Thailand's Baht, Peso --- Decline

[gjbkk]

Here is some good news for a change




Asian Currencies Decline on Week, Led by Thailand's Baht, Peso

By Aaron Pan and Shanthy Nambiar
June 7 (Bloomberg) -- Asian currencies declined this week, led by Thailand's baht and the Philippine peso, on concern rising oil prices will widen the region's trade deficit and fuel inflation.
The baht had its biggest weekly loss in three months as Bank of Thailand assistant governor Suchada Kirakul on June 3 said the central bank acted to curb excessive moves in the currency, without saying whether it bought or sold dollars. The peso had an eighth weekly decline after crude oil advanced more than $5 a barrel on June 5. All but one of the most-traded Asian currencies outside of Japan fell this week.
``The Bank of Thailand is grappling with a weakening baht,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``A lot of energy- related companies are buying dollars and hedging their positions on the back of rising crude prices, and that's exerting pressure on the baht.''
The baht fell 1.9 percent this week to 33.13 a dollar as of 4:30 p.m. in Bangkok yesterday, according to data compiled by Bloomberg. The currency will trade between 32.50 and 32.95 next week, CIMB Investment's Suresh said.
The baht has declined 5 percent this quarter, the third- worst performance among Asia's 10 most-active currencies, as investors sold stocks and fuel importers bought dollars.
The peso was the second-worst performer in the region this week. The Philippines imports nearly all its energy requirements and higher oil prices caused the trade deficit to widen to $928 million in March from $79 million a year earlier.
Oil `Spooked Sentiment'
The central bank this week raised its key interest rate for the first time in more than two years after record energy and rice prices pushed inflation to a nine-year high last month.
``Higher oil prices spooked sentiment in the peso despite a rate hike by the central bank yesterday,'' said Catherine Tan, head of regional foreign exchange at Thomson Financial Asia. ``It will put a dent into the trade deficit outlook and may cause a second-round inflation impact.''
The local currency lost 0.2 percent yesterday to 44.127 per dollar, extending its weekly loss to 0.9 percent, according to Tullett Prebon Plc.
The increase in borrowing costs may help strengthen or stabilize the peso, Deputy Governor Diwa Guinigundo said June 5.
Indonesia's rupiah was little changed from last week amid speculation Bank Indonesia will limit its losses to prevent inflation from accelerating.
Bank Indonesia
The currency weakened 2.9 percent in the past three months as crude oil rose by more than a fifth during the same period to $131.07 a barrel in New York, increasing import costs for Southeast Asia's largest economy.
Bank Indonesia on June 5 raised the benchmark interest rate to 8.5 percent from 8.25 percent, less than the half-percentage- point increase expected by economists in a Bloomberg survey.
The central bank ``will opt to protect the stability of the rupiah'' after it raised its borrowing cost, said Masahiro Gao, vice president of the treasury unit at PT Bank Mizuho in Jakarta. ``If rupiah goes down, BI will act.''
The local currency traded at 9,310 yesterday, compared with 9,322 last week, according to data compiled by Bloomberg.
Central bank Governor Boediono said this week he will use all monetary tools to fight inflation. Consumer price gains in 2008 may accelerate to 12.5 percent before slowing to 6.5 percent in 2009, he said.
Indonesia's inflation reached 10.4 percent in May, the fastest in 20 months, after the government raised local fuel prices by 29 percent on May 24 to reduce oil subsidies.
Vietnam's `Currency Crisis'
Vietnam's dong may fall 10 percent by year-end as the government seeks a gradual depreciation to avoid a ``currency crisis'' and a sudden devaluation, according to Calyon, the investment banking unit of Credit Agricole SA.
Accelerating inflation, a widening trade deficit and a near 60 percent slide in local stocks this year have seen the currency decline for three straight months, the longest losing streak since August. The dong, which is allowed to trade within 1 percent on either side of a daily reference rate, will weaken 29 percent in the next 12 months according to trading of non- deliverable forwards.
``The dong depreciation pressure remains strong,'' Calyon strategists including Sebastien Barbe wrote in a research note yesterday, which he confirmed in a telephone interview. ``We expect the dong to soften further to about 18,000 versus the dollar by the end of 2008.''
The dong fell 0.2 percent this week to 16,272.5 versus the dollar, according to data compiled by Bloomberg. The currency has weakened 1.7 percent in 2008. Offshore 12-month non-deliverable forwards traded at 23,850 yesterday.
Elsewhere, the Taiwan dollar added 0.3 percent to NT$30.335 this week. Singapore's dollar was little changed in the week at S$1.3647, while Malaysia's ringgit fell 0.6 percent to 3.2585.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8[at]bloomberg.net; Shanthy Nambiar in Bangkok at snambiar1[at]bloomberg.net.

