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  1. #1
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    Baht 'may hit 30 to $'

    Baht 'may hit 30 to $'

    Experts urge BOT to be vigilant






    A currency expert believes the baht could rise to 30 to the US dollar due to market mechanisms if the Bank of Thailand (BOT) does not intervene in the level of the currency, while exporters urged the central bank to slow the baht's appreciation.

    Adisak Kammoon, vice president of KGI Securities (Thailand), said the movement of the baht would have to be closely monitored.

    "The Bank of Thailand still doesn't let the baht move freely according to market forces, which is considered dangerous because it may quietly lead to another financial crisis," he said. "Thus, as long as the Bank of Thailand is not confident that the exporters will be able to compete on their own, it is unlikely that the 30 per cent capital control will be revoked. There is a possibility that there may be additional measures to prevent the baht from rising further. If the baht is allowed to move according to the market, the level of the baht should be Bt30."

    His comments came after the baht turned stronger to a fresh 10-year high at Bt34.19-34.21 yesterday compared to the closing value of Bt34.33 on Tuesday, mainly due to inflows to the stock exchange. The Thai stock market has rallied for three days in a row, boosting the SET index by more than 20 per cent. The baht also appreciated by 0.51 per cent against the euro from Tuesday and 0.36 per cent from last month. The baht against Japanese yen was up 0.45 per cent from Tuesday and 0.15 per cent from last month.

    The baht has turned dramatically stronger compared with major currencies. It opened yesterday at Bt34.20 to the greenback, up 0.47 per cent from Tuesday and 0.96 per cent from the end of June.

    A trader said the baht rose further after it broke the Bt34.50 barrier. "Some Thai exporters sold dollars in big lots yesterday," said the trader, who asked not be named.

    The Customs Department said it has so far lost Bt3 billion in revenue due to the baht appreciation, which has recently touched a 10-year high, as well as the country's obligation to follow the Asean Free Trade Agreement (Afta).

    Customs Department director-general Chavalit Sethameteekul said yesterday the stronger baht and lower income from Afta will cost the department around Bt3 billion in lost revenue.

    He said in the third quarter the department expected to collect around Bt20 billion in revenue or around Bt7 billion per month. The department is likely to collect around Bt88 billion in tax revenue for 2007 fiscal year, while revenue in the next fiscal year is forecast at a slightly lower figure of Bt87 billion. The department's income will fall next year mainly due to further tariff cuts following Afta obligations.

    Meanwhile, the private sector has called on the BOT to find measures to curb the baht's appreciation after it was quoted yesterday at Bt34.17 per dollar.

    The Federation of Thai Industries (FTI) will meet the central bank in a week or two if the baht keeps getting stronger, its chairman Santi Vilassakdanont said. He said the appreciation was caused by the flow of capital into Thailand's stock market and the influx of dollars from exporters.

    He said the BOT has to consider whether the stronger baht was in line with other countries in the region.

    Santi said the Thai currency market was more vulnerable to flows of foreign capital compared to other countries such as China, Japan and Vietnam due to the country's fewer regulations.

    Although the total value of exports in the first half grew around 16 per cent, this does not mean that exporters will enjoy that growth, he said. On the contrary, they had to boost their exports in order to keep their customer base, while they could not earn any profit.

    Nonetheless, Santi believes the country's export value will grow by 12.5 per cent - the same as the Commerce Ministry's target at the beginning of this year.

    Boonkij Jitngamplang, chairman of FTI's Gem and Jewellery Industry Club, said operators in this industry were seriously affected by the stronger baht.

    "If the BOT is unable to stabilise the baht, we will see a number of gem and jewellery operators close down their business this year," he said.

    However, the central bank sees no need to intervene.

    BOT deputy governor Atchana Waiquamdee said so far the baht has appreciated by four per cent from the beginning of this year but the central bank does not need to step into the market to halt the baht's movement.

