BoT keeps close watch on rising baht, Govt to lower foreign debt (Updated)

BoT keeps close watch on rising baht, Govt to lower foreign debt (Updated)

The rising baht affects a wide range of people, from visitors and outbound Thai tourists to exports and importers and more. (Bangkok Post file photo)
The rising baht affects a wide range of people, from visitors and outbound Thai tourists to exports and importers and more. (Bangkok Post file photo)

The Bank of Thailand has acknowledged the baht's rapid climb against the US dollar. Meanwhile, government agencies look to take advantage by buying back foreign debt.

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Update

Bangkok Post business writer Wichit Chantanusornsiri reports on one way the government is ready to take advantage of the baht's strength. It now takes fewer baht to buy US dollars and the Japanese yen a well.

Debt office exploits baht strength to pay foreign debits

Wichit Chantanusornsiri

The Public Debt Management Office (PDMO) is to reap a windfall from the local currency's rapid run-up by swapping foreign-denominated debt for baht-denominated debt.

The state agency plans to convert US$250 million (8.37 billion baht) in dollar debt to a baht-denominated obligation over the next few months, said Theeraj Athanavanich, a bond market adviser to the PDMO, adding that it is also aiming to swap 30-40 billion yen-denominated debt but will monitor the foreign exchange market's movement for a while before making a decision.

The foreign currency debt swap is a policy of Finance Minister Apisak Tantivorawong, who has said that it was a good time for the PDMO to curb foreign exchange risk from the government's foreign debt, though it accounts for a mere 4.99% of public debt. Apart from the government, state enterprises are also advised to swap their foreign currency debt.

Of the total 4.99%, government agencies owe 1% of the debt, while state enterprises make up for the rest.

At the end of May, public debt amounted to 6.34 trillion baht, representing 42.9% of the country's GDP. 6.03 trillion baht or 95.1% was baht-denominated debt, while 317 billion or 4.99% was foreign debt.

Morning story

Baht's sharp rise on BoT radar

Pawee Sirimai

The Bank of Thailand has acknowledged the baht's rapid climb against the US dollar recently, a movement that it says warrants close monitoring.

"Even though the baht's strengthening is in tandem with the movement of other currencies in the region, the baht in the recent period has gained in value rather fast," said Mathee Supapongse, the deputy governor overseeing monetary stability at the central bank.

The abrupt appreciation of the baht reflects the market's reaction to short-term volatility, Mr Mathee said.

"As a result, the Bank of Thailand will closely monitor the situation in the foreign exchange market," he said.

The baht has gained about 7% year-to-date against the US dollar, trailing only South Korea's won, which is up 8% in the period, according to data provided by the central bank.

Other currencies in the region have seen smaller gains against the greenback, including the Taiwanese dollar (6.3%), the Singapore dollar (6%), the Indian rupee (5.5%), the Japanese yen (5%), the Malaysian ringgit (4.7%), the Chinese yuan (2.8%) and the Indonesian rupiah (1.2%). The Philippine peso is down 2.2%.

Mr Mathee said foreign direct investment also contributed to the firmer baht.

Don Nakornthab, a senior director at the Bank of Thailand, said last week that the baht's strength had not significantly blunted Thailand's trade competitiveness and that exports remained on track to achieve the central bank's full-year forecast of 5% growth.

Mr Don said the central bank had acted on the baht to some extent in a bid to keep the currency in line with regional peers.

Thailand's outbound shipments in June surged 11.7% year-on-year. For January-June, exports were up 7.8% year-on-year.

A foreign exchange dealer said the stronger baht sprang from the dollar's retreat over concerns about the US economy.

"Indicators out of the US show that the economy is weaker than what the market expected while political uncertainties have increased, causing a sell-off in the US dollar in the recent period," said the dealer, who declined to be named.

Offshore inflows to Thailand's bond and stock markets since mid-July also contributed to the stronger baht, the dealer said.

