wowpow
July 18th, 2006, 06:47
Bangkok Post - PLOY CHITSOMBOON
"The baht is expected to strengthen further following the appreciation of Asian currencies against the weakening US dollar, currency experts say. The baht could rise as high as 37 to the US dollar if China decides to adjust the yuan's trading value and if the Japanese yen tests a level of 105 to the dollar.
The baht weakened slightly to 38.19/24 to the dollar yesterday from 37.99/38.01 on Friday. Japanese markets were closed yesterday but the yen was trading on Friday at 115.68. The Bank of Thailand is likely to leave its benchmark interest rate unchanged at 5% when its Monetary Policy Committee meets tomorrow, according to Satian Tantanasarit, financial markets management executive of TMB Bank.
The reason, he said, was that the spread between local and US rates was currently narrow at 0.25 percentage points.
''The upward interest-rate trend is a global issue. The Bank of Japan raised its rate last week by 25 basis points after freezing it for six years. Rumours that China would soon do something with its currency also have a correlation with our exchange rates,'' he said at a seminar on currency trends at the Stock Exchange of Thailand yesterday. The Bank of Japan has also said that its interest-rate policy would reflect inflation, which is currently just 0.1% in Japan. This has disappointed some investors and profit-taking on yen positions is expected.
If the US Federal Reserve decides to increase its rate again at its August meeting, this could put pressure on the Bank of Thailand to act at a subsequent meeting. ''No one can tell what the Fed will come up with. But locally, the MPC might have to look at how the Bank of Thailand will manage and act on the baht's direction, and whether it's necessary for us to follow the Fed's move,'' Mr Satian said.
The baht had been weakening over the past one to two weeks due to an expected rise in the Japanese interest rate, which had resulted in heavy yen selling. In the longer term, Mr Satian said, the yuan will have a major influence on the Thai currency as it is widely expected that Beijing will shortly announce a yuan appreciation policy. This change could lift the baht to 37 against the dollar.
M.R. Pridiyathorn Devakula, the central bank governor, said rising global oil prices would likely have no major impact on Thailand's interest-rate policy, while the Middle East issue was beyond control. ''We believe that Thai stocks will suffer on rising risk premiums from the Middle East which are driving oil prices, inflation and interest rates higher,'' he said. ''However, the flip side of this is that slower economic growth will reduce the possibility of additional rate hikes in the US or even pave the way for a possible rate cut next year,'' he added.
Caretaker finance minister Thanong Bidaya said the central bank was monitoring exchange-rate trends and capital flows closely. ''An exchange rate of 38 to the US dollar should be satisfactory for all,'' he said. ''Overall, the central bank has no need to change its monetary policy stance even with the increase in world oil prices.''
Bangkok Post
==================================================
US$ 38.1
http://img.photobucket.com/albums/v27/wowpow/38-1.png
Euro 47.7
http://img.photobucket.com/albums/v27/wowpow/Euro47.png
UK┬г 69.4
http://img.photobucket.com/albums/v27/wowpow/69.png
Interbank rates from http://finance.yahoo.com/currency/conve ... it=Convert (http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=THB&submit=Convert)
"The baht is expected to strengthen further following the appreciation of Asian currencies against the weakening US dollar, currency experts say. The baht could rise as high as 37 to the US dollar if China decides to adjust the yuan's trading value and if the Japanese yen tests a level of 105 to the dollar.
The baht weakened slightly to 38.19/24 to the dollar yesterday from 37.99/38.01 on Friday. Japanese markets were closed yesterday but the yen was trading on Friday at 115.68. The Bank of Thailand is likely to leave its benchmark interest rate unchanged at 5% when its Monetary Policy Committee meets tomorrow, according to Satian Tantanasarit, financial markets management executive of TMB Bank.
The reason, he said, was that the spread between local and US rates was currently narrow at 0.25 percentage points.
''The upward interest-rate trend is a global issue. The Bank of Japan raised its rate last week by 25 basis points after freezing it for six years. Rumours that China would soon do something with its currency also have a correlation with our exchange rates,'' he said at a seminar on currency trends at the Stock Exchange of Thailand yesterday. The Bank of Japan has also said that its interest-rate policy would reflect inflation, which is currently just 0.1% in Japan. This has disappointed some investors and profit-taking on yen positions is expected.
If the US Federal Reserve decides to increase its rate again at its August meeting, this could put pressure on the Bank of Thailand to act at a subsequent meeting. ''No one can tell what the Fed will come up with. But locally, the MPC might have to look at how the Bank of Thailand will manage and act on the baht's direction, and whether it's necessary for us to follow the Fed's move,'' Mr Satian said.
The baht had been weakening over the past one to two weeks due to an expected rise in the Japanese interest rate, which had resulted in heavy yen selling. In the longer term, Mr Satian said, the yuan will have a major influence on the Thai currency as it is widely expected that Beijing will shortly announce a yuan appreciation policy. This change could lift the baht to 37 against the dollar.
M.R. Pridiyathorn Devakula, the central bank governor, said rising global oil prices would likely have no major impact on Thailand's interest-rate policy, while the Middle East issue was beyond control. ''We believe that Thai stocks will suffer on rising risk premiums from the Middle East which are driving oil prices, inflation and interest rates higher,'' he said. ''However, the flip side of this is that slower economic growth will reduce the possibility of additional rate hikes in the US or even pave the way for a possible rate cut next year,'' he added.
Caretaker finance minister Thanong Bidaya said the central bank was monitoring exchange-rate trends and capital flows closely. ''An exchange rate of 38 to the US dollar should be satisfactory for all,'' he said. ''Overall, the central bank has no need to change its monetary policy stance even with the increase in world oil prices.''
Bangkok Post
==================================================
US$ 38.1
http://img.photobucket.com/albums/v27/wowpow/38-1.png
Euro 47.7
http://img.photobucket.com/albums/v27/wowpow/Euro47.png
UK┬г 69.4
http://img.photobucket.com/albums/v27/wowpow/69.png
Interbank rates from http://finance.yahoo.com/currency/conve ... it=Convert (http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=THB&submit=Convert)