    "It is normal that the baht is stronger when there is demand for baht but we do not need to take care of it specifically," she said.

    She conceded that the withholding reserve requirement could not prevent the appreciation of the baht as the measure did not cover portfolio investments by non-residents.

    BOT governor Tarisa Watanagase said a large amount of capital has flowed into the country over the past few days but the baht movement remained in line with regional currencies. The baht rose by 5 per cent from the beginning of the year, compared to the Philippines peso at 6.7 per cent and the Indian rupee at 8.9 per cent.

    The foreign funds flocking to the Thai bourse reflected the Kingdom's sound economic fundamental factors with a low P/E ratio.

    Tarisa said despite the amount of foreign inflows into portfolios earlier, the baht had been stable due to demand for dollars from importers. The appreciating baht, however, does not translate into an absolute disadvantage for Thailand as it also indicated an increase in the Kingdom's purchasing power for imported goods.

    She said the BOT would intervene in the foreign exchange market whenever the baht swung too much, just like in December last year when it appreciated by one per cent a week.

    The BOT has encouraged institutional investors to invest abroad in order to increase investment choice and reduce pressure on the strong baht. However, they have exercised their rights to only 27 per cent of the approved ceiling. Last year, such investments increased sevenfold compared with 2005.
    Deputy Prime Minister and Industry Minister Kosit Panpiemras attributed the rise of the baht to the fact that the business sector has began to become convinced that the Thai economy will be resolved for the better.

    Anoma Srisukkasem,

    Chalida

    Ekvitthayavechnukul
    The Nation

  2. #2
    Rhubarb, rhubarb, rhubarb
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    It's the US dollar that is fucked. Expect the greenback to gain some value next year when the Chimp departs.

  3. #3
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    Quote Originally Posted by Sir Burr
    Expect the greenback to gain some value next year when the Chimp departs.
    Too bad I had to spend two million baht while the chimp was in charge....

  4. #4
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    Quote Originally Posted by William
    However, the central bank sees no need to intervene.
    The usual "mai pan rai" attitude, hell break lose and businesses are being fucked, but hey everything is fine

  5. #5
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    Quote Originally Posted by Sir Burr
    It's the US dollar that is fucked.
    Strange that when you consider that the US economy is in the best shape it has been for a long time.

    William is just pissed off because his high-rolling US income is taking a battering. At least it should stop him paying for everyone's drinks every time we go out.

  6. #6
    Rhubarb, rhubarb, rhubarb
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    Quote Originally Posted by Marmite the Dog View Post
    Strange that when you consider that the US economy is in the best shape it has been for a long time.

    William is just pissed off because his high-rolling US income is taking a battering.
    As is mine.
    The problem is that the USA is the biggest debtor nation on earth. It spends more than it makes. Other countries are financing the USA's spending habit.

  7. #7
    ding ding ding
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    last year alone the US printed paper dollars equivalent value to half of the gold in the world!

  8. #8
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    Buggering me over as well. Baht to Won has cost me a fair whack of my monthly salary now.

    Lost over 9k a month since moving out here.

    The pounds is another one to watch though. Another interest rate hike is due or has just passed.

    I was reading about the holy grail of $2.5 to the pound.

  9. #9
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    Bangkok Post Tuesday 10th july:

    Eased rules cause baht to surge

    Capital inflow after swap rules changed

    PARISTA YUTHAMANOP
    The baht continued to gain ground against the US dollar yesterday, reaching a new 10-year high at 33.77/8 to the greenback. The gain came as the Bank of Thailand announced that it would allow foreign investors to renew swap contracts with local banks for certain transactions over a one-month window. The move aims to reduce the gap between local and offshore rates. The baht was quoted at 31.65 to the dollar in offshore trade.

    Most Asian currencies closed higher yesterday against the dollar on expectations of stronger economic growth and continued capital inflows into the region. Regional equity markets also closed higher, with Sydney, Mumbai, Hong Kong, Jakarta and Seoul all closing at all-time highs.

