Central Bank intervenes to stabilise the baht

Central-Bank-Intervenes-To-Stabilise-The-Baht

Central Bank intervenes to stabilise the baht

The Bank of Thailand (BoT) intervened in the foreign exchange market after the baht declined 0.5% to 31.08 to the US dollar on Thursday morning, as the Thai stock market plunged for the third consecutive day.

Finance Minister Kittiratt Na Ranong (left) and Central Bank governor Prasarn Trairatvorakul at Euromoney Conference: The Greater Mekong Investment Forum in Bangkok. (Photo by Apichart Jinakul).

Central Bank governor Prasarn Trairatvorakul said the baht's recent depreciation was not worrying because other currencies in Southeast Asia had also weakened.

The level of fluctuation of the baht was low when compared to other regional currencies.

"In this case, the BoT has already sold some US dollars to prevent further fluctuation, but we won't move against the market trend," Mr Prasarn said.

Finance Minister Kittiratt Na-Ranong said the weakening baht would benefit Thai exporters, who have long complained the baht was over valued, but admitted it would probably hurt the import sector.

"I would like the central bank to help stabilise the baht by using our large international reserves as a buffer to ease the impact (on importers) and keep the currency stable and in line with our trading partners and competitors, and not just rely on the US dollar," Mr Kittiratt said.

The Thai currency traded 0.4% off a nine-month low Thursday and government bonds dropped as overseas investors reduced holdings of the country's assets amid a worsening global economic outlook, according to  Bloomberg News.

The World Bank on Wednesday cut its 2013 growth forecast for developing countries to 5.1% from a January estimate of 5.5% and lowered China to 7.7% from 8.4%, the report said.

China is Thailand's biggest export market after purchasing 12% of total shipments in the first four months of the year. The baht declined 0.5% to 31.08 per dollar as of 9.22am in Bangkok, according to data compiled by Bloomberg. It touched 31.19 on Wednesay, the weakest level since Sept 7. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed nine basis points to 7.36%, a level last seen in December 2011.

International investors sold US$1.1 billion more Thai equities than they bought this month and pulled a net $205 million from bonds, official data showed.

"The weakening currency discourages foreign investors from the nation's stocks and bonds," said Yuji Kameoka, chief foreign-exchange strategist at Daiwa Securities Co in Tokyo. "The impact from China's slowdown is quite large on Asia through its exports, while growth concerns are leading to risk-off sentiment."

Mr Prasarn said the Thai stock market plunged more than 70 points on Thursday morning. This was likely due to the sharp sell-off in the bourse as investors expect the US economy to improve.

"The capital outflow is not yet worrying because the amount is not much when compared to the reserves of 180 billion dollars," the BoT chief said. "We cannot tell when the outflow stops because it's an external factor."

The Thai stock market opened in the morning with the plunge by 50.90 points or 3.62% from the close on Wednesday to stand at 1,381.57 point. The index moved in the negative zone for the whole day with the lowest point was at 1,351.95, or dropped 81.52 points.

The SET index rebound in the afternoon to close at 1,403.27 points, down 30.20 points or 2.11 % in total trade of 85.39 billion baht.

SET index drops at significant points for the third day. (Photo by Patipat Janthong)

The Thai bourse has experienced a big sell-off since Tuesday. The index has dropped by 125.28 points or 8.19% from Monday's close at 1,528.55 points.

Analysts and regulators agree that the plunge caused from external factors, especially the improvement in the US credit rating.

Info Quest reported that the European stock markets in London and France also dropped at their opening in the afternoon (Thai time) due to worry over the cut in global economic growth projection to 2.2% in 2013, slightly lower than earlier projection in January at 2.4%. Developing countries will lead the growth with 5.1%.

However, the World Bank concluded that the economic risks appeared to be diminishing and the growth is more stable than the post-2008 financial crisis which the US caused the global economy into recession.

 

 

SET index plunges 30.20 points

 

The Stock Exchange of Thailand main index went down 30.20 points, or 2.11%, to close at 1,403.27 points at the end of trading session this afternoon. The trade value was 85.39 billion baht, with 15.44 billion shares traded.

The SET50 index ended at 938.26 points, down 12.61 points, or 1.33%, with a total trade value of 61.82 billion baht.

The SET100 index fell 36.17 points, or 1.71%, to stand at 2,080.92 points, with a total turnover of 74.76 billion baht.

The SETHD index went down 22.40 points, or 1.94%, to stand at 1,129.88 points, with total trade value of 17.21 billion baht.

The MAI index dropped 22.88 points, or 5.42%, to close at 399.49, with total transaction value of 4.82 billion baht.

