Baht approaching 32

Political woes cloud outlook тАФ US professor
NAREERAT WIRIYAPONG
Political uncertainties stemming from the Dec 23 election are among major risks facing Thailand this year that have weakened investor confidence, a leading US professor and consultant said yesterday.

Professor Paul Tiffany from the Wharton School of the University of Pennsylvania said political risks are тАШтАШvery significantтАЩтАЩ following last monthтАЩs poll.

тАШтАШBusinesspeople are facing issues of political, social and economic changes in Thailand,тАЩтАЩ Prof Tiffany said at a conference on competitiveness in Bangkok.

тАШтАШInvestors are puzzled about the final Dec 23 poll results and whatтАЩs going to happen if (ousted premier) Thaksin (Shinawatra) comes back on ValentineтАЩs Day or in April,тАЩтАЩ he added.

The Election Commission has yet to certify all winners of the election, the kingdomтАЩs first since the bloodless coup in September 2006 that toppled the twiceelected Thaksin.

ThaksinтАЩs wife Khunying Potjaman returned to Thailand yesterday to face charges filed by the Assets Scrutiny Committee (ASC), the anti-corruption panel named by the junta. Mr Thaksin himself has lived in exile since the coup.

тАШтАШUncertainty abounds with a perception that there would be another revolution in Thailand,тАЩтАЩ said Prof Tiffany.

Investors basically want stability, he said. They are eager to see what the new cabinet looks like.

тАШтАШWhether the new government is likely to be corrupted or very transparent, investors want to know so they can adjust to it,тАЩтАЩ he added.

Prof Tiffany also said investor confidence dropped due to high risks facing both the local and international economies in 2008, including baht appreciation, surging oil prices and the US economic slowdown.

тАШтАШThe baht will appreciate further in 2008, while the US economy struggles with a recession. These factors are going to cause problems for exports, which account for more than 60 percent of the Thai economy,тАЩтАЩ he said.

The Wharton professor also pointed out that the continued insurgency in ThailandтАЩs Muslim-majority southern region has hurt the countryтАЩs outlook.

More than 2,800 people have been killed in the insurgency that erupted in January 2004.

In addition, Prof Tiffany said Thailand still trailed its regional competitors in technology adoption and education.

тАШтАШThe region has moved ahead faster than Thailand in technology adoption, while Thailand lags the region in educational performance,тАЩтАЩ he said.

тАШтАШThere is a huge room for improvement. It is going to take a big investment in education if Thailand wants to advance.

[ikarus]

Political woes cloud outlook тАФ US professor
NAREERAT WIRIYAPONG
Political uncertainties stemming from the Dec 23 election are among major risks facing Thailand this year that have weakened investor confidence, a leading US professor and consultant said yesterday.


This is all correct. However, to understand the dynamic of Thai baht, one should look at the general Asian context. By the way, yesterday Thai baht reached 33.17 versus US dollar which is the highest level since 1997. The most important factor is the accelerating appreciation of Chinese Yuan. Thre are several reasons for that. The two most important: EU joined US in pressing China to allow Yuan to appreciate faster (last year Yuan actually depreciated versus Euro).
Another important reason is the high level of inflation in China (most visible in rising food cost). This make Yuan appreciation an attractive tool to fight inflation.
The Thai baht is not valued fairly and the general policy of BOT is to allow baht to appreciate in line with major trade competitors (China is the most important one).
Thus, no matter what are political ramifications in Thailand (barring major crisis) baht is bound to appreciate much further. On top of that currently Thailand enjoys a very high current account surplus and high level of inflation. Both factors point to further appreciation of Thai currency and even possible hike in interest rate (after 5 consequtive reductions). Thus,if I were Wowpow I would not rush in long term term deposits (especially with TMB which is in bad financial shape and try to raise capital by offering teasing term deposit rates). Better safe than sorry, as they say, Wowpow. Wait for higher interest rates (with more reliable banks) before going into long term term deposits.

[ikarus]

Once again, you can see that my predictions (in this case on US dollar thread started by White desire) were absolutely correct. I predicted the rise of Asian currencies and in particular Japanese Yen and Thai baht. On another thread (where Pattaya headed) I predicted the fall of oil prices and indeed oil is already down 10 dollars from its peak (which pretty much coincided in time with my post). Stay tuned for further bold and correct predictions




Thai Baht Rises to Decade High as Exporters Convert Earnings

By Shanthy Nambiar

Jan. 18 (Bloomberg) -- Thailand's baht rose to the highest in more than a decade on speculation exporters, concerned that further dollar weakness will erode their earnings, converted foreign-exchange proceeds.

