elef Posted January 4, 2007 Report Share Posted January 4, 2007 Bangkok Bamk Today Link Amid fear, uncertainty - a solid baht (dpa) - Despite a spate of bomb attacks in Bangkok and a 3.0 per cent plunge in the stock market, the baht currency strengthened against the US dollar on Thursday when all other Asian currencies were weakening. The mighty baht was trading at 36.10 to the dollar mid-day Thursday, compared with 36.16 on Wednesday, when the Stock Exchange of Thailand (SET) shed 3.0 per cent of its value in an aftershock from Sunday's spate of bombs that left three people dead and almost 40 injured. The SET was closed on Monday and Tuesday for the New Year holidays. On Thursday most other Asian currencies weakened against the dollar which has strengthened because of declining oil prices announced Wednesday. Foreign exchange analysts in Bangkok attributed the baht's anomolous strength to the Bank of Thailand's capital controls announced on December 18, which, ironically, were intended to halt speculation in the baht to keep it from strengthening against the dollar and adversely affecting Thai exports. "The Bank of Thailand implementation of currency measures on December 18 has introduced a kind of two-tier system - an onshore and offshore market for the baht," said Chao Kengchon, a researcher at the Kasikorn Research Centre (KSC), a think tank. "So people who really need the baht for their business and don't want to bother following the BOT regulations might go to the offshore market, but since the supply in the offshore market is very limited, the price of the baht has strengthened," said Chao. Since the December 18 capital controls, foreign exchange brought in to Thailand for investment in bonds and property has been subject to a 30 per cent reserve requirement. The capital controls sparked a 15 per cent plunge in the SET on December 19, prompting the government to drop the reserve requirement on foreign exchange brought in for stock investments. While the regulations have slowed down the inflow of foreign exchange into Thailand, they have also prompted some investors to keep their existing reserves in the country, bank sources said. "Money that was brought in to Thailand before the December 18 regulations were put in place is still in the country, because investors don't want to bring in new amounts that would be subject to the 30 per cent reserve requirement, and this is one reason the baht is still stronger than other Asian currencies," said Saranya Raksorn, a foreign exchange trader at Bangkok Bank. Having failed to stop the baht from strengthening, and limited inflows of investments into the bond market, pressure is building on the BOT to drop the reserve requirement altogether, Chao noted. Link to comment Share on other sites More sharing options...
Guest Posted January 4, 2007 Report Share Posted January 4, 2007 What a mess.... Link to comment Share on other sites More sharing options...
Julian2 Posted January 4, 2007 Report Share Posted January 4, 2007 Amid fear and uncertainty...a weak dollar, would be a better title. Link to comment Share on other sites More sharing options...
elef Posted January 4, 2007 Author Report Share Posted January 4, 2007 Yes, I also got an impression that BoT changed it's policy so instead of following a basket of currencies based on trade shares they just want to cling to a falling stone. Link to comment Share on other sites More sharing options...
ThaiHome Posted January 4, 2007 Report Share Posted January 4, 2007 Not sure what you mean? There is no peg against any currency so what good would a basket do? Since most of Thailand's export business (as in the rest of the world, but particularly Asia) is in USD, there is not much the BOT can do to change the fact that the THB-USD rate is what counts and when the baht is strong it cost Thai business money TH Link to comment Share on other sites More sharing options...
Old Hippie Posted January 4, 2007 Report Share Posted January 4, 2007 If they are at all smart, they will change it to 60/1 before my next trip...I'll keep dreaming... Link to comment Share on other sites More sharing options...
Evel_Penivel Posted January 9, 2007 Report Share Posted January 9, 2007 [color:blue]The following was writen by a financial analyst who gets very big bucks to advise people who have even bigger bucks. Bottom line: Thai baht will weaken. I lifted the last paragraph of his analysis to the top to get to the chase faster. [/color] Evil "Needless to say, such an (investment) environment bodes ill for the Thai baht. It was one of the strongest currencies in the region last year and is likely to be among the worst performers until the political/policy environment improves. Initially look for the dollar to re-test the THB36.50 area seen in mid-December and possibly head toward THB38 in the coming months." [color:blue]This is how it begins:[/color] "The last thing Thailand needed was more bad news after the botched attempt to impose capital controls at the end of last year and the bombings on New Year's Day. But that did not stop Thai official from announcing new restrictions on foreign ownership. Overseas investors have a year to disclose their holdings in Thai companies and a further 12-months to pare their stakes to less than 50% based on voting rights. Local joint ventures, using what are called "nominees" have 90 days to disclose their stakes and 12-month to comply with the new rules. The policy re-defines "alien" to include foreigners and their Thai nominee. Retailers and hotels will be required to report their holdings, but foreign investors in those sectors will not have to pare foreign or nominee stakes Although these new policies do not impact portfolio investors, it is yet another step in the deterioration of the political and investment climate. S&P indicated late yesterday that the situation was increasing the likelihood that it will lower the outlook for Thailand's credit rating. Thai stocks fell 2.7% today (Jan 9), bringing the year-to-date loss to 9.3%. Today represents the lowest close in two years. The debt market rallied. But given the 30% withholding on foreign fixed income investments, one has to assume that the debt buying is being down by domestic investors, perhaps as they flee the equity market. The yield on the benchmark 10-year bond fell 14 bp to 5.06%." Link to comment Share on other sites More sharing options...
cavanami Posted January 10, 2007 Report Share Posted January 10, 2007 $1 USD > 38 Baht...ohhhhh, one happy camper here Link to comment Share on other sites More sharing options...
OCgringo Posted January 10, 2007 Report Share Posted January 10, 2007 35.970 now, so really not much change from the stock market crash , the 50% Thai ownership of businesses new rules and the new years bombings Pretty amazing if you think about it OC Link to comment Share on other sites More sharing options...
dean Posted January 10, 2007 Report Share Posted January 10, 2007 After the rumours last week of a second coup, I decided to hold off for a week in converting $31,000 into baht to finish paing for my house. Today, I decided that there was not much point in waiting. I figure that by builing the house this year instead of last year, I spent $10,000 extra in currency adjustments. Link to comment Share on other sites More sharing options...
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