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Thai Baht Breaks Through 32 To The US$

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CURRENCY

Baht breaks through 32 to the dollar

By Siriporn Chanjindamanee

The Nation

The baht drove past the psychological level of 32 per US dollar yesterday, thanks to the flow of foreign funds into the stock market - an inflow that could spike dramatically if the political solution and Map Ta Phut environmental crisis were to be resolved, analysts said.

Much of the inflow has been put into the stock exchange. From June until August 5, foreign investors maintained a net-buy position, with stock purchases outstripping sales by Bt15.9 billion. In May, they were net-sellers to the tune of Bt58 billion, following the political upheaval.

They have returned due to the country's stellar economic growth and listed companies' better-than-expected earnings growth.

Prapas Tonpibulsak, chief investment officer at Ayudhya Fund Management, referred to Goldman Sachs research when saying earnings of listed companies in all Asian markets would grow 31 per cent on average this year, led by Taiwan at 90 per cent, South Korea (51 per cent) and China (25 per cent). Thai firms are expected to grow 19per cent.

The news was unexpected and surprised foreign investors. For Thailand, despite the political unrest, gross domestic product is expected to rise 7.5 per cent this year and 5 per cent next year. Meanwhile, listed companies' earnings should grow 15-20 per cent this year, he said.

"More funds could enter Thailand if the political turbulence and the Map Ta Phut crisis are cleared."

Still, if the political situation hit a further turbulent phase, the SET Index could plunge 15 per cent. It could also fall 10 per cent without any turbulence, as a correction from the recent rapid advances.

The baht gained 0.7 per cent yesterday to its highest level since May 2008, at 31.92 per dollar. The gain weakened to 31.96 in the afternoon.

"Money has been flowing into the region, putting appreciation pressure on currencies," Hideki Hayashi, a global economist at Mizuho Securities in Tokyo, told Bloomberg. "When you compare growth in Asia and the rest of the world, you want to invest in the region. The baht will continue to have a strong bias," he said, adding that the currency could reach 31.90 this week.

Finance Minister Korn Chatikavanij conceded the baht's appreciation was inevitable in light of economic expansion, and extraordinary export growth. "The strengthening is natural. Despite the Bank of Thailand's monitoring, we can't avoid the fact that baht demand is growing over dollars," he said, urging all businesses involved with foreign-exchange rates to adjust to the changes.

Asia Plus Securities said in its research that fund inflows would continue to push the stock market up, but the index could moves "sideways" due to renewed interest-rate rises, which could force some local investors to sell shares.

Many brokerage houses expect the Monetary Policy Committee to increase the policy rate by 0.25 basis points at its meeting on August 25.

Asia Plus said a correction was also in the picture, as the SET had gained 14 per cent in two months. While foreign investors are returning, local institutional investors may sell to make profits.

Capital Nomura Securities said in its research that the Thai market was slightly overweighted by foreign fund managers, as were the markets in Indonesia, China, Hong Kong and India, which indicated more inflows to come.

Charl Kengchon, managing director of Kasikorn Research, is convinced the stronger baht will not damage Thailand's exports.

So far this year, the baht has gained 4 per cent against the greenback, compared to 9 per cent for the yen and the Malaysian ringgit, 5 per cent for the Indonesian rupiah and 1 per cent for the Chinese yuan.

The research house maintains its view that export value this year should expand 26 per cent, while GDP will grow by at least 6 per cent.

He said forex volatility could be more severe. Foreign money was shifting to Asia, seeking better returns as investors fretted about the US economy. They believe the US could maintain a low-rate policy for a while, but that rates could move quickly if the giant economy were to make a surprisingly sharp move in the right direction.

While expecting the global gold price to hit US$1,200 (Bt38,358) per ounce this week on concern over the weakening US dollar, Globlex Holding also warned that the situation might easily reverse.

nationlogo.jpg

-- The Nation 2010-08-10

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Does that mean that my Baht can buy more when I shop at Gaysorn this weekend? Louis Vuitton & Gucci, here I come.

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Does that mean that my Baht can buy more when I shop at Gaysorn this weekend? Louis Vuitton & Gucci, here I come.

Dream on, Thai economy is based on monopoly. Will be lucky if the price don’t go up

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The baht almost always appreciates more as we approach/go through the tourist high season which starts around Oct. Plus, western currencies ain't worth what they use to be.

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Sounds like bitter taste for expat Americans on retirement here. Not so great for the exuberance...

Edited by xenomorph

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Predicting the dollar is fairly simple: it has to follow the UK lead of devaluation by quantitative easing, thus paying down a few debts, making exports competitive and quenching imports. So, quite possibly we could see a devaluation of 10% or more against stable currencies ( of which there aren't many).

Generally Asian currencies are set to strengthen further it seems. The Thai Baht is a heavily manged currency and quite what the 'natural' level is who knows!

So it really is very difficult to predict where the exchange rate will go, save to say probably downwards by dint of the dollar's imminent devaluation.

