I wrote on march 2, before the capital controls were removed : “So, overall, I think the BOT is going to play… exactly the same game than before (buying USD and then issuing bonds). With just higher limits, thanks to new regulations. And… that it will pray and hope.“
The day after, Nation wrote : “the BOT plans to issue Bt130 billion worth of bonds in the first two weeks of March to absorb liquidity in the market caused by the baht intervention.”
And today, what do we read… ?
Meanwhile, the BOT is to issue Bt60 billion of BOT bonds today after already selling Bt165 billion over the past few days.
The central bank will issue Bt225 billion in all for the first week of the lifting of official capital controls.
The issue was aimed at absorbing liquidity in the system after the BOT stepped into the foreign-exchange market to rein in the baht as the Finance Ministry has gradually bought dollars to refinance its foreign debts. (Nation)
Again so predictable… And so dangerous (read my article).
130 billions in 2 weeks. And now 225 billions in 1 week… You start to understand the problem ?
You certainly noticed that this week the exchange rate THB/USD was… flat… Very small movements.
Meanwhile, the USD is CRASHING versus Euro and other currencies (look at the chart of USDindex !, it’s amazing)…
What the BOT will do next week ? Issuing 225 billions THB more of bonds ? And the week after ? And the freaking week after ? Again and again ?
What are they waiting for ? The Virgin Mary saving the US Dollar ?
They are running toward the reinforced concrete wall, with a stupid smile on their face.
It’s really scary.
Let me guess, the underwriter would be banks, eh?
So, in the end, the public have to pay one way or the other.
Like playing a russian-roulette with a revolver. No matter how lucky you are, the sixth shot WILL kill you.
What about that “only accounting loss” rhetoric line?
Bonds are “really for real” if I may say…
The BOT will pay interests (in THB) on these debts on the long run…
All this to have the privilege to buy now… USD that is loosing value on a very short term basis
All this to curb -temporarily- the increase of THB…
It’s just brillant.
Ah… I see right now that USD has a new low record versus Euro : 1,5404.
Everything is okay.
Have sweet dreams miss Tarisa.
Regarding the “accounting losses”, the BOT will publish its accounts for 2007 in june.