The dealer put the baht's near-term ceiling at 33.30 to the dollar through August. The baht on Tuesday traded at 33.42, compared with 33.46 on Monday.

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Vocabulary

  • abrupt: sudden and unexpected, and often unpleasant - อย่างกะทันหัน
  • acknowledge: to let someone know you have received something or the you understand what it is - รับทราบ
  • adviser (noun): a person who gives advice, especially somebody who knows a lot about a particular subject - ที่ปรึกษา
  • aim: to have as your purpose or goal - มีเป้าหมาย มีจุดมุ่งหมาย
  • appreciation: increase in value - ค่าเพิ่ม
  • bid: an attempt to do something - ความพยายาม 
  • blunt (verb): to make something weaker or less effective -
  • bond (noun): a way that companies and the government borrow money from many people each of which owns one or more "bonds" which are usually traded on securities exchanges - พันธบัตร
  • ceiling: an upper limit - เพดาน ขีดจำกัด
  • competitiveness: trying very hard to be better than others - ความตั้งใจในการแข่งขัน; ความสามารถในการแข่งขัน
  • concerns: worries - ความกังวล
  • contributed to: helped to cause an event or situation - ช่วยก่อให้เกิด
  • curb: to control or limit something - จำกัดขอบเขต, ควบคุม
  • currency (noun): the system of money, usually, but not always, that a country uses - เงินตรา
  • data: facts or information, especially when examined and used to find out things or to make decisions - ข้อมูล, ตัวเลข, สถิติ
  • dealer: a person or company that buys and sells a particular product - ผู้จำหน่าย
  • debit (noun): an amount of money that you owe, especially when it is recorded in a company’s accounts or on a bank statement - การลงบัญชีลูกหนี้,หนี้สิน
  • decline (verb): to say politely that you will not accept something, do something, or say something - ปฏิเสธ, ปฏิเสธที่จะทำ 
  • deputy: a person whose rank is immediately below that of the leader of an organisation - รอง
  • director: one of a group of senior managers who run a company - กรรมการบริษัท
  • economy: the relationship between production, trade and the supply of money in a particular country or region - เศรษฐกิจ
  • exploit: to use for your own benefit - หาประโยชน์จาก
  • export: the selling and transporting of goods to another country - สินค้าออก, การส่งสินค้าออกไปต่างประเทศ
  • firmer: stronger -
  • forecast: a statement about what will happen in the future based on information available now - การพยากรณ์, การคาดการณ์
  • foreign direct investment (noun): FDI, money that people or companies of one country invest in another country by buying property, building factories, buying businesses, etc -
  • foreign exchange (noun): money in the currencies of other countries - ปริวรรตเงินตรา
  • foreign-denominated debt (noun): money owed in a currency other than you own country's currency (foreign currency) - หนี้ในสกุลเงินต่างประเทศ
  • gain (noun): an increase in the amount of something - จำนวนที่เพิ่มขึ้น
  • governor: a person who is chosen to be in charge of the government of a state or province or a government agency - ผู้ว่าการรัฐ, ผู้ว่าราชการจังหวัด
  • greenback: the US dollar bill - ธนบัตรของสหรัฐอเมริกา
  • in line with: similar to or corresponding with another thing - สอดคล้องกับ
  • in tandem with: together with, two things were done at the same time -
  • indicator: something that shows what a situation is like - เครื่องชี้บอก, เครื่องชี้นำ
  • inflow (noun): the movement of a lot of money, people or things into a place from somewhere else - การไหลเข้า
  • mere: not large or important - เพียงเท่านั้น
  • monetary (adj): connected with money, especially all the money in a country - เกี่ยวกับเงินตรา, เกี่ยวกับตัวเงิน, เกี่ยวกับการเงิน
  • monitor: to regularly check someone/something - จับตาดู เฝ้าระมัดระวัง
