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Thai central bank says outbreak uncertain, ready to introduce more measures


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2021-04-19T103234Z_1_LYNXMPEH3I0NC_RTROPTP_4_THAILAND-ECONOMY-RATES.JPG

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thailand's central bank said on Monday the current COVID-19 outbreak was highly uncertain and it was ready to introduce necessary assistance measures in addition to recent support schemes.

 

The tourism-reliant nation is grappling with a third coronavirus wave that includes a highly contagious variant, which have caused over 14,700 infections in less than three weeks, dealing a blow to its already slow economic recovery.

 

The Bank of Thailand is closely monitoring the situation and discussing with relevant agencies help for retail debtors through support measures and debt mediation, Deputy Governor Ronadol Numnonda said in a statement.

 

Last month, the government approved financial measures worth 350 billion baht ($11.21 billion) to help business cope with the outbreak impact.

 

Monetary policy will ensure that financial conditions are no obstacles to the economic recovery, BOT Governor Sethaput Suthiwartnarueput was quoted by local newspaper Prachachat as saying.

 

Overall liquidity remains sufficient but there is a problem with liquidity distribution to needed areas, he said.

 

The BOT has kept its policy rate at a record low of 0.50% since mid-2020 and will next review policy on May 5.

 

Earlier this month, the BOT said Southeast Asia's second-largest economy could grow less than its forecast of 3.0% this year after the new outbreak.

 

The new outbreak, which accounts for a third of Thailand's cases so far, comes as the country takes tentative steps to reopen to foreign visitors after a year of tightened border controls.

 

($1 = 31.21 baht)

 

(Reporting by Orathai Sriring and Kitiphong Thaichareon; Editing by Martin Petty)

 

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-- © Copyright Reuters 2021-04-20
 
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2 hours ago, sammieuk1 said:

A problem with liquidity distribution could be multiple Swiss accounts held by a small circle of old men 🤔

Not just Switzerland, there are other European countries too who welcome Thai inflows

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Talking of FDI, this is interesting....the BOT report at 4Q20 shows that Thailand reversed huge amounts of FDI in Europe, specifically, they seem to have reversed pretty much all their investments in the UK. For the first time in many years their quarterly FDI abroad was negative, it looks like they are bringing all their funds back home.

 

https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=654&language=eng

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20 minutes ago, Isaan sailor said:

Best thing BoT could do under these circumstances—sink the Baht about 10%. Exports and expats would recover nicely.

So simple isn't it---Just out of interest--how do you do that with a floating currency?

Like step 1= .....  step 2=......

 

The Thai Baht (THB) is the official currency of the Kingdom of Thailand. ... The Baht used to be pegged to the U.S. dollar but has been floating since 1997.Aug 15, 2562 BE--

THB (Thai Baht) Definition - Investopedia https://www.investopedia.com › terms › forex › thb-thai-b.

 

 

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3 hours ago, sanuk711 said:

So simple isn't it---Just out of interest--how do you do that with a floating currency?

Like step 1= .....  step 2=......

 

 

 

Thank you for asking.

Step 1.  Central Bank should reduce their USD reserves.

Step 2. Notify currency traders and major fund managers worldwide that Thailand is no longer an “emerging market” and they should remove it from that grouping.  

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28 minutes ago, Isaan sailor said:

Thank you for asking.

Step 1.  Central Bank should reduce their USD reserves.

Step 2. Notify currency traders and major fund managers worldwide that Thailand is no longer an “emerging market” and they should remove it from that grouping.  

Thank you for answering.

It seems simple enough then--just tell the world wide your not an emerging market, and they stop sending money and the Baht goes down. Then when you are ready you tell that you are an emerging market and they start sending money and the Baht goes up again.

 

I suppose they will all take notice of that and not listen to differing opinions from people like this.

 

Bloomberg business news has named Thailand the top emerging market for 2021

https://thaiembdc.org/2021/01/06/bloomberg-column-names-thailand-top-emerging-market/

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55 minutes ago, Isaan sailor said:

Thank you for asking.

Step 1.  Central Bank should reduce their USD reserves.

Step 2. Notify currency traders and major fund managers worldwide that Thailand is no longer an “emerging market” and they should remove it from that grouping.  