The baht has gained 2 percent this year, the second-best performer of the 17 most-active Asian currencies after the Japanese yen. The Bank of Thailand bought dollars to avoid excessive strength in the baht, Governor Tarisa Watanagase said yesterday. The dollar fell to a 2 1/2 year low against the yen this week on signs the U.S. economy will slip into recession.

``The writing is on the wall, the dollar has to depreciate,'' said Kobsidthi Silpachai, head of capital markets research at Kasikornbank Pcl in Bangkok. ``Exporters are not in the business of speculating. They need the local currency to run their business. Intervention is unlikely to be effective as the structural downward trend of the dollar is pretty clear.''

The baht advanced 0.3 percent to 33.04 per dollar in onshore trading as of 4:10 p.m. in Bangkok, according to data compiled by Bloomberg, near the strongest since August 1997. Offshore, the baht fell 1.3 percent to 30.60.

The baht may rise to 32.80 by the end of March and to 31.5 by year-end, Kobsidthi said. That compares with the median estimate in a Bloomberg News survey of 25 analysts of 31.5 by the end of 2008.

The Bank of Thailand wants ``exporters and importers to hedge against dollar movements and not put one-way bets on the dollar's weakness,'' Tarisa said.

Excessive Movement

Selling of dollars by exporters has strengthened the currency and the central bank is seeking to ``stop the baht from having excessive movements or strengthening too fast,'' Governor Tarisa said. ``We want the baht to move in line with trading partners' currencies.''

Thailand's current account surplus was a record $2.65 billion in November, buoyed by shipments to Asian nations. Exports rose to an all-time high of $14.6 billion in November, according to a central bank report last month.

``There is no doubt the massive current account surplus is driving the baht strength,'' Thomas Harr, senior currency strategist at Standard Chartered Plc in Singapore, said in Bangkok today.

The central bank imposed capital controls in December 2006 to protect exporters from a stronger baht. Last month, it began easing some of the curbs, exempting property funds from a requirement that 30 percent of the money be locked into bank accounts for a year. About $5 billion in funds fell under capital controls in 2007, the central bank said in December.

Thailand's 10-year bonds were little changed.

The yield on the 5.125 percent 10-year note maturing in March 2018 held at 4.55 percent the 4 p.m. close in Bangkok, according to the Thai Bond Market Association. The price rose 0.01078, or 0.1 baht per 1,000 baht face amount, to 104.6296.

Liquidity in the baht offshore and onshore market fell as capital curbs spawned a two-tiered exchange rate and limited foreigners' access to the local currency.

The central bank is ``likely to be comfortable with a gradual strengthening of the baht as long as other Asian currencies are also strengthening,'' Harr said.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net .

Last Updated: January 18, 2008 04:45 EST

[Brad the Impala]

Once again, you can see that my predictions (in this case on US dollar thread started by White desire) were absolutely correct. I predicted the rise of Asian currencies and in particular Japanese Yen and Thai baht. On another thread (where Pattaya headed) I predicted the fall of oil prices and indeed oil is already down 10 dollars from its peak (which pretty much coincided in time with my post). Stay tuned for further bold and correct predictions


Sterling has gained over 2% against the baht in the last two days, while depreciating or holding steady against other currencies.

The fall of oil prices, and general appreciation of asian currencies, has been widely forecast by "experts". While we may be blessed with our own George Soros, the opinions expressed are not bold or original enough to warrant the self congratulations!

An opinion that I have heard expressed, is that the only way to make real money on the markets is by going against the herd of prevailing opinion.

Discuss.

[Sen Yai]

Here's whats been happening with the USD vs THB recently.

You'd have to be a very bold man (or a fool) to assert that your predictions were correct at this moment in time....

http://img.photobucket.com/albums/v291/SenYai/3mUSDTHB160108.png

Sterling has gained over 2% against the baht in the last two days, while depreciating or holding steady against other currencies.

The fall of oil prices, and general appreciation of asian currencies, has been widely forecast by "experts". While we may be blessed with our own George Soros, the opinions expressed are not bold or original enough to warrant the self congratulations!

