BOT selling dollars to stall dollar growth

[ray23]

"Selling dollars to stall dollar growth" . Sorry I just don't get this. Inflation is a huge problem, oil seems to be the main culprit in infaltion. As the dollar get stronger the cost of oil goes down. Why would anyone want to stall it.

Now if you purchased oil in baht I could understand it, but the dollar is used to purchase oil.

What am I missing?

I wonder how long the BOT can continue down this road they have already been on it for sometime. When is the money supposed to hit the country to stimulate the economy. Or is that smoke screen because of inflation.

Thai Baht Rises From 1-Month Low on Central Bank; Bonds Decline

By Shanthy Nambiar

Aug. 7 (Bloomberg) -- Thailand's baht rebounded from a one- month low on speculation the central bank will support the currency. Government bonds fell.

The currency reversed a decline after touching 33.76 a dollar, the weakest since July 9, as Amara Sriphayak, a central bank official, said last week that the Bank of Thailand is ``taking care'' of the currency. The baht has dropped 0.5 percent this quarter, the fourth-biggest decliner among Asia's 10 most-traded currencies.

``The Bank of Thailand has been in the market quite consistently,'' said Vishnu VarathThai Baht Rises From 1-Month Low on Central Bank; Bonds Decline

By Shanthy Nambiar

Aug. 7 (Bloomberg) -- Thailand's baht rebounded from a one- month low on speculation the central bank will support the currency. Government bonds fell.

The currency reversed a decline after touching 33.76 a dollar, the weakest since July 9, as Amara Sriphayak, a central bank official, said last week that the Bank of Thailand is ``taking care'' of the currency. The baht has dropped 0.5 percent this quarter, the fourth-biggest decliner among Asia's 10 most-traded currencies.

``The Bank of Thailand has been in the market quite consistently,'' said Vishnu Varathan, an economist at Forecast Singapore Pte. The central bank, has been ``selling dollars to stall the dollar rally. We are seeing ongoing outflows,'' he said.

The baht traded at 33.60 per dollar as of 4:35 p.m. in Bangkok, little changed from yesterday, according to data compiled by Bloomberg.

The Thai currency has weakened about 5.5 percent in the past three months on concern global funds will sell their local holdings amid political turmoil.

Allegations that Prime Minister Samak Sundaravej is a proxy for former leader Thaksin Shinawatra have led to street protests that called for the premier to quit. Global funds sold $81.5 million more Thai stocks than they bought this week, according to data compiled by Bloomberg.

Ten-year bonds declined. The yield on the 5.125 percent note due March 2018 rose 5.4 basis points to 4.963 percent, according to the Thai Bond Market Association. The price fell 0.41518, or 4.1 baht per 1,000 baht face amount, to 101.1997.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1[at]bloomberg.net.

Last Updated: August 7, 2008 05:45 EDT an, an economist at Forecast Singapore Pte. The central bank, has been ``selling dollars to stall the dollar rally. We are seeing ongoing outflows,'' he said.

The baht traded at 33.60 per dollar as of 4:35 p.m. in Bangkok, little changed from yesterday, according to data compiled by Bloomberg.

The Thai currency has weakened about 5.5 percent in the past three months on concern global funds will sell their local holdings amid political turmoil.

Allegations that Prime Minister Samak Sundaravej is a proxy for former leader Thaksin Shinawatra have led to street protests that called for the premier to quit. Global funds sold $81.5 million more Thai stocks than they bought this week, according to data compiled by Bloomberg.

Ten-year bonds declined. The yield on the 5.125 percent note due March 2018 rose 5.4 basis points to 4.963 percent, according to the Thai Bond Market Association. The price fell 0.41518, or 4.1 baht per 1,000 baht face amount, to 101.1997.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1[at]bloomberg.net.

Last Updated: August 7, 2008 05:45 EDT

[Ivor Biggun]

Sorry I just don't get this

Nor me.

[britmaveric]

Thai logic at work.

[DrAndy]

maybe they need to sell dollars to support the Baht

[Fabian]

Isn't a weak baht good for thais export industry?

[ray23]

Well the was the call before a little a two years ago they needed a weak baht and they were buying dollars.

Yes buying dollars strengthens the baht, but the center cause of inflation oil is purchased by dollars. The stronger the dollar the the less of cost of oil.

Yes they will get more dollars for thier baht. But unless I miss my guess if they are succesful that oil cost will continue to increase to inflation. Could they be getting national pride confused with good economics?

Not an easy choose for any central bank these days, they have raised the interest rates and seem to be planning on doing he same in the fuure.

The policy has been to let the baht float with a basket of currency's now which ones they are I have no idea. But I don't see anyother Asian currency's stepping in. They are letting things flow based on the world economy. The fact is you can't both ways either your dong what you say you are doing , or manipulating currency's. I think I know which one they are doing.

In 97 a part of the problem was currency manipulation except that time it was going the other direction. Will there be another lesson to be learned here I don't know.

[Norton]

Seems to me the relatively small amount of dollars the Thai bank has will make little or no difference in the overall value of the baht to dollar rate? The action will of course have a near term positive impact on the SET as often times the "perception" the government is taking action will do in any stock exchange.

[ray23]

Ya I think your right I didn't see a lot of change in the exchange rate this morning. Sometimes looking like the good guy could be important.

[Panda]

The sooner we move to a world currency (based on a basket of major currencies)instead of just the $US, the more stable the whole worlds markets will be.
The Chinese are way ahead of their time on this.

[ray23]

Well well Well, this is the same reporter, who wrote yesterday that the BOT was selling dollars, seems like he is not so sure today. Wonder what changed.

