Thai Baht to go to 28?

[harrymsmarkle]

Thailand to Ease Capital Outflow Rules Again, Governor Says

January 9, 2020 https://www.yahoo.com/finance/news/t...103127485.html

[S Landreth]

End of week update.

• Today, January 10th, 2020 the Thai Baht is being exchanged at 29.84 per every (1) US dollar.

• Bank of Thailand battles against strong baht/Central bank will struggle to reverse rally in the currency, say analysts

https://www.ft.com/content/b1708382-...9-0bcf87a328f2

the dollar to trade just above Bt30 by the end of the year

Looks like an entire year of cutting back for the pot-licker

[S Landreth]

To start another week.

• Today, January 13^th, 2020 the Thai baht is being exchanged at 29.76 per every (1) US dollar.

This Wednesday will be the third Wednesday of the month when the pot-licker receives its SS check and will be time for another review and a look at its awful prediction.

https://thethaiger.com/hot-news/econ...cy-manipulator

[harrymsmarkle]

January 13, 2020, 12:43 PM GMT+7


https://www.yahoo.com/finance/news/t...054303133.html

[S Landreth]

it didn't

[S Landreth]

• Today the third Wednesday of January 2020 the Thai baht is being exchanged at 29.82 per every (1) US dollar

• The Thai baht vs the (1) US dollar and where it stood (exchange rate) the 3rd Wednesday (I could have used the 3rd Thursday) for the past several months.

• Thai c.bank says worried about baht strength, ready to act if needed

BANGKOK, Jan 14 (Reuters) - Thailand's central bank is still concerned about the strength of the baht THB=TH and is ready to take further action if necessary, a deputy central bank governor said on Tuesday.

The baht's gains have been driven by the country's large current account surplus, and not speculation in the currency, Mathee Supapongse told a news briefing.

As Asia's best performing currency in 2019, the baht rose nearly 9% against the dollar, putting more pressure on the export-dependent economy amid global trade tensions.

The baht traded at 30.25 per U.S. dollar at 0344 GMT.: https://www.nasdaq.com/articles/thai...ded-2020-01-13

[harrymsmarkle]

Bank of Thailand lands in hot water



CHARTCHAI PARASUKCOLUMNIST
PUBLISHED : 16 JAN 2020 AT 04:01



A man walks past a currency exchange booth in Bangkok. The Bank of Thailand has recently intervened in the foreign exchange market to try to weaken the baht. (Photo by Somchai Poomlard)

It caught almost everyone by surprise when the baht strengthened past the psychological level of 30 baht per US dollar during the New Year holidays.
I was spending my holidays in Hakodate, Japan at that time. My immediate reaction was to buy Japanese yen right away as I knew the baht would be pushed back to be above 30 baht per dollar again as soon as the Bank of Thailand opened after the holidays. I was right, with about half a million yen in my wallet. That half a million yen will be put into good use like snow crabs when I go back to Japan in March and late April. Thank you, Bank of Thailand.

Under current circumstances, the 30 baht or so per US dollar is not the "free" market exchange rate for the Thai currency. The Bank of Thailand has been constantly intervening in the exchange market to keep the baht as weak as possible. In one week alone from Dec 27 last year to Jan 3, the central bank purchased US$4.3 billion into its foreign reserves to keep the currency above the 30 baht/dollar level.


Without intervention, we could have seen levels of 25-28 baht per dollar by now. I do not wish to cause panic or speculation, particularly through the media. But the level of activity in the exchange market is currently highly unusual. Traditional management of the exchange rate will eventually fail like it did in Thailand in 1997. No small central banks can outdo international speculators.

Despite the efforts of the Bank of Thailand, the Thai baht has appreciated by 8.9% against the US dollar and by 24.3% against our peers over the past five years. The appreciation has been particularly strong since the second half of last year. This has caused a public outcry as our exports have plummeted and our tourism income shrunk.

In a time when the domestic economy is sagging, export and tourism income is desperately needed. Furthermore, foreign investment flees the country as our strong currency greatly reduces international competitiveness.

The most noted opponent of the Bank of Thailand is Virabongsa Ramangkura -- one of Thailand's most respected economists. He was an adviser to former prime minister Gen Prem Tinsulanonda and is a former finance minister.

His railings against the Bank of Thailand are clearly understandable. In his view, the "right" exchange rate is critical to the country's economic success. The Thai economy was on the verge of a collapse when Gen Prem became prime minister in 1980. A key problem then was the too-strong baht exchange rate which was pegged to the US dollar. He was instrumental in changing the country's exchange rate system from a dollar peg to a basket of currencies peg. The Bank of Thailand resisted the change which led to the removal of the then governor. After the baht was revalued and the exchange rate regime was adjusted, the Thai economy took off.

