Thread: Baht breaks 35 level to hit new nine-year high

Baht breaks 35 level to hit new nine-year high

The Thai baht hit a new nine-year high against the dollar, breaking past the 35 barrier on Thursday amid expectations the Bank of Thailand would further ease its capital controls, dealers said.



The Thai currency peaked at 34.96 to the dollar in morning trade, up from Thursday's finish at 35.00-02.

"The baht broke the 35 level to the dollar this morning after exporters sold dollars heavily on worries that the Thai currency would get stronger after the central bank further eases capital controls," said a Bangkok Bank dealer.

"The Thai baht moved in the opposite direction as other Asian currencies, which fell against the dollar this morning," the dealer said, adding the baht was still trading at a nine-year high of 35.00-03 by mid-day.

The Bank of Thailand and the Finance Ministry were set to meet later Thursday to consider a proposal to allow investors to avoid a 30-per cent witholding requirement if their investments are fully hedged against changes in the value of the baht.

The capital measures sparked the biggest-ever one-day drop on the Thai bourse in December.

The plunge forced the central bank to quickly lift the regulations on money brought into Thailand to buy stocks, an embarrassing U-turn that damaged the government's credibility in the eyes of investors.

Most of the other controls have since been reversed or modified, creating some further confusion.

The baht, which rose nearly 12 per cent over the past year, got stronger this week on expectations that the new Finance Minister Chalongphob Sussangkarn would totally lift the remaining capital controls.

Chalongphob has previously come out against the capital controls but has sent conflicting signals on his policy since taking office last week.

Exporters expect the strong baht will hurt Thailand's overseas shipments which are targeted to grow by 12.5 per cent this year.

Exports are the main driver for Thailand's economy, which the government projects will expand 4.0-5.0 per cent in 2007.
Agence France-Presse

Exporters expect the strong baht will hurt Thailand's overseas shipments which are targeted to grow by 12.5 per cent this year.

They're not wrong with that! Is this just national pride?

bugger

Wonder when the blood is going to flow?

What are the fundamentals propping up the Baht?

Originally Posted by William

The baht, which rose nearly 12 per cent over the past year,

Originally Posted by William

overseas shipments which are targeted to grow by 12.5 per cent this year.

So measured in dollars they have to do nothing to reach the target

Originally Posted by watterinja

Wonder when the blood is going to flow?

What are the fundamentals propping up the Baht?

Little to none, aside from a $ looking for a place to land.

Thai baht continues to hit new nine-year high

The Thai baht continued to hit new nine-year highs against the dollar Friday.



The baht was quoted at 34.92-94 to the dollar in late morning trade after breaking the 35 barrier on Thursday when the unit closed at 34.98-35.01.

"The baht continued to rise against the dollar due to sustained speculation that the Bank of Thailand would soon end the capital controls," said Sukhbir Khanijoh, a senior analyst at Kasikorn Securities.

The central bank in December introduced stringent currency rules aimed at halting gains in the Thai baht, which has soared nearly 12 per cent over the past year.

Central bank governor Tarisa Watanagase and Thailand's new Finance Minister Chalongphob Sussangkarn have repeatedly said the government would keep the currency meaures to rein in the rising Thai baht.

But dealers said market players believed the opposite.

"Investors see that the capital controls are only temporary measures and they don't believe what the authorities are saying," said a Bangkok Bank dealer.

Sukhbir from Kasikorn Securities said investors were betting that the central bank could end the currency rules "anytime," adding repeated comments from financial authorities were only fueling ongoing speculation.

The capital measures required 30 per cent of all incoming investment to be held by financial institutions for up to one year but foreign investors saw them as a steep tax on their equity investments.

They quickly dumped shares, triggering a massive sell-off in December with market losses worth a staggering 23 billion dollars.

Investors initially cheered Chalongphob's appointment as finance minister since the former World Bank economist had previously come out against the capital controls.

But the new minister disappointed investors by saying Thailand still needed the capital rules to control the volatile currency.
Agence France Presse

Thai baht keeps rising to new nine-year highs

The Thai baht continued its rise Monday and hit new nine-year highs against the dollar despite speculation that new measures could be imposed to curb the currency's gains, dealers said.



The baht was quoted in a range of 34.80-83 to the dollar in morning trade, against Friday's close at 34.92-93.

The Thai currency broke the 35 barrier on Thursday amid speculation that the Bank of Thailand would end all capital controls introduced in December.

However, Thai officials, including the finance minister, repeatedly stated last week that the government would keep the currency controls but investors bet the opposite, pushing the baht to new highs against the dollars.

"Exporters sold dollars on speculation that the baht would get stronger because of expectations that the capital control rules could be lifted at any time," said Thanyalak Surapol, head of money and banking at Kasikorn Research Centre.

"They are worried that additional measures could be introduced to replace the withholding rules but the baht continued to rise this morning while other currencies didn't move significantly against the greenback," she added.

Thanyalak said Kasikorn Research expected the baht to rise past 34.70 this week, due to negative sentiment on the dollar and the US economy.

The central bank in December introduced stringent currency rules aimed at halting gains in the Thai baht, which has risen nearly 12 percent over the past year.

The rules required 30 percent of all incoming investment to be held by financial institutions for up to one year, sparking a massive stock market sell-off in December with losses of a staggering 23 billion dollars.

Central bank governor Tarisa Watanagase and Thailand's new Finance Minister Chalongphob Sussangkarn have repeatedly said the government would keep the currency measures to rein in the rising Thai baht.

Investors initially cheered Chalongphob's appointment as finance minister since the former World Bank economist had previously come out against the capital controls.

But the new minister disappointed investors by saying Thailand still needed the measures to control the volatile currency.
Agence France-Presse

Hmm... I've been holding off bringing in money for a few months, but I had to transfer some last week for a little investment plan here. Arrived this morning and I got 67.29 Baht to the Pound, which is better than I hoped.

Thai baht strengthens despite controls

Bangkok (dpa) - Thailand's baht has proven the regional strongman against the dollar in recent weeks, despite efforts by the government to weaken the local currency with capital controls to keep Thai exports competitive, the commerce minister revealed on Wednesday.

As of March 15, the Thai baht had strengthened 2.07 per cent against the dollar, compared with its average rate in February, while the appreciation levels of Singapore dollar, Chinese yuan, Indian rupee and Vietnam dong during the period were 2.05 per cent, 1.86 per cent, 1.75 per cent and 0 per cent, respectively, said Commerce Minister Krirk-krai Jirapaet.

"The authorities need to closely monitor the Thai baht, so that its appreciation does not much exceed that of competitors," said Krirk-krai, as reported by The Nation online news service.

In fact, the Thai government has been trying hard to weaken the baht currency but without much success. On December 19, the Bank of Thailand imposed capital controls on large inflows of foreign exchange in an effort to curb speculation on the local currency.

The controls led to a 15-per-cent free fall on the Stock Exchange of Thailand the next day, forcing the government to modify the measures. The controls have also created a shortage on baht on the international market, pushing the offshore rate of the baht against the dollars up higher than the domestic rate.

Thai authorities fear that if the baht appreciates against the dollar at a higher rate than their competitors the country's exports will suffer.

Krirk-krai noted that January exports totalled 10.49 billion dollars, up 17.7 per cent year-on-year and 11 per cent compared with the previous month.

In 2006, Thailand's exports increased 19.3 per cent.