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| • EXCH RATES |
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Baht/$ 33.64/67
Bid/Ask
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GOLD |
14,900
+ 200
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FINANCE
SOMRUEDI BANCHONGDUANG
Soaring prices and volatility in the commodities markets have led to sharply increased interest in hedging instruments among local companies, according to Bank of Tokyo-Mitsubishi UFJ executives. Supong Jiengattanakit, a first senior vice-president at the Bangkok branch of Bank of Tokyo-Mitsubishi UFJ, said interest in the bank's risk management services had risen sharply since opening several months ago.
The bank currently offers hedging instruments primarily for metals, but wants to expand services to cover crude oil if approval is received from the Securities and Exchange Commission.
''Product demand has risen significantly over the past year as a result of the uncertainty in global commodities prices,'' Mr Supong said.
According to data from Bank of Tokyo-Mitsubishi UFJ, volatility in metals such as nickel, zinc, aluminium and copper is significantly higher than Thai baht-US dollar exchange rates.
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| Roong Sanguanaruang, chief market analyst for Bank of Tokyo-Mitsubishi in Bangkok, discusses exchange rate trends at a briefing yesterday. — KITJA APICHONROJAREK |
Commodities prices have risen sharply over the past two years as a result of higher demand from China and India.
The weakness in the US dollar and a shift in capital from equities markets to commodities have also contributed to market price volatility.
Commodities hedging services are offered in Thailand primarily by foreign banks, although Kasikornbank also offers its corporate clients risk management products.
Songpol Chevapanyaroj, a Kasikornbank first vice-president, agreed that local demand for hedging products has jumped sharply this year.
''Higher commodities prices are forcing customers to look to solutions to help protect against price risk,'' he said.
He noted that only around 10% of local clients are estimated to have a commodities hedging strategy in place, indicating that significant room for growth existed in the market.
Meanwhile, Bank of Tokyo-Mitsubishi estimates that the baht is likely to continue to weaken this year as oil prices moved higher.
Roong Sanguanaruang, chief market analyst for the bank in Bangkok, said the baht could average 34 to the US dollar in the third quarter, with rates moving between a range of 33 and 35 over the period.
She said the baht should appreciate in the fourth quarter, as oil prices stabilise. By the first quarter of 2009, the currency is projected at 33.50 to the dollar, and 33.25 in the second quarter of next year.
Interest rates are definitely on the uptrend, Mrs Roong said, as the Bank of Thailand looked to curb rising inflation.
The one-day repurchase rate, now at 3.25%, is expected to rise by one full percentage point, she said, although increases would likely be made in quarter-point steps.
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