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Thai Baht to go to 28?

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  • The week ending September 18th, 2020 the Thai Baht was being exchanged at 30.59 baht to every 1 US dollar.

    Keep your friends close and your enemies closer


    • Little late with the weekly update.

      The week ending September 25th, 2020 the Thai Baht was being exchanged at 31.06 baht to every 1 US dollar.

      • Baht touches 3-week high after protests stay peaceful

      The baht firmed to a three-week high on Monday, gaining along with most Asian currencies against a subdued US dollar, while drawing relief from the anti-government protest passing peacefully at the weekend.

      At the biggest demonstration in years, tens of thousands of protesters on Saturday cheered calls for reform of the monarchy as well as for the removal of Prime Minister Prayuth Chan-o-cha, a former junta leader, and a new constitution and elections.

      "There was a lot of anxiety going into the weekend", said Kobsidthi Silpachai, head of capital markets research at Kasikornbank, adding that relief that that there was no violence gave "some impetus for the markets to strengthen this morning."

      The baht gained 0.4%, marking its best day since Sept 1, while local stocks also rose.

      Also lending support was the parliament passing the 3.29 trillion baht budget bill for the 2021 fiscal year starting in October, hoping to revive Southeast Asia's second-largest economy from a collapse in tourism and exports due to the Covid-19 pandemic.

      The central bank meeting due on Wednesday, governor Veerathai Santiprabhob's last, is expected to leave rates unchanged at record low of 0.5%, Mr Silpachai said.

      Other Asian currencies firmed too. Indonesia's rupiah extended Friday's gains, rising 0.4% to its highest level since Sept 2. The currency has been pressured this month by concerns over rising coronavirus cases and mooted changes to the central bank law, which could threaten its independence, but a decision last week to keep interest rates steady seems to have settled some of the jitters.

      S&P Global signalled on Friday that Indonesia should handle any changes to the central bank law carefully to prevent any pressure on its markets and sovereign rating.

      Stock markets across the region were rangebound, as a spike in coronavirus cases locally and in Europe put a dampener on global sentiment. Risks of increased military tensions between the United States and China as some Washington officials visited Taiwan last week also added to concerns.

      "This dimension of military tensions are sobering reminders that any dial back in US-China tensions on the trade or commercial front may be no more than temporary relief", Riki Ogawa of Mizuho Bank said in a note.

      Philippine stocks dipped 0.4% to lead losses, with consumer stocks weighing on the index. On Sunday, the country's confirmed infections in the country had swelled to 286,743, still the highest in the region.:

      Keep your friends close and your enemies closer


      • The week ending October 2nd, 2020 the Thai Baht was being exchanged at 31.17 baht to every 1 US dollar.

        Keep your friends close and your enemies closer


        • The week ending October 9th, 2020 the Thai Baht was being exchanged at 30.60 baht to every 1 US dollar.

          • Strengthening baht, shortage of migrant workers worry exporters as markets look up

          Thai exporters are upbeat about business prospects, citing gradual increase in demand, but they are worried about the baht strengthening as well as the shortage of migrant workers.

          The Thai National Shippers’ Council (TNSC) has revised upward its export projection this year to 8 per cent contraction from 10 per cent contraction previously forecast, says Ghanyapad Tantipipatpong, the council chairman.

          Products in demand include rubber gloves, washing machines, fax machines, telephones and parts, and gold, she noted.

          Demand for Thai products have risen as many countries have eased Covid-19 lockdown restrictions. Demand for basic need products, such as canned food, farm products, processed farm products have risen, and the coming Christmas and New Year seasons would further boost demand, she said.

          Thailand’s exports in August amounted to $20.2 billion, falling 7.94 per cent, against imports of $15.86 billion, dropping 19.68 per cent. Exports in the first eight months contracted 7.75 per cent, amounting to $153.37 billion.

          However, there are many negative factors. Consumer purchasing power remains weak due to the global recession. So, Thai exporters should focus on necessity products and products whose prices were not high, she said.

          The baht remains strong and can be an obstacle for exports, as it makes Thai products more expensive than products of competitors. The baht should stay at around Bt34 per dollar, down from the current Bt31 level, or it must move along with regional currencies, she said.

