD/Baht: 33.08

Todays USD/Baht: 31.68

i’d say they have a problem.  And they need to take some action—not just worry about it.  

This begs the question: who is dumping USD?  We know the major holders of US debt:  The US Treasury, the Bank of Japan, the Bank of China.

Whilst USD is at the top of the FOREX tree it is itself measured against a basket of currencies, as the value of those currencies fall so does the value of USD, this is known as the Dollar Index. So there's no dumping taking place, USD is simply weakening whilst the value of THB is not, that's what BOT means when it says the value of THB is not in line with fundamentals.

 

https://www.marketwatch.com/investing/index/dxy

[Scouse123]

16 minutes ago, Trillian said:

Current account surplus derived from trade, high foreign currency reserves and low government debt.

 

Agreed,

 

Add to that the unprecedented furloughing, government guaranteed wages of 80% in UK, mass unemployment in the USA, the Brexit fiasco going on affecting Sterling,

 

US/China trade wars, Hong Kong disputes, threats of sanctions and ever deteriorating relations with the US,riots in Hong Kong and now the USA,, record borrowing in the USA, Europe proposed record bailouts to help poorer EU nations get going again,

 

USA, UK and Europe trying all ways to restart their economies etc. A massive global catastrophe.

 

All things considered, Thailand looks a better bet. It isn't down to a few Thai generals this crisis, it's global money markets and those guys are a lot smarter and a lot more ' in the know ' than we are.

 

Sure, Thailand's elite doesn't look after its people, it cares more about its balance sheet, but we all know that.

 

Some guys on here don't realize it's not always Thai baht appreciating, it's their home currencies depreciating against market conditions and record borrowing, quantitative easing, vast money printing etc

 

 

Edited June 1, 2020 by Scouse123

[Cake Monster]

58 minutes ago, worgeordie said:

That would be the last thing ever to happen, everyone knows they would never

be able to compete against real service, competitive prices,and real competition,

regards worgeordie

Only one word springs to mind

" Protectionism "

[Knocker33]

Seem to have this very same headline every couple of weeks

[earlinclaifornia]

40 minutes ago, Trillian said:

Whilst USD is at the top of the FOREX tree it is itself measured against a basket of currencies, as the value of those currencies fall so does the value of USD, this is known as the Dollar Index. So there's no dumping taking place, USD is simply weakening whilst the value of THB is not, that's what BOT means when it says the value of THB is not in line with fundamentals.

 

https://www.marketwatch.com/investing/index/dxy

USD weakness is partially resulting as they spend money (trillions) they are borrowing. trump has weaken the world standing ever since elected. This will all change when President Biden is elected. Americans in Thailand will be rich again.

Edited June 1, 2020 by earlinclaifornia