  • near-term (adj): short-term - เกี่ยวกับอนาคตอันใกล้
  • obligation: something which you must do because you have promised, because of a law, etc. - สัญญาผูกมัด, ข้อผูกมัด
  • on track: likely to be successful; likely to reach a certain level -
  • outbound (adj): travelling towards a particular point, particularly away from a city, country, etc. - ขาออก (opposite of inbound ขาเข้า)
  • oversee: to watch something in order to check that it works or happens in the way that it should - ตรวจตรา
  • peers: people who are the same age or have the same social position or the same abilities as other people in a group - เพื่อน
  • policy (noun): a set of plans or action agreed on by a government, political party, business, or other group - นโยบาย
  • rapid: happening quickly - อย่างรวดเร็ว
  • reaction: the way something responds as a result of something that happens - ปฏิกิริยา การตอบสนอง, ปฏิกิริยาตอบโต้
  • reap: to get something as a result of something that you do - ได้รับผลตอบแทน
  • reflect: to show - สะท้อน แสดงถึง
  • region: a large area of land or space, usually without exact limits or borders - ภูมิภาค, ขอบเขต, แถบ, บริเวณ
  • retreat (noun): a movement away from a place or an enemy because of danger or defeat - การล่าถอย
  • risk: the possibility that something dangerous or unpleasant might happen - ความเสี่ยง
  • sell-off (noun): the sale of a large number of stocks, bonds, etc with a fall in value -
  • senior: with a high rank or position - อาวุโส
  • sharp: sudden and rapid, especially of a change in something - ฉับพลัน, กะทันหัน
  • shipment: a load of goods that are sent from one place to another - ปริมาณสินค้าที่ขนส่งในครั้งหนึ่ง ๆ
  • short-term: lasting a short time; designed only for a short period of time in the future - ระยะสั้น, ช่วงสั้น
  • situation: all the circumstances and things that are happening at a particular time and in a particular place - สถานการณ์
  • spring from (verb): to be caused by something; to start from something - เกิดจาก, เริ่มต้นจาก
  • stability: the quality or state of being steady and not changing or being disturbed in any way (= the quality of being stable) - ความมุ่งมั่นอยู่กับสิ่งใดสิ่งหนึ่ง, ความทนทาน
  • state agency: a government department or body - หน่วยงานของรัฐ
  • state enterprise: a company or business owned and managed by the government - รัฐวิสาหกิจ
  • stock (noun): a share that somebody has bought in a company or business - หุ้น, หุ้นทุน
  • surge: a sudden increase in something - การเพิ่มขึ้นอย่างรวดเร็ว
  • swap: to exchange something for something else - แลกเปลี่ยน
  • take advantage of (verb): to use something to get some benefit or "advantage" from - ใช้เป็นประโยชน์
  • to some extent (idiom): somewhat - ในระดับหนึ่ง
  • trade: the buying and selling of goods and services - การค้าขาย
  • trail (verb): to be behind someone/something - ตาม
  • trillion: the number 1,000,000,000,000; one million million - ล้านล้าน
  • uncertainty: something that you cannot be sure about; a situation that causes you to be or feel uncertain - ความไม่มั่นใจ (ต่อเหตุการณ์ ชะตาชีวิต ฯลฯ), ความรู้สึกไม่แน่ใจ
  • volatility: when something changes suddenly and become more dangerous - ที่ปะทุได้ง่าย
  • warrant: to be/make necessary or appropriate in a particular situation - มีเหตุผลอันสมควร
  • windfall: an amount of money that you get when you are not expecting it or which comes to you very easily, especially a large amount - สิ่งดีๆ ที่ได้มาที่คาดไม่ถึง, เงินที่ได้มาอย่างไม่คาดฝัน
  • year-on-year (adjective): the amount or statistic for a period this year (month, quarter, half-year) compared to last year -
  • year-to-date: an amount or statistic measured from the beginning of the year to a certain date before the end of the year -
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