Thread: Baht Set for Biggest Monthly Drop in 15 Months on Fund Outflows

I know nothing about the world of finance and economics but I would like this to be true.




Baht Set for Biggest Monthly Drop in 15 Months on Fund Outflows

May 30, 2010, 11:09 PM EDT


By Yumi Teso


May 31 (Bloomberg) --



Thailand’s baht headed for its biggest monthly decline since February 2009 as overseas funds offloaded stocks on concern political violence in the nation’s capital and Europe’s debt crisis will slow economic growth.


“The European crisis may slow exports at a time when domestic demand is already hurt by the political turmoil,” said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “The central bank will probably have to delay the timing of any rate hike, making it better to buy bonds. The baht may stay under depreciation pressure.”


The baht dropped 0.6 percent in May to 32.54 per dollar as of 8:41 a.m. in Bangkok, according to data compiled by Bloomberg. It climbed 0.1 percent today. The currency may fall to around 32.80 in June, Nishihama said.


Losses from tourism revenue and investments because of the rallies may shave about two percentage points from economic growth this year, Finance Minister Korn Chatikavanij said May 24. The finance ministry, which estimates the economy may grow 4.5 percent this year, will revise the forecast on June 29, Satit Rungkasiri, head of the fiscal policy office, said May 26.


The baht gained today on speculation exporters bought the currency, according to Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl, the nation’s biggest lender.


“The current level of the baht may be a good level for exporters to sell the dollar,” Disawat said.


Bonds and Swaps


The yield on the 3.875 percent bond maturing in June 2019 dropped 17 basis points, or 0.17 percentage points, to 3.33 percent on May 27 from the end of April, according to the Thai Bond Market Association. Domestic financial markets were closed on May 28 for a holiday.


The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, was little changed today at 1.32 percent and fell from 1.56 percent on March 12 when the anti-government rally began. The drop signals investors pared bets as to when the central bank will increase borrowing costs.
The Bank of Thailand, which next meets to review monetary policy on June 2, has kept its benchmark interest rate at 1.25 percent since April last year, the lowest level since July 2004.


“The central bank cannot raise rates anytime soon,” Dai- ichi Life Research’s Nishihama said. “They probably need to see impact from the political turmoil on tourism, consumption and investment. So, swap rates may stay under pressure to fall.”




--Editors: Sandy Hendry
%THB
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1[at]bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry[at]bloomberg.net




Baht Set for Biggest Monthly Drop in 15 Months on Fund Outflows - BusinessWeek

Yes please!!

Burn Baby Burn!

no real signs yet

Sorry, JJ ein't gonna happen. Stupid Thai government thinks there is face in having a strong currency.

Originally Posted by the dogcatcher

Sorry, JJ ein't gonna happen.

One lives in hope.

But, you're probably right.

In January of 2009 it was 35 baht to a dollar. Right now it is a little over 32. There is a long way to go to recover.

not going to happen unless some speculators will try to dump the THB

with strong fundamentals, they won't take the chance, the BOT large foreign currency reserves is probably keeping them off

an interesting figure though, they had a trade deficit this quarter, that is they had more import than export, so that could help the THB lose value if that trend is persistent

Its got to happen soon

Originally Posted by corned dog

Its got to happen soon

Hmmm. Not sure. I remember 41thb to the USD during the last year of Thaksin. I was sure the THB was going to drop like a stone, but in the 5 past years of turmoil (arguably 5 of the worst unrest in Thailand), we now see 32-odd.


Its all very puzzling, I certainly don't understand it and I'm not sure the Thai Banks is doing very much to keep theTHB up, for face or any other reason, they just don't have that much clout. They could sell all their FX tomorrow and the net impact in terms of currency liquidity would be fanny all.


The fundamental trading situation is important but I suspect that as a net exporter (except for April which is probably anomalous), Thailand is just weathering the economic storm abroad better than most. Currency strength is always relative, and at the moment, most other currencies are very weak so any net exporter will appear strong.

Look, it snot a one sided game of the Thais keeping their currency strong.
Has it ever occured to you that it could be the weakness of the Euro/pound/sterling etc?

Before going to cambodia the other week I went into the bank in chum phae asking to buy some dollar. The fella said he had dollars but wouldn't sell them. Would only buy them Whats that all about !!

Don't expect lgic or business acumen inLOS ,perhas he was keeping them for a special aldy or theywere the special $100s printed in former USSR for folks he didnt like more likely couldn't be bothered.

Originally Posted by corned dog

Its got to happen soon

Haha, if I only got 1 baht for every time I've heard this the last 6-7 years. If the time frame of "soon" is about 10 years, then I'm in!

It's not like me to wish anyone ill, but the sooner the baht collapses the better from a purely selfish point of view !

Originally Posted by SiLeakHunt

It's not like me to wish anyone ill, but the sooner the baht collapses the better from a purely selfish point of view !

Not really selfish - the Thai exporters would love to see the baht hit 40 to the US dollar.

^^ everyone would like to see 40 but it's not going to happen anymore unless you guys wouldn't mind we go into an inflationary mode with prices going up by 20%

so much for saving on exchange rates

the price of beer would double overnight

I get 39 odd on the Euro today last year 48

Originally Posted by Butterfly

^^ everyone would like to see 40 but it's not going to happen anymore unless you guys wouldn't mind we go into an inflationary mode with prices going up by 20%

so much for saving on exchange rates

the price of beer would double overnight

Where were the high prices in 1999?

Also since it is cheaper to import where are the low prices on Western groceries?

Originally Posted by chitown

Where were the high prices in 1999?

we were in a recession in 1999

recession gap, ever heard of it ?

Originally Posted by chitown

Also since it is cheaper to import where are the low prices on Western groceries?

it's still a luxury so quantity are small and prices high

they would be higher with a higher THB

Originally Posted by Butterfly

Originally Posted by chitown

Where were the high prices in 1999?

we were in a recession in 1999

recession gap, ever heard of it ?

In 2003 the baht was still relatively weak and there was little to no inflation, so why would you expect it now?

need to get a job?