Currency : “They have almost pegged the baht now”

Almost ? Now ? This is an understatement from this “well informed financial source“, quoted by Nation.

This is what I repeat… since last june.

The BOT is following the chinese path. Nothing less, nothing more.

But, Thailand is not China. China (or Japan) could bare for instance (for strategic reasons too long to explain here) a sharp decline of the value of its USD reserves.

And regarding its currency, the country is so large and so powerfull, that China can apply the “talk to the hand policy“.

The US and the UE wanted the chinese to speed up the increase of the Renminbi. They failed, in a very pathetic way. The chinese smiled at them. And wished them a good trip back… Politely.

This is the “talk to the hand” policy…

The Thais are playing a dangerous game. A game too big for them.

“Bank of Thailand’s senior director Pongpen Ruengvirayudh is denying the central bank has quietly abandoned the managed float system in favour of a basket of currencies to curb the baht’s rise.

However, by intervening in the foreign exchange market quite heavily to rein in the baht’s appreciation, the central bank has, in practice, almost fixed the value of the baht at a certain level. This intervention resulted in a big jump of its foreign exchange reserves from US$80.9 billion (Bt2.7 trillion), including forward positions, in May to $100.3 billion in November.

“They have almost pegged the baht now. Then they will wait for the new government to decide how they should proceed further,” said a well-informed financial source.

A former finance minister also confirmed the banking authorities were in practice adopting the foreign exchange policy that almost pegs the baht. ” (Nation)