Thread: Thai currency continues upward trend

Time to borrow in USD baby like it was in 1991 !!! good times are back

Originally Posted by StrontiumDog

http://www.bangkokpost.com/news/loca...n-t-be-stopped

Rampant baht can't be stopped

Few believe government can fight outside pressures

• Published: 13/10/2010 at 12:00 AM
• Newspaper section: News

Financial experts have expressed little confidence in the government's measures to rein in the baht as they believe outside influences are far too powerful and likely to stay that way.


In the opinion of Prapas Tonpibulsak, chief investment officer of Ayudhya Fund Management, Asian economies remain attractive to foreign investors as those of Europe and the US are too weak.

And it could take a week or more for the dust to clear from the new measures to judge how effective they are, he said.

• See also: Business applauds the bonds tax

Tuesday, the baht remained strong at 29.98/30.00 to the dollar compared to 30.03/30.06 the day before, compounding the problems of exporters.

The government and the Bank of Thailand have scrambled over the past week to try to rein in the baht's spectacular rise against the dollar.

The central bank has introduced steps to promote overseas investment of Thai companies and lifted the ceiling on foreign currency deposits.

The cabinet yesterday endorsed more measures proposed by the Finance Ministry to counter the baht's appreciation and to ease the damage being caused to small and medium exporters.

These include reimposing the 15% withholding tax on interest gains for foreign investors in the local state bond market. This will be in effect from today but will not be retroactive.

Niwat Kanjanaphoomin, president of the Thai Bond Market Association (ThaiBMA), said the effect of this would be to discourage foreign inflows of capital into the bond market.

Besides trying to control the money influx, the cabinet is promoting capital outflows by speeding up foreign currency investment by government and state enterprises. This is designed to reduce the impact on small and medium exporters by supporting forward contracts and providing them with soft loans.

Finance Minister Korn Chatikavanij expects the steps to ease the baht's rise and help reduce foreign exchange risks for 17,000 small and medium exporters.

But to market analysts, the steps are only a mild remedy that will not rein in the pace of the strengthening baht which has reached 11% against foreign currencies since early this year.

Even Prime Minister Abhisit Vejjajiva concedes the measures will not solve the problem.

"Going on [global] economic trends, the baht is not expected to get any weaker in the near future," he said yesterday.

"The measures instead are aimed at assisting small and medium exporters and will hopefully slow capital inflow."

Mr Abhisit indicated the government may add more steps in the next two weeks to encourage the private sector to import machinery that will help boost productivity and reap benefits from the baht's appreciation.

Mr Prapas said it will take about a week to get a clearer picture of whether the government is on track.

"It is too early [to jump to a conclusion]. At least one week from now we might probably see the picture of the impact of the measures," he said.

"We have to admit the remedy may not be strong enough. Asia is still a haven for investors compared to Europe and the US where the economies are weakening.

"Also, the interest rate is still far higher than elsewhere in the region."

Barclays Capital Research, like other market observers, agrees the impact of the measures on the baht will be minimal.

"At the margin, the elimination of foreign investors' exemption from the withholding tax is likely to moderate the pace of the baht's appreciation. But we do not believe these types of transactions are the primary source of the baht's strength," it said in a report.

"Even with the reduced attractiveness of Thai government bonds, we expect the baht's appreciation to continue over the next year, especially under expectations that the US dollar will remain weak in the coming months."

thats what i said 5 pages ago

Originally Posted by Butterfly

Time to borrow in USD baby like it was in 1991 !!! good times are back

damn, I hate it when I am right, here we go

Originally Posted by Bangkok Post

BBL dollar debt

FINANCE: Bangkok Bank plans to issue dollar-denominated bonds with maturities of five and 10 years to help fund overseas business, a senior executive said yesterday.

‘‘We see an opportunity in the market and interest rates now look reasonable. The funding will partly help support business in our overseas branches,’’ said the executive, who declined to be identified.
He declined to disclose the amount or timing of the issues.

Sources said each tranche would be worth at least $250 million, with Morgan Stanley as the lead arranger.

Debt is in full fashion again for Thai companies

CPF bond plan

FINANCE: Charoen Pokphand Foods Plc, the country’s biggest chicken exporter, plans to issue bonds with terms of four and seven years in late October or early November.
The bonds are rated A+ by Tris Ratings, which said the issue size would be about 8 billion baht.

The four-year issue would have a coupon of 3.0% in the first three years and 4.0% in the fourth year, said CPF. The seven-year bonds will pay 3.0% in the first three years, 4.0% in the fourth and fifth years and 5.0% in the last two years.

