Finance Ministry: Baht’s surge a short-term factor

THE Finance Ministry came out to explain further strengthening of the Thai baht today (August 7) saying this is due to two deals which have led to large sums of the greenback flowing into the country and is a short-term factor, Thai News Agency said.

However according to a Reuters report published by CNBC the US dollar too held the bulk of its gain today after an upbeat US jobs report lifted it off 15-month lows, with data lined up this week seen as key to whether the greenback’s rebound could be sustained in the longer term.

Thai Finance Minister Apisak Tantivorawong said continuous strengthening of the Thai baht which is trading at 33.27 baht to the dollar today are due to two factors with one being Thailand is on average recording 1 billion dollars trade balance surplus a month.

The second factor is foreign investment funds are continuously flowing into the country with there currently being two important deals with one of them being CTBC Bank buying some LH Bank shares for a sum of 16.595 billion baht.

At the same time banks and insurance firms are also bringing in 10 to 20 billion baht worth of US dollars into Thailand.

Mr Apisak added that the large amounts of US dollars floating in the Thai financial system has led to the Thai baht appreciating but once these sums are used up the Thai currency will return to its normal trading value.

Moreover Bank of Thailand is taking care that the Thai currency does not get too strong.

Mr Apisak admits that the strong baht would impact SME (small and medium enterprises) exporters especially those using local raw materials and urged them to protect themselves from currency exchange risk through pricing and not to speculate whether the Thai baht will be strong or weaker.

Big exporters are not affected because they import some of their raw materials and most have already hedged the baht. The bulk of Thai exports are handled by these big exporters.

Meanwhile the US dollar, which briefly sank below 110.00 yen to a seven-week low last week, was steady at 110.695 yen after going as high as 111.050 on Friday.

The dollar index against a basket of six major currencies was a shade lower at 93.330 after climbing 0.75 percent on Friday. The rally pulled it away from 92.548, its lowest level since May 2016 marked on Wednesday.

The greenback had reached that 15-month trough after a series of weak US indicators added to uncertainty about the Federal Reserve’s plan to start shrinking its $4.2 trillion bond portfolio and the pace of its rate hikes amid political turmoil gripping Washington.

But closely watched US employment data released on Friday helped the dollar snap out of its downturn. Nonfarm payrolls increased by a bigger-than-forecast 209,000 jobs last month, while average hourly earnings increased 0.3 percent to match expectations after rising 0.2 percent in June.

“The jobs report was able to halt the dollar’s bear trend for now. We can at least hope for the Fed to begin shrinking its balance sheet at the September meeting,” said Koji Fukaya, president of FPG Securities.

The euro inched up 0.2 percent to $1.1798 after losing 0.8 percent on Friday, to put some distance between a 2-1/2-year high of $1.1910 scaled earlier last week.


Top:  The Thai baht surged further today. Photo: Reuters via


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