Pound should get stronger

[JimboPSM]

It looks as though the fall of the pound has now stopped, or at least paused for breath; it has fallen by 4.1 cents (2.2%) against USD and 1.7 Baht (2.4%) against THB since the start of September.

When currencies rise or fall they often gather a degree of momentum which can result in them overshooting their

[BKKSTAN]

[quote="JimboPSM"]It looks as though the fall of the pound has now stopped, or at least paused for breath; it has fallen by 4.1 cents (2.2%) against USD and 1.7 Baht (2.4%) against THB since the start of September.

When currencies rise or fall they often gather a degree of momentum which can result in them overshooting their

[JimboPSM]

Stan, from "The Phrase Finder" http://www.phrases.org.uk/meanings/108600.html

Dead cat bounce

Meaning

A small and temporary recovery in a financial market following a large fall.

When a financial market suffers a consistent fall traders attempt to detect when prices are at their lowest and then buy stocks hoping for a bargain. If they buy too soon prices may rise temporarily but then decline again. This is called the dead cat bounce. The idea being that even a dead cat will bounce if you drop it from a great height.

The phrase seems to have struck a chord and other 'bounce' phrases have emerged, notably 'Baghdad bounce'. This is the rise in popularity that both George Bush and Tony Blair enjoyed following the fall of Baghdad in the Iraqi War. That popularity waned somewhat later when it became clear that pulling allied troops out of Iraq was likely to take longer than the public had first anticipated.

Origin

The earliest citation I have found is in an article by Chris Sherwell in The Financial Times, December 7, 1985:

"Despite the evidence of buying interest yesterday, they said the rise was partly technical and cautioned against concluding that the recent falls in the market were at an end. This is what we call a 'dead cat bounce', one broker said flatly."

[BKKSTAN]

Thanks Jimbo,I did understand the phrase from my stock trading days.Those without any familiarity with the market probably learned a new phrase.I have to admit though,I never bothered to find out How the phrase came about!Thanks

[nevket240]

interesting little video on Bloomberg regarding Asian currencies with a Westpac chap. (Aussie of course). He states that the Thai Baht is a little bit pricey against other currencies. may be a bit of relief for retired farangs in the trade winds.

[BKKSTAN]

interesting little video on Bloomberg regarding Asian currencies with a Westpac chap. (Aussie of course). He states that the Thai Baht is a little bit pricey against other currencies. may be a bit of relief for retired farangs in the trade winds.

What is his reasoning?

[JimboPSM]

interesting little video on Bloomberg regarding Asian currencies with a Westpac chap. (Aussie of course). He states that the Thai Baht is a little bit pricey against other currencies. may be a bit of relief for retired farangs in the trade winds.

What is his reasoning?

I had a look for the video on Bloomberg but could not find it.

My speculation on his reasoning would be that THB has appreciated more than the other Asian currencies this year and the momentum in this appreciation has caused THB to overshoot its correct level and therefore might now be deemed to be a bit pricey - mind you if that is the case the markets have ignored it

I don't have comparative data on other Asian currencies, but the currencies I do analyse shows THB appreciating as follows from the end of last year:

• USD - 9.0%
  AUD - 6.9%
  EUR - 2.6%
  GBP - 1.2%

[JimboPSM]

[quote="JimboPSM"]It looks as though the fall of the pound has now stopped, or at least paused for breath; it has fallen by 4.1 cents (2.2%) against USD and 1.7 Baht (2.4%) against THB since the start of September.

When currencies rise or fall they often gather a degree of momentum which can result in them overshooting their

[nevket240]

The Aussie chap on Bloomberg the other day was given about 20 seconds to remark on the Baht, pricey was about all that was said. The following is a Bloomberg statement ,copied from the Standard this morning.

South Asia currencies to rise faster on inflation pressure

Thursday, September 14, 2006

The currencies of Thailand, Malaysia and Indonesia may rise faster than their North Asian counterparts as Southeast Asian central banks let them strengthen to control inflation, said Morgan Stanley chief Asia economist Andy Xie.
A stronger baht, ringgit and rupiah may temper inflation by lowering the price of imported goods, reducing the need for higher borrowing costs that may also choke economic growth, Hong Kong-based Xie said.

North Asian economies are not faced with the same inflation pressure, so are more likely to resist currency gains in order to help exporters, he said.

"The central banks of Southeast Asian countries don't want to raise rates, while they also want to control inflation," Xie, a former World Bank economist, said. "The way to do that is to let their currencies appreciate."

The baht climbed as much as 0.3 percent Wednesday to 37.34 and will reach 37.20 by the end of the month, according to Morgan Stanley.

The baht had its biggest gain Wednesday in more than a week after an industry report suggested a rebound in consumer spending that may propel economic growth.

The rupiah will rise 1.5 percent to 9,000 against the US dollar and the ringgit by 0.6 percent to 3.6, according to Morgan Stanley. The Korean won will gain less, by 0.4 percent to 955.

Thailand started raising rates in 2004, followed by Indonesia and Malaysia in 2005, in tandem with a two- year cycle of increases from the Federal Reserve as surging crude oil prices and improving growth stoked inflation.

With the Fed having paused and oil near a five-month low, Southeast Asian central banks may prefer the lesser effect on growth of a stronger currency pushing up export costs than higher rates curbing investment and spending.

The Bank of Thailand's "current interest rate is at the appropriate level to accommodate growth if inflation doesn't accelerate," assistant governor Atchana Waiquamdee said in Bangkok after the bank left its rate at 5percent September 6.

Malaysia's government September 1 said a stronger ringgit will help contain inflation, while its central bank on August 25 held the key rate at 3.5 percent to support economic growth.

Indonesia's inflation was at 14.9 percent on-year in August and Thailand's at 3.8 percent. Malaysian prices rose at a 4.1 percent pace in July. Their rates are higher than South Korea's 2.9 percent in August, while Taiwan consumer prices fell 0.57 percent that month from a year earlier.

"By trying to keep both inflation and interest rates low, they are hoping to encourage consumption and spur the economy," said Xie, confirming a report he wrote last week. Rising prices and higher borrowing costs deter consumer spending.

The rupiah has gained 3.9 percent in the past three months and the baht 3percent. By comparison, the won edged up 0.3 percent and the Taiwan dollar weakened 0.7 percent.

Southeast Asian nations' export growth gives their central banks room to let currencies appreciate, said Xie. A rising currency may hurt exporters, as it increases the price of goods sold abroad.

"Domestic demand is noticeably weak, especially in Indonesia and Thailand," Xie wrote in the report, dated September 4. "Hence, it makes sense to trade currency strength for rate hikes."

Among the three nations, Indonesia posted the largest export growth in July from a year ago at 23.4 percent, according to the Central Bureau of Statistics in Jakarta on September 1.

While Malaysia recorded the lowest rate, the 16 percent rise announced by the trade ministry in Kuala Lumpur on September 5 was the fastest in 16 months.

The Bank for International Settlements said in its quarterly review that Asian central banks, which have sold their currency to limit strength, may have to raise interest rates or let their currencies appreciate as inflation quickens.

The Indonesian rupiah rose 0.4 percent to 9,118, its biggest increase in almost a month.

The Malaysian ringgit rose 0.1 percent to 3.6725, snapping a three-session fall.

In other trade, the Taiwan dollar gained 0.1 percent to NT$32.897, the Philippine peso advanced 0.1 percent to 50.340 and the Singapore dollar rose 0.1 percent to S$1.5763.

BLOOMBERG
Put into quotes by Mod