The markets don't care which foreign currencies are contained in the foreign currency reserves, just what the total value is, reducing USD holdings will achieve nothing if the total value of all the reserves remains high. The foreign currency reserves are held in 24 different foreign currencies which are the currencies of their trading partners, plus gold, plus Special Drawing Rights or SDR's. It can be argued that holding SDR's is far more powerful than holding USD and helps influence the value of THB far more because they are stronger and not every country holds them. In practice, BOT may hold 50% of it's reserves in USD or it may hold 1%, we will never know and neither will the markets because BOT never tells hence USD holdings mean very little.

 

Thailand's classification as an EM country is not something it can control, the status of every country's development is determined by the IMF and is nothing more than a label or badge upon which few people apart from the can agree. Technically, Thailand is classed as a developing nation, EM is a category that markets use to help distinguish between mature and immature investments. So feel free to drop the label, that won't change anything.

 

 

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If Thailand really wanted to level the playing field then the measures they would introduce would include removing all import and customs tariffs other than WT tariffs; making THB fully convertible and allowing it to be exported and held freely in every country; allowing foreign business to set up shop here and compete freely. Even if they allowed the first two of those the trade surplus would disappear in flash and the currency would decrease in value substantially. The downside is that Thai products would no longer be protected from foreign competition and chances are that a hedge fund would accumulate THB and force a devaluation, neither of which are allowed to happen currently. Both of these things are long held fears resulting from the '97 crash, they will do anything to avoid a repeat. The other thing that would happen is that favored partner nations such as Japan would lose their market advantage which would cause them to move to other countries, companies such as Toyota and Honda would just go, as would many others.

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1 hour ago, sanuk711 said:

Thank you for answering.

It seems simple enough then--just tell the world wide your not an emerging market, and they stop sending money and the Baht goes down. Then when you are ready you tell that you are an emerging market and they start sending money and the Baht goes up again.

 

I suppose they will all take notice of that and not listen to differing opinions from people like this.

 

Bloomberg business news has named Thailand the top emerging market for 2021

https://thaiembdc.org/2021/01/06/bloomberg-column-names-thailand-top-emerging-market/

Therein lies the problem.  When they classify Thailand as the top emerging market—Joe six-pack back in USA or other western country dumps a certain % of his paycheck into Emerging Markets via his 401k account or done via a pension fund.  And when the Baht rises from this, they pat themselves on the back for selecting Emerging Markets, and continue buying.

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3 hours ago, Isaan sailor said:

Therein lies the problem.  When they classify Thailand as the top emerging market—Joe six-pack back in USA or other western country dumps a certain % of his paycheck into Emerging Markets via his 401k account or done via a pension fund.  And when the Baht rises from this, they pat themselves on the back for selecting Emerging Markets, and continue buying.

So in answer to the original question..... Is ........??

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6 hours ago, Brierley said:

Talking of FDI, this is interesting....the BOT report at 4Q20 shows that Thailand reversed huge amounts of FDI in Europe, specifically, they seem to have reversed pretty much all their investments in the UK. For the first time in many years their quarterly FDI abroad was negative, it looks like they are bringing all their funds back home.

 

https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=654&language=eng

 

Care to speculate as to why that might be?

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38 minutes ago, ParkerN said:

 

Care to speculate as to why that might be?

A cancelled investment opportunity perhaps, or maybe they just want their money back, I really don't know. But looking at their history, it's the first time they've ever done that and it only applies to one country rather than all their FDI.

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Just now, Brierley said:

A cancelled investment opportunity perhaps, or maybe they just want their money back, I really don't know. But looking at their history, it's the first time they've ever done that and it only applies to one country rather than all their FDI.

Nothing to do with Hopewell then?

 

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4 hours ago, Isaan sailor said:

Therein lies the problem.  When they classify Thailand as the top emerging market—Joe six-pack back in USA or other western country dumps a certain % of his paycheck into Emerging Markets via his 401k account or done via a pension fund.  And when the Baht rises from this, they pat themselves on the back for selecting Emerging Markets, and continue buying.

Some perspective: the article named Thailand as the top EM for 2021, that's two Bloomberg journo's, that's all. Secondly, EM's globally should be no more than 10% of an investment portfolio, right now there aren't that many funds that are promoting Thailand as an EM investment opportunity - JPM EM's holds less than 3% Thailand, Asia Focus holds less than 2%, Thailand is a small boutique economy, its currency is something like 0.45% of the global total. No matter what a pair of Bloomberg journo's write about Thailand's potential for investment, it isn't going to cause a flood of money to roll into the SET or into Thai bonds.

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Just now, Brierley said:

Dunno, really, sorry.

Ah well. Another icon gone. If you hear or intuit something- let me know. I'm particularly interested in Hopewell and the goldmine.  Shenanigans and machinations.