Originally Posted by socal

thats what i said 5 pages ago

Originally Posted by Butterfly

damn, I hate it when I am right, here we go

gosh, you are both genii

Originally Posted by Butterfly

Originally Posted by Butterfly

Time to borrow in USD baby like it was in 1991 !!! good times are back

damn, I hate it when I am right, here we go

Originally Posted by Bangkok Post

BBL dollar debt

FINANCE: Bangkok Bank plans to issue dollar-denominated bonds with maturities of five and 10 years to help fund overseas business, a senior executive said yesterday.

‘‘We see an opportunity in the market and interest rates now look reasonable. The funding will partly help support business in our overseas branches,’’ said the executive, who declined to be identified.
He declined to disclose the amount or timing of the issues.

Sources said each tranche would be worth at least $250 million, with Morgan Stanley as the lead arranger.

Not sure how the FX would be a motivation for this transaction. Seems to me that to issue dollar bonds would just increase the amount of the liability that is translated into baht in Bangkok Bank books if the baht continues to appreciate.
TH

Originally Posted by Butterfly

Originally Posted by Butterfly

Time to borrow in USD baby like it was in 1991 !!! good times are back

Why would you want to borrow dollars?

You yesterday were quoting with apparent approval a piece which said the dollar was nearing an inflection point and is poised to strengthen.

And the day before yesterday you were approving of the withholding tax that could help weaken the Baht.

Originally Posted by The_Ghost_Of_The_Moog

Why would you want to borrow dollars?

You yesterday were quoting with apparent approval a piece which said the dollar was nearing an inflection point and is poised to strengthen.

And the day before yesterday you were approving of the withholding tax that could help weaken the Baht.

me personally ? I think you misread my comment about the USD borrowing. I was referring to Thai companies abilities to borrow in USD because of the THB strength.

A bit like the Brits borrowing in Euro when the GBP was strong. It's a dangerous debt because it has a currency exposure on the top of the interest rate exposure.

Originally Posted by 9999

You're better off doing business with the Thai banks than the Aussies.

My Aussie accounts with NAB and Westpac are great. Far superior to any service from any Thai bank accounts I have including Kasikorn, Bangkok Bank and SCB.

Originally Posted by DrAndy

Originally Posted by socal

thats what i said 5 pages ago

Originally Posted by Butterfly

damn, I hate it when I am right, here we go

gosh, you are both genii

I wish you hadn't say that by associating my name with socal

Continued baht rise costs some industries Bt90-100 billion already


Continued baht rise costs some industries Bt90-100 billion already


วันศุกร์ ที่ 15 ต.ค. 2553

• • 

BANGKOK, Oct 15 – The continued strengthening of Thailand's baht currency has incurred some Bt90-100 billion in damages to the country’s industrial sector, according to the Federation of Thai Industries (FTI).

FTI chairman Payungsak Chartsutipol said various measures taken by the government to help small entrepreneurs affected by the rising baht sounded satisfactory because it enabled the entrepreneurs to import machinery to improve their product quality and boost competitiveness in the medium and long terms.

However, he conceded the latest measures issued by the government had been taken with an aim of helping only the baht surge-affected small- and medium-size enterprises (SMEs).

Regarding ongoing efforts to oversee the baht value, he said, it is the duty of the Bank of Thailand to ensure that the currency moves in the same direction with other currencies in the region.

He said the central bank is empowered to intervene in the baht movement through various approaches. One effective way is to use the capital to purchase foreign bonds.

Mr Payungsak said that FTI found various industries had already incurred around Bt90-100 billion is losses from the continued baht appreciation.

Industries affected by the stronger baht most include foods, textiles and garments, and local content-reliant production. (MCOT online news)

[quote=StrontiumDog;1580289]Continued baht rise costs some industries Bt90-100 billion already


Continued baht rise costs some industries Bt90-100 billion already


วันศุกร์ ที่ 15 ต.ค. 2553

• • 

BANGKOK, Oct 15 – The continued strengthening of Thailand's baht currency has incurred some Bt90-100 billion in damages to the country’s industrial sector, according to the Federation of Thai Industries (FTI).

funny they say nothing about the sectors that incurred gains.

One effective way is to use the capital to purchase foreign bonds.

No, The central banks of Japan and Switzerland tried that and wasted billions for nothing. The Swiss franc has since hit an all time high and the Yen hit a 15 year high after they tried the "purchase foreign bonds" idea.

http://www.bangkokpost.com/news/loca...rate-dangerous

BoT: Fixed exchange rate 'dangerous'

• Published: 15/10/2010 at 12:04 PM
• Online news: Breakingnews

The Bank of Thailand will not reintroduce a fixed exchange rate policy as it would be harmful for the country’s exchange rate system, BoT governor Prasarn Trairatvorakul said on Friday.