In his view, resistance to change at the Bank of Thailand, again, led to the "Tum Yum Kung" financial crisis of 1997 as the value of the baht did not reflect economic fundamentals. After a change to the floating exchange rate regime the currency found its natural level at around 38 baht/dollar, and the Thai economy sprang back to life. He is afraid that similar mistakes arising from the incompetence of the Bank of Thailand are happening, which could lead to another economic collapse. He sees a baht exchange rate of 33-35 baht/dollar as needed to support the export sector and foster economic growth.

For those who follow my bi-weekly articles, they can see that I agree with Mr Virabongsa about the "wrong" currency value issues. I also agree that 33-35 baht/dollar might be the right baht valuation giving present Thai economic fundamentals. Even the governor of the Bank of Thailand admitted in public that the current baht value did not reflect economic fundamentals. However, he mentioned no appropriate value for the currency.

Question: Since everybody is in agreement, why are things not happening?

Answer: Because nobody knows how to effectively manage a currency under the floating exchange rate regime.
Under the fixed exchange rate regime of Mr Virabongsa's time, all one had to do was change the peg value. I believe that the baht/dollar rate was changed from 20 baht/dollar to 25 baht/dollar. Of course, the one-currency peg was also changed to a multiple-currency peg called a basket of currencies. However, the US dollar dominated at 70-80% of the basket so nothing changed much there.

Under the present-day floating exchange rate regime, there are only two text-book measures to affect exchange rates. One is to change domestic interest rates. Raising rates is supposed to attract more capital inflows while lowering them would do the opposite. The other way to affect exchange rates by a central bank is to intervene in the exchange market by buying excess inflows of foreign reserves or selling foreign reserves to counter outflows.

The Bank of Thailand has fully exploited the above two measures. The policy interest rate has been cut from 1.75% to 1.25%. The central bank is reluctant to cut the rate further as it would bring real interest rates to a negative level. But, out of desperation, do not be surprised to see more rounds of rate cuts this year, particularly before Chinese New Year. In terms of capital inflow absorption, US$17.5 billion of foreign capital inflows was mopped up by the Bank of Thailand last year. Wow. See the numbers. That amount for the entire year of 2019 but US$4.3 billion for only one week from Dec 27, 2019 to Jan 3, 2020. Giving the tsunami-sized inflows, I don't think the central bank can perform this operation indefinitely.

I am sorry I cannot say things in black and white here. But when "text-book" measures are exhausted, it is time for the central bank to think outside the box by looking at the root cause of excessive inflows. If the bank cannot do that, Mr Virabongsa's comments could become a reality.

By the time I finished writing this article, I decided to sell back my half a million yen. At this point in time, it is unwise to hold foreign currencies until the Bank of Thailand can think outside the box.

CHARTCHAI PARASUK https://www.bangkokpost.com/opinion/...s-in-hot-water

[S Landreth]

• Today, January 17th, 2020 the Thai baht is being exchanged at 30.03 baht per every (1) US dollar.

• Baht's moves dodge US watch list/BoT underlines continued action

Thailand again managed to avoid placement on the US watch list for currency manipulation, while the Bank of Thailand affirmed that steps have been taken to curb the baht's gain with an almost US$80-billion increase in foreign reserves over the past five years.

According to the US Treasury Department's report to Congress on "Macroeconomic and Foreign Exchange Policies of Major Trading Partners", Thailand met only one of the department's three criteria for identifying manipulation.

Thailand had a current account surplus of 5.3% of GDP last year, exceeding the 2% set in the criteria, the department said.

Although Thailand had a net purchase position of the US dollar to control the baht's strength in six of the 12 months in 2019, the net purchase was only 1.5% of GDP.

Thailand's current account surplus with the US was $19 billion, also falling short of the criteria.

The other two criteria are persistent one-sided intervention in the foreign exchange market with net purchases of at least 2% of GDP, and a trade surplus of at least $20 billion with the US. Countries that meet two of the three criteria are put on the monitoring list.

"Treasury continues to track carefully the foreign exchange and macroeconomic policies of US trading partners under the requirements of both the 1988 and 2015 Acts, including several that are not on the Monitoring List but are close to triggering key thresholds [for example, Taiwan and Thailand]," the report said.

The department also dropped China's designation as a currency manipulator, but officials continue to be concerned about the currency practices of eight other countries -- Germany, Ireland, Italy, Japan, Malaysia, Singapore, South Korea and Vietnam -- and added a ninth, Switzerland, to the list.

Mathee Supapongse, deputy governor for monetary stability at the Bank of Thailand, said international reserves took a net forward position during 2015-19, increasing by $79 billion and accounting for nearly half of the country's cumulative current account surplus of $180 billion over the same period.

Thailand is among the world's top 20 in foreign reserve holdings. As of Jan 3, the country's international reserves amounted to $227.5 billion.

"Without baht management, foreign reserves would not increase," Mr Mathee said. "The baht could be stronger than current levels."

The current account surplus is not due to short-term speculative flows, he said.

From January to November 2019, Thailand's current account surplus was $32.7 billion, while the investment portfolios of non-residents declined by $4.4 billion in value, reflecting foreign capital outflows. Foreign direct investment to Thailand was $9.3 billion.