    Suchart Sakkankosone, the senior director for the central bank's exchange control and credits department, said hat foreign investors could now hedge their currency exposure for certain transactions with local banks.

    The rule change would help reduce the gap between the onshore and offshore markets, he said.

    The baht has effectively been split between the onshore and offshore markets since last December, when the Bank of Thailand imposed stringent capital controls to curb ''hot'' capital inflows that had led to a 15% appreciation of the baht in 2006.

    Mr Suchart said the regulatory change would help foreign banks and non-resident investors who had undertaken currency swaps with hedging in the offshore market. These markets came under pressure due to low liquidity following the 30% reserve rule on inflows imposed on Dec 18.

    The central bank would now allow foreign investors to hedge their exposure in the domestic market for transactions matched with an underlying investment as long as that investment originated before Dec 19, 2006.

    Investors unable to complete the transaction within the timeframe could apply for an exemption from the central bank.

    Mr Suchart said that onshore swaps for qualifying transactions would be exempted from the 30% reserve rule, and could be taken from July 16 through Aug 17.

    He said the thin liquidity in the offshore market meant that investors closing open positions faced higher financing costs due to the baht's scarcity. This in turn resulted in further pressure on offshore rates for the baht to appreciate, which had a psychological impact on domestic rates.

    ''Before the 30% reserve rule was imposed, there was no rule that hedging had to be made with Thai institutions. As a result, some foreign investors undertook hedging transactions with foreign institutions,'' he said.

    Mr Suchart stressed that foreign investors could sell dollars onshore to close contracts only to match their actual investment transactions priced at existing market rates.

    The offshore contract could only be closed with an onshore contract at the maturity date of the original deal, he added.

    The Dec 18 rule required foreign investors to set aside a 30% reserve for inflows into certain asset classes.

    But the rule has been made largely moot, with exemptions offered for foreign direct investment and equity investments. The central bank has also waived the rule for inflows fully hedged against currency risk.

    Usara Wilaipich, a senior economist with Standard Chartered Bank, said the measure would help to narrow differentials between onshore and offshore baht exchange rates.

    ''In the end, the measure will help to improve sentiment. The closer gap between the two markets should prove supportive for the central bank's lifting of the 30% reserve requirement in the future,'' she said.

    But a local treasurer, who asked not to be named, said the measure could result in more Thai currency circulating in the offshore market.

    ''The measure would help to bring the offshore baht rate and swap premiums closer to the onshore market. But it may fail to address the long-term problem,'' he said.

    The measure would increase the central bank's workload as it limited the screening process to a one-month period.

    ''The central bank should allow investors to obtain baht liquidity gradually, instead of setting 'golden minutes'. There could be limitations as to how well the central bank could screen cases,'' the trader said.

    Thiti Tantikulanan, the head of capital markets at Kasikornbank, said that recent trends indicated that the baht would continue to appreciate.

    The currency could possibly reach 33.70 to the dollar by the end of the week.

    ''The baht is likely to continue to strengthen due to strong fundamentals. For instance, Kasikorn Research Center projects the current account surplus this year to be as high as $12.5 billion,'' he said.
    Mr Thiti said the central bank's rule change yesterday would have no real impact on the currency, noting that the baht continued to strengthen in intraday trade.
    Lord, deliver us from e-mail.

  10. #10
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    Well, my life is now toast....

  11. #11
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    Buy gold BH.

  12. #12
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    Quote Originally Posted by mrsquirrel
    Buy gold BH.
    With what?

  13. #13
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    bottle caps and conkers

  14. #14
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    Sir Burr's Avatar
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    BH,
    Stop buying beer in bottles and buy in cans. The cans sell for 0.25 Bt per can scrap value. Amazing how it all adds up over a few months.

