Baht falls most in five weeks

Published: 26 Dec 2012 at 10.51
Online news: News

Thailand's baht declined the most in more than five weeks as concern that stalled United States budget talks will hamper efforts to revive the global economy reduced demand for emerging-market assets.

Congress will return on Thursday to resume negotiations aimed at averting more than US$600 billion in automatic tax increases and spending cuts, due early next year, that could hurt the world's largest economy. Huang Guobo, chief economist and director of the reserves management department at China's State Administration of Foreign Exchange, said the country does not plan large economic stimulus measures, according to comments posted on Tsinghua University's website.

"SAFE's comment suggested that China isn’t going to play Santa and the US Congress certainly isn't inclined to do so," said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. "People are getting out of risk."

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boons
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Discussion 3 : 26 Dec 2012 at 18.003
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"Thailand's economy may grow at least 5% next year, supported by an export recovery and state investment, after expanding about 5% in 2012, Finance Minister Kittiratt Na-Ranong told reporters"

We know the export recovery is a mirage. Exports are up just over 2% on a *declining* balance of trade. And the rest is government spending. (ie: Artificial, unsustainable growth).

You can't double the price of labor in an export economy, in a world of declining consumer demand and get real growth out of that setup. There's no such thing as a free lunch.
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boons
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Discussion 2 : 26 Dec 2012 at 17.542
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D1: The issue isn't the relative attractiveness of currencies. The issue is Thailand's exports are inexorably tied to US consumption. If the US goes over the cliff, US spending dries up very fast, and Thailand's exports dive. Exports are already looking dangerously imperiled by the rising minimum wage, and access to cheaper ASEAN labor in every direction. Thailand's rice pledging and auto incentives have pulled forward demand setting up a trough in trade in the coming year. European demand is also continuing to fall. Thailand will have no choice but to keep lowering the baht because Thai banks have leveraged up on growth expectations.
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dougo
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Discussion 1 : 26 Dec 2012 at 15.211
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Let me get this straight. The US is going over the fiscal cliff, and people are dumping the baht for the US dollar. Evidently I just don't understand human nature.
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Baht falls most in five weeks | Bangkok Post: business