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16 minutes ago, ParkerN said:

Ah well. Another icon gone. If you hear or intuit something- let me know. I'm particularly interested in Hopewell and the goldmine.  Shenanigans and machinations.

Off the top of my head....Hopewell was the cancelled MRT project that Thailand was fined THB 20 bill for and dragged through the courts forever, that Hopewell is a Hong Kong company, not a UK company.

 

The gold mine which was as I recall Australian, not British, I think that was Kingsgate or similar..

 

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4 hours ago, Brierley said:

Off the top of my head....Hopewell was the cancelled MRT project that Thailand was fined THB 20 bill for and dragged through the courts forever, that Hopewell is a Hong Kong company, not a UK company.

 

The gold mine which was as I recall Australian, not British, I think that was Kingsgate or similar..

 

Correct on both points IIRC. I am more interested in the gymnastics the Thai government engages in to avoid liability. I've hear these stories before. Silly to enter into a contract of any kind with TL. Next stop World Court in respect of Hopewell if I am not mistaken. Odd how that blew up again about the same time a pooyay became persona non grata in Germany...

 

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On 4/20/2021 at 8:19 PM, ParkerN said:

Nothing to do with Hopewell then?

 

I was looking at Thailand's outbound FDI history, you recall I said that in 2020 they cancelled 10 bill. to the UK. It seems that cancellation was the continuation of a trend, in 2018 outbound FDI was USD 18.5 bill, in 2019 it was USD 12 bill, in 2020 it was negative. This looks more like early warning signals that it's belt tightening time and time to start cutting the stuff that's not absolutely essential.

 

  https://www.statista.com/statistics/945561/thailand-outward-fdi-value/

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Just now, Brierley said:

I was looking at Thailand's outbound FDI history, you recall I said that in 2020 they cancelled 10 bill. to the UK. It seems that cancellation was the continuation of a trend, in 2018 outbound FDI was USD 18.5 bill, in 2019 it was USD 12 bill, in 2020 it was negative. This looks more like early warning signals that it's belt tightening time and time to start cutting the stuff that's not absolutely essential.

 

  https://www.statista.com/statistics/945561/thailand-outward-fdi-value/

 

Hmmm. Belt-tightening. Yes, I could see how that would fit, but I suspect there's more to it. Market psychology is best not to be ignored.

 

I have no real evidence, which I know is important in an evidence-based game, but in recent years I suspect TL is less welcome on the international stage than it would like to claim. Perhaps I'm over-diagnosing but  I have the distinct feeling that TL is viewed increasingly as the interloper at the dinner; the guest who has arrived and nobody quite knows who invited him, but they notice he has a severe halitosis they had not noticed before. Certainly TL's democratic credentials are looking increasingly iffy. In a post-COVID world this would not be good news and if the national honey jar has also been emptied, in a post-Trump world where everyone is trying to impress  with multilateralism and multiculturalism, someone like Prayuth seems likely to be seen as someone without the right badges.

 

Don't know, I'm searching for the words to express a feeling. but I have a notion that TL joining the China fan club has been noticed and not in a good way. Perhaps its nothing, but it's another indicator that all is not well - one of a good few recently.

 

Coffee.

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24 minutes ago, ParkerN said:

 

Hmmm. Belt-tightening. Yes, I could see how that would fit, but I suspect there's more to it. Market psychology is best not to be ignored.

 

I have no real evidence, which I know is important in an evidence-based game, but in recent years I suspect TL is less welcome on the international stage than it would like to claim. Perhaps I'm over-diagnosing but  I have the distinct feeling that TL is viewed increasingly as the interloper at the dinner; the guest who has arrived and nobody quite knows who invited him, but they notice he has a severe halitosis they had not noticed before. Certainly TL's democratic credentials are looking increasingly iffy. In a post-COVID world this would not be good news and if the national honey jar has also been emptied, in a post-Trump world where everyone is trying to impress  with multilateralism and multiculturalism, someone like Prayuth seems likely to be seen as someone without the right badges.

 

Don't know, I'm searching for the words to express a feeling. but I have a notion that TL joining the China fan club has been noticed and not in a good way. Perhaps its nothing, but it's another indicator that all is not well - one of a good few recently.

 

Coffee.