The 1997 financial crisis occurred because the then government tried to fix the exchange rate, Mr Prasarn added.

The BoT chief was responding to suggestions by former deputy prime minister and finance minister Virabongsa Ramangura that the central bank should cut its policy rate and reintroduce a fixed exchange rate to curb the baht’s appreciation.

“The central bank is now using a flexible exchange rate, to avoid distorting the money market mechanism,” Mr Prasarn said.

The BoT governor said cutting the policy interest rate was a matter for Monetary Policy Committee to decide. It would meet next Wednesday.

The baht’s value and related issues, including the exchange rate, will be considered at the meeting.

BoT board chairman MR Jatumongkol Sonakul said on Friday that he personally felt the need to raise the central bank’s policy rate had lessened, because strengthening baht had slowed down inflation.

“The repurchase rate cannot be immediately cut, as was called for. Any change in monetary policy must be done gradually, to prepare for dealing with any possible negative impact,” he said.

MR Jatumongkol said even though he is the BoT board chairman he has no authority in setting the policy rate. That authority rests with the Monetary Policy Committee.

Originally Posted by larvidchr

The BOT is protecting the few very very rich and the one supremely rich in Thailand it seems like, there is no logic to what they do other than that, only market forces from outside would ever see the THB go down, that is why the BOT have 3 times the reserves that Countries of similar size need's in foreign currency, rather than using some of all that money to improve much needed infrastructure, education ect in the country (a question also raised once in the foreign correspondents club at a meeting with the BOT gov.) No they sit on it so they can use it to protect the superrich against losses on the currency, that is the lesson learned from the "crash" of the THB in the nineties. No BOT governor would "literally" survive playing the THB down, since that would mean that the superrich in Thailand would loose billions, an unthinkable scenario!, the money policy of the Government and the BOT is not what serves the country Thailand best, but what serves the superrich Thai "elite" citizens best.

^ correct tract

Superich now buy foreign currency as Thb is high...

Crash has to happen some day due to known reason ahead sometimes, super rich will buy Thai baht after crash and double the fortune, in that line me think...

^Spot on. The last time the Thai baht crashed it was suspected (anecdotal-ly; for we mortals could not move huge quantities of currency, yet those in power could and likely did so) that for days and even a few weeks before, Thaksin and the hi-so plus even higher-ups moved Thai Baht offshore then brought it back when the Baht was 50+, thus doubling their fortunes. Probably the same game these days, especially given current 'health' considerations of the baht.

Bangkok Post : Capital inflows worry Prasarn

Capital inflows worry Prasarn

• Published: 16/10/2010 at 12:00 AM
• Newspaper section: News

Global foreign exchange cooperation is essential to tackle the problem of excessive foreign capital inflows into regional economies, says Prasarn Trairatvorakul, the governor of the Bank of Thailand.


Bank of Thailand governor Prasarn Trairatvorakul gives his address at the Bank of Thailand International Symposium2010onthe challenges facing central banks in the era of ‘‘new globalisation’’, held at the Mandarin Oriental Hotel yesterday. WISIT THAMNGERN

Failure of negotiations to smooth currency markets might lead to a stagnant global economy, he said yesterday.

"I am concerned," said Mr Prasarn, who took office on Oct 1. "Thailand is not a large economy, but we are very open [to the international market]. The saying goes that when elephants fight, the grass is trampled."

He said central banks in the region were discussing with each other possible measures to curb rapid currency appreciation. Their top concerns are that the US Federal Reserve is likely to extend its near-zero interest rate policy for a longer period, and that it would also buy huge amounts of government and private-sector bonds to shore up the weak US economic recovery.

Huge flows of foreign capital by investors seeking better returns in emerging markets such as Thailand are seen as the main force behind rapid currency appreciation. The baht was trading late yesterday in Bangkok at 29.80/84 to the US dollar, unchanged from Thursday.

The expectation of prolonged low interest rates in advanced economies, coupled with China's refusal to allow the yuan to appreciate, has put Asian economies under pressure from excessive fund inflows.

Mr Prasarn was circumspect about whether the BoT planned to introduce any new measures to curb the baht's surge. But he was adamant that it would not operate with a specific baht target.

"We would rather not impose extreme measures [as they may affect the overall economy]," he said.

