Currency : BOT wants more US Dollars. More.

(chart : the % of growth of foreign currency reserves of the BOT, per month, year on year. For instance : the reserves increased by 31,38 % in september 2007, compare to september 2006).

“Gimme more“. I don’t know why, I’m thinking about Britney Spear when I look at Miss Tarisa, the governor of the BOT.

The international reserves in foreign currency of the BOT reached a all time high of 78,851 billions USD (here) during the week of october 12.

The week before : 77,575 billions…

I would like to add that during this week, the USD has plunged against Euro (and other currencies, except the manipulated ones like Yen, RMB…)…

But by miracle, there was not really a big move on the THB (on shore market). The BOT states an exchange rate of 34,192, and 34,127 for this week.

Therefore, it’s easy to assume that, once again, the BOT is “managing” the forex market (on shore), by buying USD…

Week after week, the BOT increases its holding of USD. Week after week the USD is loosing value (USD index is a good indicator).

The BOT is playing short term, for obvious political reasons. They should really start to think long term. BOT will never be like the BOJ (Japan) or the Central bank of China.
Different leagues… Different scale…

So what’s the point to try, desesperatly, to follow them ?

Ah yes, the idea is to save exports. And meanwhile, the oil is reaching 90 USD per barrel…

So… save exports on the left and protect the country from inflation on the right… Difficult choice.

Obviously, the BOT doesn’t want to (or can’t) decide. But soon, it will have to.

A last chart : amount of foreign currency reserves per month in USD (left scale), with the exchange rate USD-THB (on shore rate, provided by BOT, right scale)…

As you can see, there is a problem… BOT accumulates something that is loosing value… And watchout, this is the on shore exchange rate (manipulated by the BOT).

It would be much worse if the capital controls were removed… The THB would go up, much further.