Mr Mathee said several countries, including Taiwan and South Korea, also experienced large current account surpluses, but their outbound investments prevent their currencies from rising significantly against the greenback.

During 2016-18, Taiwan's current account surplus was $13.3 billion, compared with net outward direct investment of $1.6 billion and portfolio investment of $14.1 billion.

The current account surplus of South Korea in the period amounted to $5.2 billion, while net outbound direct investment was $1.2 billion and portfolio investment was $3.5 billion.

Thailand's current account surplus totalled $8.6 billion, while net direct and portfolio investment contracted by $2.1 billion and $800 million, respectively.

Outbound portfolio investment from Taiwan and South Korea is mainly through institutional investors, especially pension funds, while such outbound investment from Thailand remains at low levels.

The central bank will discuss the matter with related parties and continue to encourage outbound portfolio investment, Mr Mathee said.

"The Bank of Thailand continues to pursue baht management, while fiscal policy is also needed to take care of the baht," he said.

The regulator is ready to implement additional measures to manage the baht if necessary, Mr Mathee said.

Given the structural economic problems, public-private collaboration is needed to ensure the baht moves in line with economic fundamentals, he said.

The private sector could help to tame the baht's appreciation in multiple ways, he said, such as through importing machinery.

According to a source, the Finance Ministry plans to propose tax incentives to enhance private-sector investment to Deputy Prime Minister Somkid Jatusripitak today, with the aim of reining in the baht.: https://www.bangkokpost.com/business...-list#cxrecs_s

[S Landreth]

• Today, January 20^th, 2020 the Thai baht is being exchanged at 29.98 baht to every (1) US dollar. The baht remains strong against the US dollar

[lamphun]

[harrymsmarkle]

...and dance like it's 1997...

[S Landreth]

Today, January 22^nd, 2020 the Thai Baht is being exchanged at 29.99 baht per (1) US dollar.

[S Landreth]

• Today January 24^th, 2020 the Thai baht is being exchanged at 30.07 baht to every 1 US dollar.

• KBank: Baht to rise throughout 2020/Economic imbalance spurs relentless climb

The baht's strength is expected to continue throughout this year, buoyed by Thailand's increased surpluses in current account and trade balance coupled with flat growth in imports, says Kasikornbank (KBank).

The local currency's value is forecast to hover around 29.75 against the US dollar in the first half before appreciating to 29.25 by the end of the year, said Kobsidthi Silpachai, KBank's head of capital markets research.

On Dec 30, the baht touched a six-year high of 29.90 per dollar before depreciating into the 30s in 2020. Anaemic trade volume as the holidays approached allowed some investors to easily manipulate the baht, while the country's economic fundamentals also contributed to the previous gain.

The baht was Asia's best-performing currency last year, rising by more than 7%, according to Reuters.

Despite subdued economic growth, the baht gained from the country's massive current account surplus, inflows of tourism revenue and near-record foreign reserves.

Ample foreign reserves have made Thailand stand out as a safe haven to park capital, either for actual investment or speculation.

"We estimate that the country's current account will record a surplus of US$33.8 billion this year, a reflection of imbalances in the economy," Mr Kobsidthi said.

Thailand's current account surplus totalled $33.2 billion as of November 2019, accounting for 5.3% of GDP, according to Bank of Thailand data.

The country's trade surplus with the US was $19 billion in 2019, according to the US Treasury Department.

Although the Bank of Thailand's Monetary Policy Committee is expected to make another 25-basis-point rate cut this quarter to shore up economic growth momentum and fend off appreciation, limited monetary policy space will still put pressure on the baht's upward trend going forward, Mr Kobsidthi said.

Thailand's GDP growth is projected at 2.7% this year, supported by fiscal 2020 disbursement budget and public investment, he said.

Drought is anticipated to incur economic losses of more than 20 billion baht or 0.1% of Thailand's GDP, Mr Kobsidthi said.

If economic losses stemming from drought and fourth-quarter GDP growth data are worse than expected, the 2.7% growth forecast could be downgraded, he said.

The tweak to ease loan-to-value (LTV) regulations is not projected to rev up property sales, he said, as purchasing power has been dented by elevated household debt, which accounts for 79% of GDP.

The ratio of household debt to income is as high as 220%, contributing to a slowdown in private consumption, Mr Kobsidthi said.

The Bank of Thailand has eased the LTV rules governing mortgage lending, shortening the minimum debt-servicing period for first mortgages required for those seeking a second loan for homes priced below 10 million baht.

Another change was lowering the minimum down payment for first mortgages for homes valued at 10 million baht or more.: https://www.bangkokpost.com/business...hroughout-2020

[Somchai Boonporn]

29 and decreasing!!

Perhaps, this will persuade Farang visitors from coming around and Farang residents a mass exodus.

Less Farang.
Can only be beneficial.

[S Landreth]

^Any forethought taken before that ignorant remark?