Bomb shell ? Pathetic propaganda in order to create fears among people who are betting on a continuous depreciation of the USD vis-a-vis THB (AKA almost everyone) ?
Or just a bravado from a lunatic Prime minister ?
We can read this strange quote in an article of Nation, about the new record of THB versus USD.
Deputy Prime Minister and Finance Minister Surapong clarified that Prime Minister Samak Sundaravej, by noting of the possibility of reviving the fixed regime, just wanted Bank of Thailand to conduct the feasibility study.
I’ve never heard Samak talking about “reviving the fixed regime” for exchange rates.
I seriously doubt that Thailand would have the means (financial and political) to do it. We’ll see.
And here, another article from TNA :
Deputy Prime Minister and Finance Minister Surapong Suebwonglee today refuted press reports quoted Prime Minister Samak Sundaravej as saying that Thailand may change its current floating currency exchange system as has been implemented following the financial crisis that hit the country in 1997.
He said Mr. Samak only said Monday that monetary officials should study the currency exchange systems adopted in Thailand’s neighbouring countries.
It did not mean that Thailand would switch to using fixed exchange rate system in which the Thai currency, the baht, was pegged to US dollar, he said.
But have not the BOT already relatively pegged the baht to dollars at 33?
By the way, what do you think about the petrodollar effect on THB?
Odd isn’t it how easily Mr Samak is misunderstood. What should be a simple statement like “the BOT is reviewing exchange control mechanisms’ gets reported as ‘Thailand will have a fixed exchange rate’. And then of course someone who is even less easy to understand has to come along and explain what Mr Samak actually did say. Which isnt anything like what Mr Samak did say or the confusion would never have erupted in the first place.
Because Mr Samak does not have room in his prodigious mouth for both his feet, it appears he has to open his mouth in order to change them.
Is this guy for real? It surely goes to show (does it not?) that you can put a monkey in a dinner suit, but it is still only a monkey.
Bedwyr
Well the “surprise” today from the BOT (capital controls lifted) has somehow… broken the “informal peg”.
THB shot up at 31,20 !
-> Fall : I think this issue (petro dollar) is the main factor… My bet : BOT/gvt are playing short term (to fight inflation) rather than mid term (economic slowdown).
A higher THB will alleviate the burden of oil prices.
I mean look at the crude : we are now over 102 USD ! Gasoline prices are really a burning issue in Thailand from a political point of view (and economic as well).
But still, I continue to believe that the trap is closing. Wednesday BOT left interest rates at 3,25. They can’t cut. They can’t increase. They can only wait. And hope.
However, we have to admit that this problem is not thai related. Almost all central banks in the world face the same issue.