Hopefully indications of good things to come.
This article might give a better indication of where the baht is going
http://www.nationmultimedia.com/business/Exporters-wish-for-a-weaker-baht-unlikely-to-be-fu-30258803.htmlBANGKOK: -- To the dismay of exporters, most economists are convinced that the Bank of Thailand will stay put when it meets on the policy rate this week.
In short, exporters will need to flex their muscles to boost sales, as the baht should stay at this level without a change in the policy rate, or could even appreciate further against the US dollar amid low oil prices.
Despite the government's pressure for further rate cuts to boost shipments, the biggest engine of the economy, the swelling current account surplus warrants no weakening of the baht in the short term.
The impact of a rate cut would be neutralised, while the central bank will have less ammunition to cope with possible global volatility and risks destabilising the country's financial strength.
Joey Chew, HSBC's Asia FX strategist, said last week that the baht has outperformed many other Asian currencies recently due mainly to the improvement in its current account surplus. Thailand's oil-trade deficit has also narrowed with the plunge in global oil prices, while tourism receipts have rebounded.
Moody's Investors Service expects oil prices in 2015-18 to average about 40 per cent lower than in 2011-14. This is a boon to oil-importing countries like Thailand, as its oil imports were about 12 per cent of gross domestic product (GDP) in 2013.
"Although the Bank of Thailand cut the policy rate earlier, the baht has been relatively unaffected since foreign equity and bond flows have been very muted over the past couple of years.
"Indeed, the absence of volatile capital flows is another reason for the baht's resilience, amid global financial market volatility," Chew said.
Most local economists believe that the Monetary Policy Committee would take no action, as it convenes for the third time this year on Wednesday. The central bank would rather wait for the release of official first-quarter economic indicators on May 18.
If the risk factors worsen, action can be taken at the fourth meeting in June.
New Zealand and Japan are also expected to maintain their monetary settings this week, pending more details on growth and inflation.
Moody's Analytics, the research arm of Moody's Investors Service, sees the central bank likely to keep rates on hold for the rest of this year. HSBC forecasts no change until early next year.
Though Thailand's exports contracted 4 per cent in the first two months of this year, low oil prices have fuelled the current account surplus, which would only strengthen the baht, not weaken it.
Thanks to lower oil prices and higher tourism receipts, the current account has been in surplus since last October. In December, the surplus hit an all-time high of US$5.15 billion. From 32.43 per dollar at end-September, the baht rose 0.3 per cent to 32.36 at end-February. It weakened in the first week after the rate cut in March, but later regained strength.
From $14.2 billion last year or 3.8 per cent of GDP, the International Monetary Fund expects a $17.2-billion surplus this year or 4.4 per cent.
HSBC's Chew said the baht's gains could slow in the second and third quarters, as some dividends paid by listed companies may leave the country, while the tourism industry will be entering the low season.
"Global factors may also play a role. We are seeing some signs of risk-taking in the market, which could favour other currencies with stronger growth and higher yields. In the second half, the dollar could strengthen once more, as the first rate hike nears. HSBC expects the Fed to raise the policy rate in September," he said.
Kobsidthi Silpachai, head of markets and economic research at Kasikornbank's capital markets business division, said cutting interest rates to influence the currency requires a diagnosis of whether interest rate differentials have resulted in speculative behaviour.
This can be seen through the level of foreign holdings of Bank of Thailand bonds.
"We view that cutting rates to weaken the baht would be effective when such positioning is high such as was the case in April 2013, when foreign positioning was about Bt300 billion. However, foreign positioning now is at Bt61 billion," he said.
Gundy Cahyadi of DBS Research said further rate cuts are often thought to be a way to weaken the baht, in order to boost export competitiveness.
"It is interesting to note, however, that the terms of the trade index has actually gone up by about 10 per cent alongside the 7-per-cent gain in the baht's real effective exchange rate (REER) in the past 12 months.
This is unlike in 2011-13, when the terms of trade fell by 3 per cent while the REER gained some 10 per cent," he said.
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