Thai Baht Advances on Speculation Exporters Converting Income

[CrazyExpat]

Thailand’s baht climbed to the strongest level in more than two years on speculation exporters were converting their overseas income to guard against further appreciation in the currency.

“With anticipation of further declines in the dollar, local exporters will rush to sell them, boosting the baht,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “Some Asian countries may boost interest rates while the U.S. is expected to keep them low, which is supportive of regional currencies.”

The baht appreciated 0.3 percent to 31.74 per dollar as of 9:15 a.m. in Bangkok, according to data compiled by Bloomberg. It earlier touched 31.73, the strongest level since May 2008. The currency may reach 31.7 this month, Hayashi said.

Shipments from Thailand climbed 37.1 percent in July from a year earlier after increasing 46.3 percent the previous month, a report on Aug. 20 will say, according to the median forecast in the Bloomberg survey.

The one-year swap rate, the fixed cost needed to receive a floating payment, was 1.71 percent from 1.705 percent yesterday. The rate has increased 33 basis points since the end of June. A basis point is 0.01 percentage point.

South Korea, India, Malaysia, Taiwan and Thailand have raised benchmark rates this year in response to inflationary pressures, while the U.S. central bank has kept borrowing costs near zero since December 2008 to prop up the world’s largest economy.

http://www.businessweek.com/news/2010-08-16/thai-baht-advances-on-speculation-exporters-converting-income.html

[CrazyExpat]

South Korea's Won, Thai Baht Lead Asian Currency Gains on Growth Optimism

South Korea’s won and Thailand’s baht led gains among Asian currencies on optimism interest-rate increases and the world’s fastest economic growth will attract funds to regional assets.

The Bloomberg-JPMorgan Asia Dollar Index was near a one- week high as economists predicted data this week will show Taiwan and Malaysia had their best growth in more than a decade in the first two quarters of 2010. Thailand had its biggest increases in gross domestic product since 2003, a Bloomberg survey showed before data next week. The won has gained almost 1 percent since Aug. 12, when Bank of Korea Governor Kim Choong Soo said borrowing costs aren’t at an “appropriate level.”

“When you look at the growth prospects, Asia’s strong numbers are supportive of currencies,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Due to strong growth, many Asian countries are in the interest-rate increase cycle. The region’s yield advantage also encourages buying of the currencies.”

The won gained 0.3 percent to 1,173.25 per dollar as of 1:55 p.m. in Seoul and the Thai baht climbed 0.2 percent to 31.67, according to data compiled by Bloomberg. The Taiwan dollar rose 0.1 percent to NT$31.93, according to Taipei Forex Inc. The Vietnamese dong fell 1.1 percent to 19,320 after the currency was devalued for the second time this year.

Asia’s developing economies will expand 9.2 percent this year, outpacing growth of 2.6 percent in industrialized nations, the International Monetary Fund said on July 7.

Higher Yields

Central banks in South Korea, Thailand, India, Malaysia and Taiwan have raised benchmark rates this year, giving their currencies a yield advantage over the Group of Seven nations. Indonesia’s 6.5 percent rate compares with a maximum of 0.5 percent in the U.S., U.K. and Japan.

Policy makers in Korea and Taiwan are likely to increase borrowing costs when they meet in September, Standard Chartered Plc said in a research note on Aug. 16.

The won rose to a one-week high as foreigners bought more Korean shares than they sold for the first time in six days, adding to this year’s $4.6 billion of net purchases, exchange data show. The central bank in Korea raised its benchmark rate in July by a quarter of a percentage point to 2.25 percent.

For More: http://www.bloomberg.com/news/2010-08-18/south-korea-s-won-thai-baht-lead-asian-currency-gains-on-growth-optimism.html