[Begbie]

I thought when you wrote peso you were referring to the US dollar.

The Dollar was doing well this week until the half wit head of the European Central Bank said in public that he might increase Euro interest rates due to inflation worries. Instant drop in the dollar and an increase in the price of oil by $10 dollars a barrel in one day, which of course will mean inflation.

[good2bhappy]

65 baht to the pound
may it continue

[bkkandrew]

Not one to be smug, but I did forecast this two months ago...

(Offshore Baht hits new 11-year high)https://teakdoor.com/business-finance-and-economics-in-thailand/25317-offshore-baht-hits-new-11-year-13.html#post593262

Thailand not mentioned, but inflation is at least as rampant here as it is regionally. I think that (at long last) the long-anticipated slide of the Baht could be commencing....

[gjbkk]

100baht to the UK pound would do nicely

[bkkandrew]

^This is a distinct possibility, if one ignored the parallel weaknesses stalking Sterling.

On this point, there is an event panning out, which I cannot comment on at this stage, but will post in full in due course. The effects, however, will probably be that GBP follows THB down, maintaining a 65-70 range...

[Begbie]

Interest rate cut ?

[bkkandrew]

^No, a rather large problem in the banking sector. Full details in a week or so...

[thehighlander959]

Andrew
Why can you not comment on this event which will affect currency fluctuation. Are there other market forces at work which prevent you from doing so? or that you have some private investments which outside knowledge could affect.

[bkkandrew]

^Because I don't want to go off half-cocked...

My posts on economic matters are always factual and precise and I am awaiting a couple of answers to be able post a factual, precise summary of events current and their ramifications...

[Begbie]

Thanks Andrew, guess I'll hold off sending money back to the UK for a week or so.

[good2bhappy]

^ but we could make some real dosh, spill the beans and make us rich.

[bkkandrew]

^ but we could make some real dosh, spill the beans and make us rich.

As I said, the trouble with this is that it is not straightforward, THB is being caned due to inflationary problems on one hand and GBP is facing trouble from a banking problem. The two are not linked in any way, so it would be foolhardy to predict which pressures come to bear first...

[Begbie]

Bradford and Bingley just went tits up. Small building society though.

[thehighlander959]

Thanks Andrew for letting us know.I am paid in Euros, maybe there will be some benefits in my exchange rate in the near future. I certainly hope so.

[bkkandrew]

^You are sitting pretty for the time being, with the trend in Eurozone Interest Rates on the up!

[thehighlander959]

Thanks for that Andrew, I do like positive information and good banking intelligence.

[Begbie]

Still being a bit cryptic Andrew. "A Banking Problem" ?

[Rasher]

Hi guys!

I've just registered on this forum, but I have enjoyed reading the posts for quite some time. It is a very informative site with some very knowledgable members.

I too am wondering about the performance of the Euro against the Baht. I was in Thailand last August and the rate was really low (about 42.00, I think).

Now it is over 50.00!

That is quite a difference! Especially when you think about spending €2,500 + for the few weeks!

I am going for my 7th trip to LOS in September.

So, does anyone think the Euro will remain strong, or will it drop by much?

I understand it is impossible to guess accurately FX rates, but I would greatly appreciate any comments and input on this from members who are more clued into finance than I am.

Many thanks,

Joe

[Begbie]

Baht to the Dollar

[Butterfly]

damn, time to do another transfer, last one was only paying 31.5

[thehighlander959]

Could be happy days again if the baht continues to plummet against the western currencies.I am glad that I am salaried in Euros as the effect on the dollar has not really been an issue for me.All I need to do in Thailand is find a decent bank that pays a good interest rate on all Euro transfers into Thailand.
Any suggestions guys?

[bkkandrew]

Allright, I understand that the following events in the UK/US banking sectors have happened:

1. B & B (The UK's largest Buy-to-Let mortgage provider), the 8th biggest UK bank was secretly bailed out by the FED. The reason was that it was about to default on the $4Billion per year purchase contract of mortgages from GMAC, wich, in turn, would have forced GMAC into insolvency.

This was covered up by the 'investment' from the US PE Group and the 'illness' of the Chief Exec, but is becoming more well known in financial circles. This NR II scenario further undermines confidence in the UK and US banking systems.

2. Then we have HBOS.

HBOS are facing the failure of their crucial cash call - the 275p rights offer. The share price is well below the 'discounted' rights price and the fate of one of the World's largest banks lies in the balance. Collapse (possible) or bailout (more likely) would depress Sterling significantly.

Disclaimer:

Don't come running to me with your lawsuit!

[thehighlander959]

Sounds like the UK Pound could be in a bit of trouble. Good information last week Andrew just need to wait for the drop in value now. Am I glad I am paid in Euros not that Euros are bullet proof in the current climate. Willhave top wait and see!!

[ray23]

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