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I use the Oanda converter. It has been below 32 twice in the last two week. They post in the morning and that is all they show through the day. It has been flirting around .32 for quite a while now. Down 10% Lets hope that is all. Of course you are going to get different answers at different times of the day depending on whitch converter you use.

Edited by jayjay0

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This strengthening of the baht makes life more difficult for us farangs who work abroad but try and maintain a life here in Thailand. Basically Thailand is becoming more and more expensive for us. What I am seeing is that less farangs are coming over from Europe or the US; the flight is becoming more expensive and there are much cheaper places to visit closer to home. So how far can you take downsizing your life here in Thailand before you decide you can no longer afford it and up sticks to live elsewhere, or simply give up the presence you maintain in Thailand? For me I have seen Thailand modernise so much that it has lost alot of the original charm that brought me here. Maybe its time to move somewhere much cheaper and less developed? All I can say is that it is constantly on my mind.

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This strengthening of the baht makes life more difficult for us farangs who work abroad but try and maintain a life here in Thailand. Basically Thailand is becoming more and more expensive for us. What I am seeing is that less farangs are coming over from Europe or the US; the flight is becoming more expensive and there are much cheaper places to visit closer to home. So how far can you take downsizing your life here in Thailand before you decide you can no longer afford it and up sticks to live elsewhere, or simply give up the presence you maintain in Thailand? For me I have seen Thailand modernise so much that it has lost alot of the original charm that brought me here. Maybe its time to move somewhere much cheaper and less developed? All I can say is that it is constantly on my mind.

Depends on who you ask. The still active and fairly young working guys, like myself, can always move on to another place.

But the retired ones who moved here because hope of a better life than back home due to low retirement payouts, are probably stuck here and left to what devices they may have left in life. Moving back home is not an option either, since they've probably spent their savings on a house somewhere in the outskirt villages which will render impossible to sell for a decent price. I'll guess a condo in a bigger city would be easier to sell though. The low retirement payouts doesn't offer a livable life back home either. Many are also in more or less bad health with hearth conditions, on medication and such. So... For great deal, the low dollar rate is no fun reading at all.

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I've seen it 20 & I've seen it 55. Some of you Chicken Little's need to buy an umbrella.

Americans don't obsess over it like POM's do.

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I've seen it 20 & I've seen it 55. Some of you Chicken Little's need to buy an umbrella.

Agreed! 214326-Royalty-Free-RF-Clipart-Illustration-Of-Two-Hands-Shaking-Over-Orange.jpg

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Does that mean that my Baht can buy more when I shop at Gaysorn this weekend? Louis Vuitton & Gucci, here I come.

Sadly, no. Every time the baht gets weak, imported products rise slightly in price. But when the baht gets strong, the price never comes down. It's really frustrating.

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If I'd have to venture a guess, it probably has to do with the US printing money like there's no tomorrow. Helps paying down trillions in debt, etc. It all makes sense I think, America is going to get cheaper, perhaps a lot cheaper, and Asia is getting more expensive, all has to do with the relative performances of the economy.

I still don't know who in their right mind would invest in a place like Thailand but it seems like there's many willing to take the risk, and it must be working out just fine for many, too. Not just Thailand I am just always surprised businesses have absolutely no qualms investing in a 3rd world country where laws don't really exist; I suppose it's just another risk aspect, and if you'd invested in the USA in the boom cycle you'd be just as screwed now as when the reds here rise again, or the airport gets blocked.

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Does that mean that my Baht can buy more when I shop at Gaysorn this weekend? Louis Vuitton & Gucci, here I come.

Dream on, Thai economy is based on monopoly. Will be lucky if the price don't go up

To be fair, all modern economies are based upon fancy and illusion. Wealth is imaginary.....very dangerous, in time.

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Predicting the dollar is fairly simple: it has to follow the UK lead of devaluation by quantitative easing, thus paying down a few debts, making exports competitive and quenching imports. So, quite possibly we could see a devaluation of 10% or more against stable currencies ( of which there aren't many).

Generally Asian currencies are set to strengthen further it seems. The Thai Baht is a heavily manged currency and quite what the 'natural' level is who knows!

So it really is very difficult to predict where the exchange rate will go, save to say probably downwards by dint of the dollar's imminent devaluation.

Quantitative easing ... an expression selected by UK Bankers and Politicians in order to prevent the wording "money printing" since the general public, the working classes, would be aware of the negative results of "money printing" for the national economy, and in particular the reduction in the value of their currency, but "quantitative easing" is something they are not sure about, hence the selection of the wording ... Q.E.

On this forum however we do not have the obligation to conceal the activity of "Money Printing" thus their is no need to use the expression ... quantitative easing.

The public resents devaluation of their currency, in the UK in the mid 1960's (for economic reasons) the then P.M. Harold Wison devalued the GBP by 8%, and in order to prevent public protests we went on TV and stated ... > the devaluation does not affect

"the pound in your pocket" < this silly statement hunted him for the rest of his life.

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