Western nations don't seem to have a problem dealing with African dictators and ME zealots so I doubt that you know who is totally unwelcome, if we can sell them arms or a soccer club in the process, so much the better! And with everyone in the region taking Chinese loans and mortgaging  themselves to uncle Xi, I would have thought that it is in the Wests best interests to remain good chums with TL for as long as possible, especially with the neighbors acting up as they are. It's interesting though that TL declined the offer of Chinese loans to build the high speed rail link and instead went with domestic loans, that was seriously smart. I think TL views all foreigners in a similar way, even the Chinese, they are a source of tourist revenue, no more no less. My take on the outbound FDI is that .gov realized in 2018 that all was not well, inbound FDI flows were favoring Vietnam and Thailand's competitiveness in the region was looking less stellar than before. Cancelling, or at least scaling back outbound FDI, was a move to improve the balance sheet, no more, no less.

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Just now, Brierley said:

Western nations don't seem to have a problem dealing with African dictators and ME zealots so I doubt that you know who is totally unwelcome, if we can sell them arms or a soccer club in the process, so much the better! And with everyone in the region taking Chinese loans and mortgaging  themselves to uncle Xi, I would have thought that it is in the Wests best interests to remain good chums with TL for as long as possible, especially with the neighbors acting up as they are. It's interesting though that TL declined the offer of Chinese loans to build the high speed rail link and instead went with domestic loans, that was seriously smart. I think TL views all foreigners in a similar way, even the Chinese, they are a source of tourist revenue, no more no less. My take on the outbound FDI is that .gov realized in 2018 that all was not well, inbound FDI flows were favoring Vietnam and Thailand's competitiveness in the region was looking less stellar than before. Cancelling, or at least scaling back outbound FDI, was a move to improve the balance sheet, no more, no less.

Seems fair, but I am increasingly aghast at the likelihood of conflict in the South China Sea, and around the whole Hong Kong issue. TL will take Chinese loans because quite soon, they are the only country that will lend the money, and they've done it to themselves, but you are right, TL regards all foreigners with suspicion but it does bother me a little that many people regard that as including China.  Personally, I don't, and that is  because the large Chinese contingent in Thailand business is not completely an asset.  But I've been wrong before, more times than I care to think about.

 

 Another coffee.

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9 minutes ago, ParkerN said:

Seems fair, but I am increasingly aghast at the likelihood of conflict in the South China Sea, and around the whole Hong Kong issue. TL will take Chinese loans because quite soon, they are the only country that will lend the money, and they've done it to themselves, but you are right, TL regards all foreigners with suspicion but it does bother me a little that many people regard that as including China.  Personally, I don't, and that is  because the large Chinese contingent in Thailand business is not completely an asset.  But I've been wrong before, more times than I care to think about.

 

 Another coffee.

It helps me sometimes to ask, what would I do if I were him, in this situation. Given my proximity to China,. the reliance of my neighbors on China, the reliance of my country on Chinese business, the dominance that China is likely to have on the global economic and political scene within five year, etc etc, the answer usually is, pretty much the same thing. Of course, if I thought that the global community could do much about a Chinese invasion of Taiwan et al, at a time when Russia is sabre rattling, I might see things differently, as things stand I don't think they can prevent much of anything.

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Just now, Brierley said:

It helps me sometimes to ask, what would I do if I were him, in this situation. Given my proximity to China,. the reliance of my neighbors on China, the reliance of my country on Chinese business, the dominance that China is likely to have on the global economic and political scene within five year, etc etc, the answer usually is, pretty much the same thing. Of course, if I thought that the global community could do much about a Chinese invasion of Taiwan et al, at a time when Russia is sabre rattling, I might see things differently, as things stand I don't think they can prevent much of anything.

 

And, FWIW, I fully agree. The only refuge for Prayuth is in China. But that is not how the USA sees it at all. Of course the USA has a world domination agenda and everything has to be seen with that as a backdrop.  Sadly if hostilities were to break out, the USA would make sure that the connections between Taiwan, Hong Kong, SCS and Korea are both obvious and of strategic interest, even if they required some confecting.

 

A little personal viewpoint here might be useful.  Personally I think USA is finished, and I think it's been finished for some time.  Civilisations rise and civilisations fall the USA is now falling,  and the only question is who is going to rise to take its place.  I don't see any argument against the proposal that it must be China. Russia by now is an 'also-ran', North Korea is too small and ineffective, it has to be China.  It doesn't mean I agree with the fact that it's got to be China it's just the fact that it is too obvious to ignore. There will be the inevitable posturing and sabre-rattling, but at the end of the day the USA will be on the losing end of the equation and will have to come to terms with the fact that there will be a new global power which has outmanoeuvred it, and out-worked it. My opinion FWIW.

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