"The lesson from 1997 was that we cannot have all three objectives - price stability, an open capital account and a fixed exchange-rate regime - simultaneously. We have chosen the first two."

The Finance Ministry last week introduced a 15% withholding tax on capital gains from foreign bond holdings, a measure the market considered a form of capital control. But the baht has continued to strengthen since then.

Economists expect the G20 forum in Seoul in November to discuss the foreign capital influx into emerging markets.

Developing and developed economies that are members of the G20 were likely to discuss the effects of big injections of liquidity by the US, Europe and Japan on developing economies, said Hyun Song Shin, the Hughes-Rogers professor of economics at Princeton University, who spoke at the BoT forum yesterday.

Barry Eichengreen, professor of economics at University of California, Berkeley, said the euro and yuan may become more important international reserve currencies sooner than expected.

Originally Posted by tango

^Spot on. The last time the Thai baht crashed it was suspected (anecdotal-ly; for we mortals could not move huge quantities of currency, yet those in power could and likely did so) that for days and even a few weeks before, Thaksin and the hi-so plus even higher-ups moved Thai Baht offshore then brought it back when the Baht was 50+, thus doubling their fortunes. Probably the same game these days, especially given current 'health' considerations of the baht.

both of you are totally wrong. If the baht crashes, I will give both of you a million pounds. Its not going to crash

http://www.bangkokpost.com/business/...winners-losers

Winners, Losers

• Published: 18/10/2010 at 09:21 AM
• Online news: Economics

The baht's gain of more than 10 per cent against the dollar this year has led to an outcry from some businesses, chiefly exporters who believe the government and the Bank of Thailand are not doing enough to arrest the currency's rise.


But for every outraged exporter, there is probably another business executive quietly enjoying gains from lower-cost imports.

According to the research division of TMB Bank, a 10 per cent gain in the baht will cause Thai exports to fall 3.3 per cent each quarter, while the benefits from cheaper imports will be only short-term.

"In the longer term, the continuous decline of exports will drag down imports by 2.5 per cent in every quarter," TMB Analytics said. On the upside, it said, "concerns over inflation have been partially eased".

An executive of a leading food exporter has warned of a crisis on a scale similar to what happened in 1997, when a speculative run on the baht touched off a crisis that dragged down most of Asia for years.

Losses of 80-100 billion baht have been estimated so far for food processors, textiles and other industries that use mostly local raw materials and thus do not benefit from cheaper imported inputs.

"The furniture and housewares sector, for example, has seen profit margins decline by 52 per cent. Once the baht gains 20 per cent, the manufacturers will post losses," the TMB report added.

The Economic Intelligence Center of Siam Commercial Bank says the strong baht affects any industries that have a higher export ratio against imported content. For example, smoked rubber sheet and block producers export up to 90 per cent of their output against almost zero imports of raw materials. Rice exporters are in a similar condition.

Prasit Boonchoey, president of the Thai Farmers Association, said some additional costs have been passed on to farmers, yet they have not seen the prices of imported pesticides and fertilisers fall yet.

The strengthening baht has already trimmed rice farmers' income by about 300 baht a tonne.

"The farmers' predicament would be worse if there was no government price insurance programme," he said.

However, conditions are not as good for farm products without such insurance coverage. Prices of pineapples, for example, have fallen this year by about one baht per kilogramme to six baht.

"We don't know whether buying prices will fall further, as the direction of foreign exchange rates is unpredictable," said Nirut Ruplek, secretary- general of the Thai Pineapple Industry Association.

The association predicted the export value of canned pineapples would drop at least 10 per cent this year from 13.9 billion baht in 2009. However, volumes would remain unchanged from 473,279 tonnes last year.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the strong baht had prompted exporters to delay purchases from farmers, putting pressure on milled rice.

"Falling milled rice prices would in turn lead millers to cut their paddy buying prices, which would eventually affect farmers' incomes," he said. "Next year will be another year of risk. It is very hard to predict [the prices]."

Agriculture Minister Theera Wong- samut conceded the baht's rise might deter exports of farm products and result in falling farm prices unless the government adopts effective measures.

However, he said there had been minimal impact on the sector so far as the September farm price index rose strongly by 26.7 per cent year-on-year, and 0.41 per cent over the previous month.

Of course, along with losers there are winners. As a country heavily dependent on oil imports, Thailand has been insulated from the 5 per cent rise in global crude prices this year, although local pump prices have been little changed.

Every one-baht appreciation against the dollar reduces the cost of domestic oil production by 50 satang per litre.

Even exporters can offset some losses with lower freight rates.

