The rising baht

27 04 2010

A few days ago PPT asked a question regarding the ever rising baht in amongst a falling stock market and a political crisis of mammoth proportions. We asked why the baht remained high. Now Bandit Nijthaworn the  deputy governor of the Bank of Thailand  has confirmed that the “escalating political crisis has not affected the value of the Thai currency…”. He said that the “baht’s value has not been hit by the political turmoil as there are no capital outflows at this time….  In contrast, the Thai currency has appreciated as a result of continuous capital inflows to the Thai stock and bond markets…”.

Our earlier post made an undergraduate economics error when we asked if the baht was being sold and this was keeping the value up – dumb. But why is the baht, stocks and bonds so attractive just now to international buyers who have seldom shown a deep interest in Thailand events and have usually herded?

Reuters (27 April 2010) reports that yesterday the “Thai baht THB= fell 0.3 percent to 32.26 per dollar. A Bangkok-based dealer said: “The baht is weighed down by both external and local factors. With no more negotiations in sight, the red shirt protests look likely to drag on and on…. But I still see 32.50 as a fairly strong support for the baht given the bullish sentiment for Asian assets.” Reuters says that the “baht is still up 3.3 percent against the dollar this year, despite the political turmoil.”



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