Baht What up with Dat?????

nkstan wrote:I agree Arjay!This is relatively ''good news for us'' and the first news that might slow the downward trend for the reasons you mentioned!

Domestic vehicles exports in July amounted to 87,605 units, an increased of 139 per cent year-on-year, and 26.45 per cent over June of this year, according to the Federation of Thai Industries.

In the first seven months of this year, Thailand exported 422,364 units, up by 53.8 per cent from the same period last year.

Thailand reported a trade deficit of US$939 million (Bt29.6 billion) last month, the biggest deficit in two years, due mainly to increasing import demand for gold and auto parts to support export expansion.

The Commerce Ministry reported yesterday that the value of Thailand's exports in July grew 20.6 per cent to $15.5 billion, while imports surged 36.1 per cent to $16.5 billion, a record for imports in two years.

Exports in the first seven months jumped 34.1 per cent to $108.63 billion while imports rose 49 per cent to $103.19 billion. Trade surplus totalled $5.43 billion in the first seven months of this year, despite a huge trade deficit last month.

The ministry reported that imports saw a big jump last month due to the lower gold price compared with June this year.

Gold imports reached 44.57 tonnes, worth $1.7 billion last month, up 203 per cent from $126.6 million in June. This was due to the lower gold price in the world market, which dropped by 3.01 per cent month on month to $1,231 per ounce in July.

Imports of vehicles and parts, including automobiles and parts, and motorcycles and parts, rose steeply last month by 77.1 per cent to $697.8 million.

"Continued export growth in July has ensured that Thai exports will achieve the expansion target of 20 per cent to Bt183 billion this year, said Commerce Minister Porntiva Nakasai.

However, the appreciation of the baht has emerged as the biggest concern, with the possibility of it slowing down export growth in the remaining period, she said.

Porntiva said the baht could even strengthen to Bt30 to the US dollar. To ensure export growth, the ministry will cooperate with the Bank of Thailand to stabilise the baht, she said.

Meanwhile, following a significant growth in exports, domestic consumption and recovery in the tourism sector, the University of the Thai Chamber of Commerce (UTCC) has revised up its economic forecast for 2010 from 56 per cent to 6.57.5 per cent.

It is expected that the Thai economy has a high possibility of achieving 6.9 per cent expansion, valued at Bt9.67 trillion this year.

robust economic growth would result in higher employment and more loan demand in the final quarter of this year, and next year.

Factors that may cause slowing down of economic growth are sluggish demand in the United States and the European Union, and the stronger baht, which is expected to touch Bt31.3Bt31.4 in the fourth quarter of this year, said Thanavath.

The new forecast took into account that incomes from tourism will grow by 6.02 per cent this year from minus 9.85 per cent, with the number of tourists reaching 14.6 million this year; exports are expected to grow by 23.9 per cent; domestic consumption will reach 3.8 per cent from a 1.1percent slide last year; and foreign direct investment will improve by 5.7 per cent from a 9percent decline last year.

GDP for the farm sector is projected to grow from minus 0.5 per cent last year to 2.1 per cent expansion this year, while GDP for the industrial sector will climb from minus 5.1 per cent to 11.5 per cent this year.

The assumption of 6.57.5 per cent growth is based on an estimated average exchange rate of Bt32 against the greenback, policy interest rate at 1.752 per cent, inflation at 3.5 per cent, and unemployment rate at 1.3 per cent.

Additionally, the UTCC also expected that the Thai economy will continue to grow by 45 per cent next year. Due to the strong economic fundamentals, the baht could move up to Bt30 to the US dollar next year.

Business » Economics
FTI: Each 1% rise costs exporters B1bn

* Published: 20/08/2010 at 03:23 PM
* Online news: Breakingnews

For every one per cent appreciation of the Thai baht the cost to car exporters is one billion baht in lost revenue, Payungsak Chartsuthipol, chairman of the Federation of Thai Industries (FTI), said on Friday.

Mr Payungsak said the private sector was worried about the current strength of the baht as it could well drag on until next year, due to a continuation of the economic slowdown in the US and the European Union.

“The baht's value could strengthen to 30 baht to the US dollar in 2011. This has prompted manufacturers to adjust their business plan based on a foreign exchange rate of 31 baht to the dollar, to minimise business risk,” he said.