One thing is for sure the BOT and F.M office are at odds on this, wonder who will win.

Well at the moment dollars up and oil is down seems like good deal to me. Oil going down has to help inflation world wide.

Thai Baht Declines on Slowing Growth; Government Bonds Advance

By Shanthy Nambiar

Aug. 8 (Bloomberg) -- Thailand's baht declined, snapping a two-day advance, on speculation slowing growth will prompt global funds to dump the nation's stocks. Bonds advanced.

The baht has dropped 5.3 percent over the past three months, the biggest decliner among Asia's 10 most-traded currencies excluding Japan's yen, on concern street protests and a rift within the ruling coalition will delay policies to bolster the economy. The benchmark SET Index of stocks dropped as much as 2.6 percent, after U.S. stocks declined.

``There's still downside risk because growth prospects don't look good for the region,'' said Usara Wilaipich, a Bangkok-based economist at Standard Chartered Plc. ``Given the bearish sentiment in regional stocks we are also seeing Asian currencies weaken.''

The baht declined 0.3 percent to 33.67 per dollar as of 4:10 p.m. in Bangkok, according to data compiled by Bloomberg. It reached 33.76 yesterday, the weakest since July 9, and has declined 0.4 percent this week. The currency may fall to 34 by the end of September and 34.5 by the end of this year, Usara said.

Allegations that Prime Minister Samak Sundaravej is a proxy for former leader Thaksin Shinawatra have led to street protests urging the premier to quit. Samak reshuffled his cabinet on Aug. 2, removing five ministers, after court rulings forced out key members of his cabinet.

Tolerance

The central bank's Amara Sriphayak last week said the Bank of Thailand is ``taking care'' of the currency, without indicating whether it was buying or selling dollars.

``The Bank of Thailand may have more tolerance for baht weakness to balance the competitiveness of exports,'' said Usara. ``Exports remain the engine of growth. The stock market could continue to be volatile.''

Global funds sold $106.4 million more Thai stocks than they bought this week, according to data compiled by Bloomberg.

The Bank of Thailand on July 16 raised its one-day bond repurchase rate by a quarter percentage point to 3.50 percent, the first increase in two years, saying it may raise it further to cool inflation. Policy makers next meet on Aug. 27.

Ten-year bonds advanced. The yield on the 5.125 percent note due March 2018 fell 1 basis point to 4.95 percent, according to the Thai Bond Market Association. The price rose 0.07582, or 0.7 baht per 1,000 baht face amount, to 101.2756.

Deputy Finance Minister Suchart Thadathamrongvej yesterday said the nation ``shouldn't raise the interest rate,'' because it will ``lower growth.''

``Thailand's major problem is political instability,'' Suchart said. ``Foreign investors don't have confidence in our country. We can't solve that by using monetary policy.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1[at]bloomberg.net.

Last Updated: August 8, 2008 05:48 EDT

[Ivor Biggun]

Thai baht seems to be gaining strength so it must be working ?

[ray23]

Ivor are you sure that is what you meant to say, you would go more baht for a dollar today then yesterday. Which would seem to me it weakening.

SCB at the moment 33.59

It will show more on Bloomberg but for some odd reason SCB won't change the published rate until Monday.

[DrAndy]

hooray

about time the dollar got a bit stronger

more Baht to the bite

[Spin]

current dollar strength has more to do with euro weakness that anything else.

[Panda]

The $US has made a rapid rise against all major currencies in the past few weeks, even the Chinese Yuan. The turning point seemed to have occurred on July 14th.
I have no real idea why except to guess that the big money speculators might be buying $USs now that the current oil investment bubble has burst?
A stronger and rising $US is good for expats and good for the US government trying to sell bonds to other countries (AKA going deeper into debt), but bad for employment and exporters within the USA.

[ray23]

Not my post borrowed from a friend on another forum, who knows what he is doing, so these countries musrt be doing much worse he Thailand, with it's border stand offs. Civil war in the south and a governmet forning new parties as the Supreme Court will likely disolve the current governement.

Doesn't this seem an odd picture?


"The USD has had an exuberant start to the month having risen quite dramatically against most currencies.

For the currencies I track this has seen the USD make the following gains in the first six trading days of August:

3.2% against GBP

3.4% against EUR

6.3% against AUD

0.4% against THB
The movements stem primarily from news about other countries economies and changes in their interest rate expectations rather than any particularly news on the US Economy."

[Panda]

Ray23, the movement in the $US started BEFORE the end of the month. In fact the turning point seemed to be on a particular day, that being the 14th July 2008.

The $US suddenly kicked up against ALL world currencies at around the middle of last month. It couldn't be that all other world economies suddenly declined against the US on a particular day.

Take a look at the link provided below and compare the value of the $US against any major currency you like and you will see a sudden spike in the middle of July.

Exchange Rates


I am not sure whats going on there but it sure looks like the big money people in the world market suddenly changed heart on July 14th. Something must have happened just before that date to cause suce such a massive shift in world money markets.

It sure as hell ain't related to "other countries economies" as you friend seems to think.

[ray23]

To be honest with you. I think he was trying not to say anything negative as, the comment was in a very different kind of thread. The answer lies in aggressively propping up the baht. Let say they had actually been succesful would the price of oil come down as it did last week. I don't think so.

I think two things happened, first consumption was at lower levels then expected. Secondly the dollar value went up.

This is part that I don't understand at all. Raising the interest rate will work agianst inflation, , maybe not a fast a everyone wants. But the major component is the cost of oil. Don't get that down and you will not control inflation. One of the factors in bringing that cost down is the value of the dollar. So that would seem the last thing you would want to mess with.