Top five most active values were as follows;

INTUCH stood at 79.50 baht, unchanged
ADVANC stood at 244.00 baht, up 4.00 baht (1.67%)
BBL stood at 191.00 baht, unchanged
KBANK stood at 178.00 baht, up 3.00 baht (1.71%)
KTB stood at 164.00 baht, down 2.00 baht (1.20%)

 


Pledge price for rice may be cut, says Kittiratt

The crop pledging price for rice may be reduced from the current 15,000 baht per tonne for ordinary rice, Finance Minister Kittiratt Na-Ranong said on Thursday.

He was commenting ahead of a meeting of the National Rice Policy Committee Thursday, which was due to scrutinise the rice scheme's losses in the wake of estimates they total as much as 260 billion baht.

The committee, chaired by Commerce Minister Boonsong Teriyapirom, is the only agency that knows the exact losses incurred by the rice-pledging scheme, a flagship policy of the government.

Mr Kittiratt said the set price was suitable when the government first implemented the programme, but it is no longer a suitable price.

The baht’s strength had caused operational losses for the scheme, he admitted.

Bloomberg photo

“I am not saying that the rice scheme will be scrapped. But conditions for managing the economy can be adjusted or changed to suit the changing situation, similar to the increase or reduction of the policy rate by the central bank,” Mr Kittiratt said.

The minister said the government will carefully consider all related information and data before making any change to the pledging price.

Mr Kittiratt’s remark coincided with the latest opinion survey results released on Thursday by Nida Poll, of the National Institute of Development Administration (Nida).

Nida Poll reported that more than a third of people polled believe the government should adjust its rice pledging policy to minimise damage to the public purse.

The pollster conducted the survey regarding the Pheu Thai Party's rice scheme and its alleged 260-billion-baht losses on June 11-12, among 1,249 individuals nationwide.

When asked what the government should do if the rice policy did in fact incur 260-billion-baht losses, 38.51% said the government should modify the rice pledging price in accordance with market prices, but said the scheme should continue.

Some 20.82% suggested the government should offer a rice price guarantee, instead of the rice pledging scheme, but 21.38% said the programme should be scrapped because it is susceptible to corruption, is causing losses on an international scale, and uses up too much public money.

A total of 9.61% respondents said the current policy should continue without any adjustment. The remainder had no idea, or said they were unsure.

The survey meanwhile found that 37.71% of people polled believe the rice pledging policy has indeed led to 260-billion-baht losses.

Some 20.82% said the scheme did lose money, but not as much as the claimed amount, while 26.50% said they thought that the policy did not generate any loss. Others had no answer or were uncertain.

Questioned on who the beneficiaries of the rice scheme are, 36.60% said the government, 36.20% said rice mills, 34.03% said farmers, 29.86% said politicians and 14.04% said rice exporters.

 

 

Kittiratt: Rice pledging price may drop

There is a possibility the crop pledging price of rice could be reduced from the current 15,000 baht per tonne for ordinary rice, Finance Minister Kittiratt Na-Ranong said on Thursday.

He said the set price was suitable when the government first implemented the programme.

But it is no longer a suitable price, he said, since the baht’s strength had caused operational losses to the scheme.

Mr Kittiratt said the government will carefully consider all related information and data before making any change to the pledging price.

 

 

BoT intervenes in forex

The Bank of Thailand (BoT) has intervened in the foreign exchange market after the baht declined 0.5% to 31.08 per dollar on Thursday morning.

 

Kittiratt Na-Ranong, left, and Prasarn Trairatvorakul (Photo by Apichart Jinakul)

Central Bank governor Prasarn Trairatvorakul said the baht's recent depreciation is not worrying because other currencies in Southeast Asia have also weakened. The level of fluctuation of the baht is low when compared to other regional currencies.

"In this case, the BoT has already sold some US dollars to prevent further fluctuation, but we won't move against the market trend," Mr Prasarn said.

He said the Thai stock market plunged more than 70 points on Thursday morning. This was likely due to the sharp sell-off in the bourse as investors expect the US economy to improve.

"The capital outflow is not yet worrying because the amount is not much when compared to the reserves of 180 billion dollars," the BoT chief said. "We cannot tell when the outflow stops because it's an external factor."

Finance Minister Kittiratt Na-Ranong said the weakening baht will benefit Thai exporters but will likely hurt the import sector.

"I would like the central bank to help stabilise the baht by using our large international reserves as a buffer to ease the impact (on importers) and keep the currency stable and in line with our trading partners and competitors, and not just rely on the US dollar," Mr Kittiratt said.

 

Fuente Bangkok Post

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