However, the private sector was confident that the Bank of Thailand would be able to stabilise the currency's value to keep it in line with other Asian countries’ currencies.

The FTI chairman was concerned that a strong baht would hurt car exports because every one per cent rise in the strength of the baht would cost vehicle makers about one billion baht in export revenue.

“Since the beginning of the year, the baht has strengthened by eight per cent, reducing automobile export values by nearly 10 billion baht.

"If the situation continues, Japanese car makers could scrap plans to move their production bases to Thailand,” said Mr Payungsak.
About the author

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Writer: Online Reporters
Position: Online Reporters

But with the US economy stalled and short-term interest rates still essentially zero, a local rate hike would widen the rate gap and potentially draw even more capital inflows, putting added pressure on the baht to appreciate against the US dollar.

Haha, yes Ray your right. Not that the Asian Countries agree because they see us as US and Uk partners and not Asian. Your also right that the interest rates have gone up and look to go up further in the short term. Google Fortiscue Metals if you want a good investment (spelling)

Thai Baht, Malaysia's Ringgit Lead Asian Currencies Rise on Growth Outlook
By Yumi Teso - Aug 21, 2010 5:48 AM GMT+0700

Asian currencies gained this week, led by the Thai baht and Malaysia’s ringgit, as regional growth that’s forecast to surpass developed markets and relatively high yields attract investors.

The baht appreciated the most for a week since March after the central bank signaled currency gains that are in line with the regional trend can be tolerated. The ringgit reached a 13- year high after Malaysia reported its economy expanded faster than economists predicted in the second quarter and the monetary authority eased currency curbs.

“Asia’s economy is stronger than other regions and there’s the outlook for interest-rate hikes in some countries,” said Tetsuo Yoshikoshi, a senior economist at Sumitomo Mitsui Banking Corp. in Singapore. “So investors are pouring money into the region selectively.”

The baht rose 1.2 percent this week to 31.51 per dollar in Bangkok, according to data compiled by Bloomberg. The ringgit advanced 1 percent to 3.1395 and the Philippine peso gained 0.6 percent to 45.025.

Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund said on July 7.

Stock exchange data show global funds have pumped more than $22 billion into India, South Korea, Indonesia and Taiwan this year as central banks around the region raise interest rates.

Baht Gains

Thailand’s currency has climbed 0.3 percent since central bank Governor Tarisa Watanagase said on Aug. 18 that the bank is “not concerned” about the baht’s gains, provided it moves in line with other Asian currencies. The rising baht won’t hurt the nation’s export competitiveness, she said.

“After the central bank said they are not concerned about the baht’s strength, interbank players sold the dollar against the baht,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl, the nation’s biggest lender. “Foreigners are still buying the Thai baht for investment.”

Economists in a Bloomberg survey predict the Bank of Thailand will increase borrowing costs by a quarter of a percentage point on Aug. 25 to 1.75 percent.

Malaysia’s ringgit reached its strongest level since 1997 after data this week showed the economy expanded 8.9 percent in the second quarter, beating the 8.4 percent median forecast in a Bloomberg survey of economists. Domestic companies can now settle cross-border transactions in ringgit and exporters can hedge currency risks beyond a previous 12-month threshold, Bank Negara Malaysia said on Aug. 18.

Philippine Remittances

The Philippine peso climbed as data showed money sent home by overseas citizens, which accounts for about a 10th of the economy, climbed the most in five months in June. The currency also approached its strongest level in three months after bids for a retail government bond totaled almost five times the amount on offer.

“The momentum is there,” said Rafael Algarra, treasurer at Security Banking Corp. in Manila. “We should probably see the peso continue to strengthen. Remittances remain strong.”

The Vietnamese dong dropped 2.1 percent to 19,475 after the central bank this week devalued the currency for a third time in the past year to boost exports.

Elsewhere, the Singapore dollar gained 0.7 percent this week to S$1.3539 against its U.S. counterpart and the Indonesian rupiah rose 0.1 percent to 8,973. Taiwan’s dollar climbed 0.1 percent to NT$31.935. South Korea’s won was little changed at 1,183.13 from 1,183.70 a week earlier.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net