1 US$ = 36 baht lowest since 1988. speculators involved

"Local bank dealers confirmed that there had been speculation, adding that the currency had appreciated too rapidly also because of the weakening of the US dollar. During the past six months, it has gained Bt2 against the greenback, which is far more than other currencies in the region.

"Without intervention, the baht could rise further to Bt35.80 soon," said one dealer.

Foreign speculators have found new ways of financing the speculation, BOT assistant governor Suchada Kirakul said, adding that the unit has strengthened too quickly - to a level not justified by economic fundamentals.

The BOT has learnt that a number of non-resident investors have bought into baht bonds from Thai banks with the agreement to sell back the bonds in a certain period. This is equivalent to the borrowing of baht from local banks, and waiting for the right time to convert the currency into US dollars when the greenback slides further. Once the first sell-back agreement expires, they strike another revolving contract.

"This has taken place after the central bank plugged a hole by forbidding commercial banks to sell bills of exchange with a maturity of less than one year to non-residents," Suchada said......

Full article

http://www.nationmultimedia.com/2006/12 ... 020410.php (http://www.nationmultimedia.com/2006/12/01/business/business_30020410.php)

Can't they pick on the Euro for a change?

[bedbugy1-old]

maybe it's all the 800000baht s need for the visa rules there will be biger inflows during the new year

Baht 'will remain strong' for months - Bangkok Post

(TNA) тАУ Economists predict continued baht strength until the middle of next year and a booming stock market, but warned that a more dramatic braking of the US economy could yet see funds flowing out of the region as fast as they have flowed in.

Usara Wilaipich, senior economist at Standard Chartered Bank in Bangkok, said at a seminar on Investment Prospect in the Year of the Pig (2007) held by the Stock Exchange of Thailand, that Thai investors need to monitor the economic development in the US closely.

She attributed the baht rise to the recent influx of foreign investment into the financial and stock markets, pushing the baht, along with other Asian currencies, to record highs. Investor sentiment has been buoyed by low inflation, low interest rates and a healthy trade balance, Usara added.

However, the countryтАЩs general election, scheduled for the third quarter of next year, might prompt foreign investors to re-evaluate the political outlook, she warned. Profit-taking of the baht at that stage should come as a no surprise, she added, noting that an exchange rate of Bt39 to a US dollar was a real possibility.

Visit Ongpipattanakul, deputy managing director of Trinity Securities, opined that the prospect of easier monetary conditions in the US in the not-too-distant future would help sustain the bullish activities in the Thai stock market. The US Federal Reserve is seen as likely to ease monetary
policy next year as economic growth slows.

He said the SET index is likely to reach 760-770 early next year as a result. However, short-term profit-taking might cause sporadic volatility in the market.

1 US$ = 36 baht lowest since 1988. speculators involved

"Without intervention, the baht could rise further to Bt35.80 soon," said one dealer.

The lowest since 1988! Don't all those years (before 1997: 1996, `95, `94....) when it fluctuated around 25-26\$ count?

I have heard that within the next 45 days, there will be a massive movement of funds from China to the U.S. I wonder how that will impact the baht.

Sirius - 1997 was the year that the Thai baht crashed and the US $ went from 25/26 to 45 and the UK Pound from 35 via 90 tp 70. Comparisons before then are therefore not really relevant.

Soxfan 1 Can you help me understand what a "massive movement of funds from China to the US" actually means. I understand that China has massive holdings in U S dollars (where?) what does the movement imply? Maybe it's a loan? Thank you.

What the massive movement of funds from China to US means, (I actually put this statement my similar thread) - China is realising that the dollar is falling fast and has probably held off from dumping their dollars for sometime, their economy is very strong to say the least, they dont need dollars anymore, they dont need US bonds either (or certainly not as much as they have had in the past) - hence they are intending to invest their monies in the Euro and the UK Pound which will make them stronger - and when they do dump the dollars the dollar will be even weaker than it is now.

The reason at the moment why people are investing in the Euro and UK Pound is , well one of the reasons is the high interest rates and a few other things - we could high activity over the next few months - sooner or later the chinese are going to dump lots of US bonds and dollars and when they do we could see even 80 bht to the pound and less than 35 bht to the dollar.

I suspect there will be interventions though to stop it. Certainly from a US perspective they will more than likely not intervene, they believe in free for all, free flow.

Sirius - 1997 was the year that the Thai baht crashed and the US $ went from 25/26 to 45

It got a lot worse (better?) than that...hitting a high in the mid 50's to the dollar. Yeah, those were the days..