An opinion that I have heard expressed, is that the only way to make real money on the markets is by going against the herd of prevailing opinion.

Discuss.

Whilst sterlinig has gained over 2% against the bht, it has not filtered through to the exchange markets in Thailand yet, most probably will on Monday.

All indicators are showing that the bht is getting stronger. I find it strange that there has been an increase in sterling value - as I have always thought, someone is playing with the currencies. On another thought, look what has happened to Thailand with regard to americans, a dramatic fall in american visitors, I'm sure they do not want that to happen to UK citizens, albeit also European visitors.

Stirling will fall drastically on 15 Feb recover slightly between 6-13 March and drop again until 21 March

How do I know? Always happens when I visit LOS - the slight blip is due to me taking a side trip to Ankor Wat.

[ikarus]

It is funny that Brad Impala thinks that my predictions were obvious and Sen Yai thinks that I am totally wrong.
Sen Yai, the charts you show reflect the so-called off shore exchange rate. I, on the other hand, always talk about onshore rate . US dollar steadily declines versus Thai baht in onshore rating. Now, offshore rate is of no interest for visitors or expats living in Thailand, anyway.
Brad, any change of cable versus US dollar immediately reflected in onshore exchange rate versus Thai baht. Currently , variations in price of cable versus US dollar can be easily explained by perception of what is going to happen with interest rates in UK and various economic and financial data feeding the market. However, general trend for UK pound is down. UK is heading towards significant slow down or even recession and hence rate cuts. By the way, the best indicator how UK pound is doing is observing its dynamic versus euro, though quite understandably most of the people here (from UK) are mostly interested in the exchange rate UK pound-Thai baht.
How to make money on the markets is, of course, a completely different story. It may be true that one can make big money moving against the herd but one can also loose a lot of money in this way! In the current envornment I made good money by moving with "the right" herd and it was quite trivial: by buying US treasuries! That was a recommendation given by Mark Faber about six monthes ago. He also correctly predicted the coming recession in US and even its timing!
Now Mark is a very wise man. My wisdom is that I follow the right recommendations.

The glass is half FULL .

Call your congressman/woman. it is all about the weak dollar.

In October I had to pay 19-20 Danish Cronen=DKK for 100 BAHT, I have just checked and today I only have to pay 16.81 DKK. Let it be that way until May. The DKK is following the EURO very tight so maybe this is also the trend for people living in euroland. ? So a growing in European visitors maybe make it up, from fewer US visitors to Thailand?
BTW there have never being so many Scandinavians traveling to the US because of the weak $

[ikarus]

Call your congressman/woman. it is all about the weak dollar.

In October I had to pay 19-20 Danish Cronen=DKK for 100 BAHT, I have just checked and today I only have to pay 16.81 DKK. Let it be that way until May. The DKK is following the EURO very tight so maybe this is also the trend for people living in euroland. ? So a growing in European visitors maybe make it up, from fewer US visitors to Thailand?
BTW there have never being so many Scandinavians traveling to the US because of the weak $
You are making a very good point. Euro, in fact, did not depreciate versus Thai baht. Keep in mind, though, that many analysts now predict decline the euro versus US dollar during 2008 by about 8 percent. Good example is Hans Redekker from BNP Paribas who has a good record in this respect. The theory behind this predictions is that Europe (which is behind US and UK in economic cycle) will enter recession or significant slow down later this year and Trichet will need to cut interest rates. However, even this is going to happen most agree that before this decline, euro will reach 1.50 per US dollar
at least (after expected rate cut in US in the end of January). Talking about Scandinavian currencies , there is a group of analysts who believe that they outperform euro in 2008 (with the exception of islandic crona which look like in deep trouble at the moment). Since I keep sizable amount of my funds in Denmark, I try to follow somewhat what is happening over thre and it seems there is a chance that Denmark may join eurozone.
In any case, I am sure you will be in reasonable shape (at least in terms of exchange rates!) in May. Enjoy.

Call your congressman/woman. it is all about the weak dollar.Yes indeed - let's get Congress to fix the exchange rate :idea: By the way, I am also approaching 32 having once been 40 (and am now 63)

Brad:

Although the offshore rate has gone up with regard to sterling i.e. about 60 odd to the UK pound, its actually gone the other way with the onshore rate - today around 64 - obviously the authorities have their own way of "doing this" and even though the thai bht was weaker offshore, doesnt necessarily mean it will be weaker onshore.