  15. #15
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    Quote Originally Posted by Sir Burr
    Stop buying beer in bottles and buy in cans. The cans sell for 0.25 Bt per can scrap value. Amazing how it all adds up over a few months.
    I do buy cans. I've got nearly a full bag of them now, ready for sale. I usually get about 200 baht per big bag which buys beer for a couple of days. Maybe I'll buy gold this time instead!

    I must admit though that it is a bit embarrassing to be the only guy on the soi with a huge bag of empties in the car port. Of course, sales day brings more than a few glances from neighbors as Recycle Lady weighs them all out.

  16. #16
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    Begbie's Avatar
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    Plastic bottles can also be sold for a bit of cash. Made about 70 baht last month from this alone.

  17. #17
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    ^^ not embarrasing selling them like that. We will start to worry if you ever announce you go looking for the empty ones in trash cans though

  18. #18
    ding ding ding
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    TT rate for incoming dollars today is 33.53.
    gbp is 67.47
    euro is 45.54

  19. #19
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    SIAM CITY BANK PLC.
    CURRENCY EXCHANGE RATES



    DATE:
    10/07/2007


    TIME:
    09:26


    UPDATE #
    5

    For indicative rate only
    Currency Bank Note Buying SellingBuying Selling Sight T/T T/T&D/D
    US$:1$ 32.50 33.76 33.45000 33.55000 33.75000
    US$:5-20$ 32.88 33.82 - - -
    US$:50-100$ 33.28 33.89 - - -
    EUR 45.27 46.26 45.46875 45.56250 46.06250
    JPY/100 26.77 27.51 27.06250 27.12500 27.50000
    GBP 66.64 68.35 67.34375 67.50000 68.15625
    CHF 27.09 27.85 27.40625 27.46875 27.84375
    MYR 8.04 10.34 UNQ. UNQ. UNQ.
    SGD 21.86 22.38 21.96875 22.00000 22.31250
    HKD 4.20 4.37 4.23750 4.28125 4.33125
    AUD 28.41 29.26 28.62500 28.68750 29.15625
    NZD 25.76 26.54 25.90625 25.96875 26.40625
    InR - - 0.73750 0.75000 0.93750
    CAD 31.44 32.35 31.68750 31.75000 32.34375
    CNY 3.75 4.74 - - -
    DKK 5.90 6.23 6.08125 6.12500 6.21875
    NOK 5.61 5.82 5.70625 5.75000 5.81250
    SEK 4.84 5.04 4.92500 4.93750 5.03125
    KRW/100 3.11 3.90 - - -
    Remarks :
    The above rates are subject to change without prior notice.
    For firm rates, please contact Treasury department tel.0-2208-5201 - 4
    For bank notes, please contact Foreign Exchange and Remittance Department tel. 0-2208-5157 - 8, 0-2208-5165

    -->

    I heard that the siam city is one of the best rate for walk in transactions for small amounts...

    The Swiss franc for TT was at 27.88 last week and now a bit lower...
    Last edited by forreachingme; 10-07-2007 at 11:11 AM.

  20. #20
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    Thursday, July 12, 2007
    1 US Dollar = 31.22467 Thai Baht

    should they rename the USD the US peso?

  21. #21
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    That's the offshore rate, not the onshore rate, which according to the Bangkok Post is 33.45 / 48.

  22. #22
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    Thick bastard that I am I really don't understand this dual rate, I got 25,000 New Zealand dollars sent this AM and got the "onshore rate".
    Mai cowjai

  23. #23
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    Unprepared for strong baht


    The sudden emergency over the value of the national currency displays deep and alarming problems in both the political and economic establishments. Ten years after the 1997 devaluation triggered a regional recession, the reversing fortunes of the baht threatens a similar result.

    A large factory has slammed the doors on its workers, and thousands of small businesses are said to be on the edge of insolvency. Ministers are rushing between meetings and press conferences. Most lamentably, taxpayers are once again seen as the only way out of a problem that was foreseeable and mostly preventable.

