Thai Baht hits highest point in seven years

[BahtandSold]

Thursday October 26, 2006
Baht/$ 37.080

Thai Baht hits highest point in seven years on steady inflows
source: Bkk Post

The baht yesterday hit the highest point in seven years owing to steady inflows in the stock market, according to dealers.

The baht closed at 37.08/11 to the US dollar, its highest point for the day, up from 37.22/25 at the start of the day, and 9.7% above the level of 41.07 at which it stood at the start of the year.

Tarisa Watanagase, the governor-designate of the Bank of Thailand, said the baht had appreciated too quickly on the back of strong capital inflows.

One market dealer said foreign investors were continuing to shift portfolios from dollar-denominated assets to Asian markets yesterday, on anticipation that the US Federal Reserve would hold its interest rate steady. The formal Fed announcement was due at around 2 am today, Thailand time.

The appreciation of the baht is in line with other regional currencies as investors have been pouring money into Asian markets across the board.

Promising economic factors such as an improving trade balance and a low price-to-earnings ratio in the Thai stock market have helped to attract investment.

"The central bank intervened in the market yesterday by buying the dollar through local banks in the afternoon to ease the baht down," said the dealer.

Songpol Chevapanyaroj, a capital markets business manager at Kasikornbank, said the baht might move in a range of 37-37.30 in the short term, with the possibility of reaching a support point of 36.75 at the end of this year.

Charl Kengchon, an economist at Kasikorn Research, said this reflected confidence of foreign investors in the Thai economy and political situation, and foreign net buying in the capital market. In addition, Fitch Ratings on Monday removed Thailand from its Rating Watch Negative list.

This reflects improvement in market consensus for October, forecasting the baht at 37.80 in the aftermath of the coup, which is slightly down from 37.756 in September.

He said Kasikorn Research had predicted that the next wave of foreign capital fund flows would come in the second half of next year along with clarification of the new constitution and a schedule for the national elections.

Kasikorn Research predicts the baht to move within a range of 37 and 37.50 next year, similar to the market consensus of 37.36, to close at around 37.12 at the end of 2007.

Mr Charl said one concern was the possibility of the US economy achieving a soft landing next year. A hard landing would make the baht more volatile.

"I am not worried about baht currency competitiveness as we expect that it will not be stronger than the Asian currencies' average. But we are watching the US economy and movement of other major Asian currencies such as the Japanese yen and Chinese yuan," he said.
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[BahtandSold]

Friday October 27, 2006
Baht/$ 36.990
BoT: Baht strengthening 'too fast'
POST REPORTERS

The Bank of Thailand yesterday cautioned that the baht had appreciated ''too fast'' as the unit briefly traded under 37 to the US dollar yesterday. The baht, which is trading at a seven-year high, opened yesterday at 37.01 to the dollar and strengthened to as much as 36.98 before closing at 36.99.

Suchada Kirakul, a central bank senior director for the domestic economy department, said foreign portfolio inflows were helping push the baht stronger against the US dollar.

''You can see that the Stock Exchange of Thailand index has been rising and foreign investors are net buyers of Thai stocks. But the appreciation has been a bit sudden,'' she said.

Mrs Suchada cautioned that capital flows into the equity market could reverse, affecting currency rates.

For now, the appreciation of the currency has given importers an opportunity to build up their stocks.

Exporters, in contrast, are being urged by bank authorities to hedge their exposure to protect against further strengthening in the baht.

According to the central bank, the baht had a reference rate of 37.01 baht to the dollar on Thursday, representing an increase of 1.38% from the end of September and 10.83% from the end of 2005.

In contrast, the baht has gained 1.89% against the euro over the past month and 4.37% from the end of 2005, while the baht is up 2.2% against the Japanese yen over the past month and 11.4% for the year to date.

Nontaphon Nimsomboon, a director of the Bank of Thailand, said economic growth for the year was projected to range from 4.5% to 4.6%.

But directors yesterday discussed at a board meeting the need to monitor currency flows given recent the appreciation of the baht, which has gained ground in part due to the easing of political tensions following last month's coup.

Khunying Jada Wattanasiritham, the president of Siam Commercial Bank, said exporters could be affected by the stronger baht depending on the relative rate movements of competing nations.

The relative stability in the Chinese yuan against the dollar could affect Thailand the most, she said, as Chinese manufacturers gain an edge against their Thai counterparts in the world market.

Khunying Jada said SCB was recommending that exporters take out forward cover to lock in their exchange-rate exposure.

But she added that it was understood that the central bank did not want to see the baht too strong against the dollar.
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[BahtandSold]

Saturday October 28, 2006
Baht gets stronger - rises to 36.72
source: Bkk Post

The Thai baht strengthened against a moribund dollar on overnight money markets.

At 6 a.m. Thailand time, the international rate was 36.715 baht per US dollar. Just 12 hours earlier, the Thai currency reached 36.99 baht per dollar on New York currency markets.

The dollar tumbled to a one-month low against the yen and a more than three-week low versus the euro Friday, after a government report showed the US economy grew more slowly than expected in the third quarter.

Early this morning in New York, the dollar was quoted at 117.58 yen, compared with 118.37 yen late Thursday. It had earlier dropped to 117.12 yen, the lowest level since Sept. 27. The euro changed hands at $1.2732, compared with $1.2688, after rising to $1.2749, the highest level since Oct. 3.

On the week, the dollar eased 0.9% against both the euro and yen.

The Bank of Thailand said on Friday it had intervened in the foreign exchange market to restrain the rise of the baht, which is at a seven-year high against the US dollar.

Acting central bank governor Tarisa Watanagase indicated that the central bank bought the US dollar to the stem the baht's advance.

"The baht got very strong because of a lot of capital inflows. We had to take some action to prevent too much movement," Tarisa told reporters.

Ms Tarisa said the central bank is considering relaxing some rules for local entities on their foreign investments to allow freer outflows of funds. That would also ease pressure on the dollar.

"It could be relaxation on the amount of investment or the conditions of investment. We are looking at the possibilities," she said.

In its latest move to allow more outflows, the central bank increased the limit on foreign currency deposit accounts to $50 million per account from $10 million in May.

Ms Tarisa said foreign funds bought Thai shares aggressively after the U.S. Fed decided earlier in the week to keep its benchmark rate steady.
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