“Managed float system keeps Baht stable
The baht has been stable for the past one or two months under the Bank of Thailand’s managed float exchange rate system, according to BoT Governor Tarisa Watanagase.
The U.S. dollar has traded between Bt34.50 and Bt34.65 for the past month due to possible dollar buying by the central bank.
Despite trade- and equities-related inflows, the BoT was able to curb the baht’s appreciation as trade volume is limited by controls on speculative inflows, while investment in local debt must be fully hedged via foreign exchange swaps.“
The naiveness of this news illustrates what the BOT is doing.
The BOT is indeed buying USD, in order to curb the value of the THB. And by the way, because USD is loosing its value (anyway), the BOT records… accounting losses.
And interventions are easier due to capital controls, decided last december, because they create a small volume market, isolated.
The “managed float exchange rate system” is nothing less than manipulation. This is why we have 2 rates : the “on shore rate“, the one that BOT is looking at, very proud. And the “off shore“.
Today : 1 USD = 31.60 at off shore rate (we broken the bottom record last march, by the way). And 34.50 with the on shore rate.
That’s a 9 % difference !
Off shore rate shows only one thing : the real value, or the market value, of the THB. Continue reading ‘Currency : more deceptions from BOT’