    Once again, authorities and the business community seem to have turned a possible opportunity into a deep crisis. The lack of preparation for a rise in the value of the baht is particularly stunning given the fact the currency has been on a steady increase for well over two years.

    In July of 2005, the value of the baht was hovering at around 42 to one US dollar. Figures show that the value of the baht has increased gradually and without drama. Through political crises and a military coup, the baht kept rising. Yet now, authorities seem flabbergasted to discover that the national currency has ''suddenly'' climbed in value.

    Phongsak Assakul, president of the Thai Textile Manufacturing Association, claimed that the garment industry could lose 300,000 of the one million existing jobs. Hundreds of important companies could be ruined. Mind you, this is the same association that warned in 1997 that the baht devaluation could cost half the industry jobs because the cost of importing raw materials had risen too fast.

    The public must be forgiven if it is sceptical about this. What seems to have happened is that a highly profitable business refused to adjust to reality and plan for the future. The fact is that in 1997, textile moguls and economists alike widely criticised the garment trade as a sunset business. The Thai textile industry was founded more than 30 years ago with the strategy of high-intensity assembly lines staffed by tens of thousands of low-paid workers. Hundreds of thousands of poorly educated workers, primarily young women, put Thailand on the world map as the producer of low-cost pants, shirts, socks and coats for countries around the world.

    Since then, little has happened. A handful of bright young business people have moved their factories and workers up the evolutionary chain. Their educated, motivated workers and managers produce high-class goods, and receive salaries and bonuses accordingly.

    Most factories, however, have stuck stubbornly to their old ways. Their workers are still low-paid, their production is unimaginative and mostly unattractive. Technology, modern marketing and quality control is so bad that Thailand is being replaced by other countries able to produce such low-quality goods at even lower prices. Vietnam, Cambodia and China are among the nations eager for the work.

    As unprepared as a grasshopper in the rainy season, the textile business now is crying crocodile tears. The baht is rising, all is lost. Last week, a Bang Phli factory locked out 5,000 workers and then came running to the government for help. Everyone conferred and helped the company raise 500 million baht for the sake of those workers. This is no way to do business.

    Nor can taxpayers afford to support tens of thousands of workers victimised by basic business errors of their bosses.. Finance Minister Chalongphob Sussangkarn, effectively this government's economic tsar, has been relaxed in this crisis. The Bank of Thailand, especially Governor Tarisa Watanagase, has appeared perplexed and puzzled about just how to proceed.

    But Mrs Tarisa is also right. The country cannot afford to try to fight the world's currency market trends. The US dollar has continued to fall, and the baht is destined to rise, along with most other world currencies. Since 1997, successive governments have ignored warnings to ease dependence on exports. Industry has refused to move up the quality supply chain, or to put up provisions for the inevitable rainy day.
    It is disappointing, to say the least, that the country is being let down so badly by both our political and business leaders.
    I think I just saw four horsemen ride by.

  24. #24
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    good article, except they forget to mention that after the 1997 crisis, it was impossible (lack of funding, duh) to "upgrade" those businesses, the country was fucked. With no strong tax base, the government couldn't finance in the middle of a decade long economic crisis, the incentives to upgrade the country economic model. So instead they kept doing what they could.

    Poor excuse ? I don't think so, properly education here doesn't exist and without a government dedicated to it, I don't see it happening by miracle.

    I suspect the current run of the THB is speculative, once more, like it was in 1997. Who is doing it ? The Japanese ? The massive inflows of farangs ? the strong exports ? without the right statistics that even the government doesn't seem to have, it's hard to say.

  25. #25
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    its not just a Thai phenomenon. I just did an article about Indonesia.

    The once active Bandung textile industry has ceased in recent years. Premises converted to factory outlets for Chinese made items.

    Call it the 'China Syndrome'.

    Indonesia has its natural resources to fall back on. What does Thailand have?

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