Thai baht reaches 2-year high

[leadpencil]

Taken from businessweek.com, this article supports everything else that I have read about the Thai baht potentially getting stronger

 

Thai baht reaches 2-year high

 

Thailand’s baht rose to the strongest level since March 2008, extending a three-month rally, as the central bank said the currency’s advance hasn’t had a significant impact on exports.

 

The Bank of Thailand isn’t concerned by currency appreciation, Governor Tarisa Watanagase said in an interview today. The baht advanced 3.1 percent in August, the best performance among Asia’s most-traded currencies, as overseas investors stepped up purchases of local stocks.

 

“There is strong optimism over the Thai economic outlook and that helps to increase fund inflows, putting appreciation pressure on the baht,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. “Another reason for the baht’s recent rapid gains is the central bank’s stance. They seem to be more tolerant with gains.”

 

The baht gained 0.4 percent to 31.17 per dollar as of 3:51 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.15, its strongest level since March 20, 2008. The currency may rise to about 31 by the end of this month, Uchida said.

 

The baht’s one-month implied volatility, a measure of exchange-rate swings used to price options, was 4.1 percent today, compared with 13.5 percent for South Korea’s won and almost 8 percent for Malaysia’s ringgit, according to Bloomberg data.

 

Swap Rate

 

“Exporters, importers and whoever can be impacted by currency fluctuations and currency volatilities should hedge their positions,” said Tarisa, whose term expires at the end of this month. “The same advice is still valid or even more important at this particular point of time.”

 

The baht’s appreciation is “much more favorable” than currency weakness caused by capital outflows, said Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch Ratings. “It reflects the success or the resilience of the economy in Asia through the global crisis.”

 

The one-year onshore swap rate, the fixed cost needed to receive a floating payment, declined to 1.675 percent from 1.685 percent yesterday.

 

The yield on the 3.625 percent bond maturing in May 2015 dropped six basis points to 2.59 percent, according to the Thai Bond Market Association. That was the lowest level since May 2009, according to Bloomberg data. A basis point is 0.01 percentage point.

 

 

Source: businessweek.com

 

Publication date: 9/2/2010

[ginseng]

In spite of all the political problems Thailand's economy is very strong and getting stronger. I do not know what this means for the future but I do think it will continue to get more expensive to live and play in LOS. Check out the Thai fund hitting 2 year highs

 

http://finance.yahoo.com/q/bc?s=TTF&t=2y&l=on&z=l&q=b&c=

[Thaihot]

Why is the baht so strong ????

 

Civial wars for years, Tourisum low, Global down turn & exports more expensive due to the strong baht.

 

I just do not get it.

 

[leadpencil]

Why is the baht so strong ????

 

Civial wars for years, Tourisum low, Global down turn & exports more expensive due to the strong baht.

 

I just do not get it.

 

 

Protectionism policies have got a lot to do with it. Exports are increasing (which seems illogical) although I have not looked into yet to find out why.

[Thaihot]

Protectionism policies have got a lot to do with it. Exports are increasing (which seems illogical) although I have not looked into yet to find out why.

 

The last I read in the export side of things the USA was moving purchases over to Vietnam for rice & chickens as they were cheaper.

 

May be with all the girls moving to falang land they have put some heavy dutie export tax on that & increased the revenue. LOL.

 

I know there is not much logic with Thai's but some thing strange is going on IMO.

 

[philkrenshaw]

Economic strength and low debt make a currency attractive.

 

Governments with large debts eventually have to print a lot of money to pay them off. Flooding the market with more money makes that currency less valuable. Huge debts can be survived if the economy is growing, as those debts will become a smaller and smaller part of the GDP. Huge debts when the country's economy is NOT growing is a bad sign. So the Baht is strong against the Dollar and Pound because the money people expect many more dollars and pounds will be printed to pay off the respective governments' debt while and countries are experiencing poor economic growth.

 

I don't know much about Britain's new government, but if the US can toss the Democrats out in the November elections and start to reduce spending, reduce taxes and set the private sector free, the dollar will probably get stronger. I suspect if Britain starts to reduce their welfare state and show some fiscal responsibility the Pound will get stronger. That may prompt riots from those on the dole, as it has in several European countries that have tried to improve their economic stability.

Edited September 5, 2010 by philkrenshaw