          A shortage of migrant workers is also adversely affecting businesses, she complained. The rise of logistics cost, including freight cost, is also a cause for concern, she pointed out.

          She said exporters want newly appointed Finance Minister Arkhom Tempittayapaisith to deregulate exchange rate regulations. The government should also provide financial aid to those who have not yet been supported by previous measures, she added.

          Meanwhile, Visit Limluecha, vice chairman of the TNSC, said the US presidential election in November may have an impact on Thai exports. If Democrat Joe Biden wins the election, the US government may implement more free trade policies than incumbent President Donald Trump, he added.:

          Keep your friends close and your enemies closer


          • The week ending October 16th, 2020 the Thai Baht was being exchanged at 30.68 baht to every 1 US dollar.

            • BoT prolongs debt moratorium for SMEs

            Deadline pushed to next June for firms that have not fully recovered

            The Bank of Thailand has extended the debt moratorium period to next June for small and medium-sized enterprises (SMEs) with a credit line below 100 million baht and difficulty in servicing existing debts.

            The extension period will end on June 30, 2021. The extension will only apply to targeted SMEs that cannot cope with repaying loans to financial institutions due to business operations not being fully recovered.

            The central bank implemented debt relief measures on April 23 to help SMEs reeling from pandemic fallout, but the measures were scheduled to end on Oct 22.

            Roong Mallikamas, assistant governor for financial stability and corporate strategy, said the central bank will let banks and non-bank companies negotiate with debtors as to whether they can repay debts normally or prefer to continue with the debt moratorium scheme for another six months.

            Banks and non-bank companies will have to collect SME information for the extended debt moratorium by December of this year.

            The value of debtors receiving debt relief measures in the formal banking system totals 6.89 trillion baht, with 1.35 trillion baht attributed to SME loans of 1.05 million accounts.

            Of the 1.35-trillion-baht amount, 950 billion baht from 319,000 accounts making up 79% of total SME loans is classified as SME borrowers with incurred debt of less than 100 million baht. Commercial banks and non-bank companies are creditors of this SME loan portion.

            Of the 950-billion-baht sum, 57 billion baht or 6% from SME loans provided by commercial banks and non-bank companies is categorised as SME borrowers that banks and non-bank companies have been unable to contact.

            The majority of SME borrowers say they intend to service their debts normally when the debt moratorium programme expires next Thursday, according to the central bank.

            "The Bank of Thailand has asked financial institutions to try contacting the 6% of SME debtors," Mrs Roong said. "They will have more than two months or until the end of December to find them [debtors] and offer an opportunity for debt moratorium for another six months or to service their debts normally."

            She said financial institutions can also consider adjusting debt-servicing conditions for customers on a case-by-case basis to prevent a rise in non-performing loans, as well as adopting other tools such as reducing interest payment for credit cards and personal loans and the suspension of instalment payments.

            Borrowers can resume repaying the full amount when the situation returns to normal, Mrs Roong said.

            "The Bank of Thailand has been monitoring the situation closely and expects that there won't be a lot of debt defaults in a very short time [cliff effect] after the debt moratorium scheme ends," she said. "This is because SME debtors whose creditors are specialised financial institutions, with loans totalling 400 billion baht, will continue to be under the debt moratorium scheme for another six months. The majority of SME debtors, owing a combined 950 billion baht to commercial banks and non-bank companies, also intend to repay their debts."

            The main reason for targeted debt moratorium measures, as opposed to blanket measures, is to prevent long-term negative repercussions, Mrs Roong said.

            Debtors are still shouldering interest burdens during the debt moratorium, while targeted measures are a means to discourage moral hazard, as some debtors, who have not been heavily affected by the crisis, may opt to take this opportunity to delay debt repayment.

            The longer period of debt moratorium will also adversely affect financial stability, with an estimated 200-billion-baht loss in liquidity incurred from suspended repayment of the principal amount and interest, Mrs Roong said.

            With the eased lockdown measures, each business sector has resumed operations, albeit at a varying pace.

            Businesses related to drinks, agriculture, appliances and petrochemical products have seen a good recovery, according to the central bank.

            On the other hand, tourism-related businesses have recovered slowly compared with activity before the crisis.:

            Keep your friends close and your enemies closer


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