"Exporters pay shipping liners and freight forwarders in Thai baht even though freight rates are quoted in dollars. In doing so, they are paying less for shipments," said Suwit Ratanachinda, president of the Thai International Freight Forwarders Association. "But it is not significant compared to their suffering from the rapidly rising exchange rate,"

Sumate Tanthuwanit, president of SET-listed Regional Container Lines Plc, said most of its expenses were in dollars as it also operates overseas. However, most of its services for Thai customers are also quoted in dollars. "Consequently, overall operations have not been affected much by the sharp gains in the exchange rate," he said.

Some industries benefit due to their heavy reliance on imported content if they sell most of their finished products locally. They include steel, mining, energy, infrastructure and machinery. But executives of these industries are reluctant to discuss their gains at a time when their export-oriented peers and rivals are crying.

[quote=StrontiumDog;1582530]http://www.bangkokpost.com/business/...winners-losers

Winners, Losers

• Published: 18/10/2010 at 09:21 AM
• Online news: Economics

The baht's gain of more than 10 per cent against the dollar this year has led to an outcry from some businesses, chiefly exporters who believe the government and the Bank of Thailand are not doing enough to arrest the currency's rise.

But for every outraged exporter, there is probably another business executive quietly enjoying gains from lower-cost imports.

Yep.
.

On the upside, it said, "concerns over inflation have been eased.

I have been saying this this whole thread.

An executive of a leading food exporter has warned of a crisis on a scale similar to what happened in 1997, when a speculative run on the baht touched off a crisis that dragged down most of Asia for years.

An executive of a leading food exporter better keep exporting food because who ever it is knows fuck all nothing about macro economics.


Of course, along with losers there are winners. As a country heavily dependent on oil imports, Thailand has been insulated from the 5 per cent rise in global crude prices this year, although local pump prices have been little changed.

Every one-baht appreciation against the dollar reduces the cost of domestic oil production by 50 satang per litre.

hilarious,

Tax curbs foreign trading

• Published: 26/10/2010 at 12:00 AM
• Newspaper section: Business

Trade by foreigners in the local bond market has fallen by 70%, to an average of 2-3 billion baht a day, since the government reintroduced the 15% capital gains tax on foreigners, according to the Thai Bond Market Association.

The government imposed the measure on Oct 13 as part of its effort to slow foreign capital inflows that had been pushing up the value of the baht. The 15% withholding tax applies to interest income and capital gains on foreign investment in government and state enterprise bonds.
However, foreign investors still had outstanding portfolios worth more than 200 billion baht in Thai bonds, said Ariya Tiranaprakit, an executive vice-president of the Thai BMA.
Total bond trading including commercial bank bills of exchange is valued at 40-50 billion baht per day.
Foreign investors' desire for better returns has been reflected in a shift to one-year bonds from the three-, five- and 10-year maturities they favoured in the past, she added.
"They were holding their investments in the Thai market to see if the government may impose more capital controls," said Ms Ariya.
"The market has been so quiet since the government resumed imposing withholding tax for foreign investors. New money has not been coming in."
However, she noted that the Bank of Thailand's decision to keep its policy interest rate unchanged at 1.75% had already been affecting bond prices in any case.
Low rates have encouraged more issues of corporate debt, which is expected to reach 250 billion baht this year, based on 200 billion recorded in the first nine months.
Government bond issues will total 500 billion baht, similar to last year.
The government hopes to soon issue its first 50-year bond to set a new market benchmark. However, the issue size would be small, at no more than 5 billion baht, she said.

The Thai Baht isn't rising.

Recently the Euro has gained ground against the Baht, by about 5% in recent weeks, as has the Swiss Franc.

The US and Sterling are falling in value. Sterling especially is destined to fall further in the near future.

I see it hitting 25 or 36 baht to the dollar and then crash to 1997 levels. I remember the 1999 prices, I was living like a king in Thailand!!

Originally Posted by socal

Originally Posted by tango

^Spot on. The last time the Thai baht crashed it was suspected (anecdotal-ly; for we mortals could not move huge quantities of currency, yet those in power could and likely did so) that for days and even a few weeks before, Thaksin and the hi-so plus even higher-ups moved Thai Baht offshore then brought it back when the Baht was 50+, thus doubling their fortunes. Probably the same game these days, especially given current 'health' considerations of the baht.

both of you are totally wrong. If the baht crashes, I will give both of you a million pounds. Its not going to crash

I gladly accept your offer, 1 million up in the bank is welcome !

It can takes few month or few years, but it will fall !