Thai baht strengthens to a record 1-month high
Thai baht strengthens to a record 1-month high
SINGAPORE (Bloomberg): The Thai baht strengthened to its strongest in more than two months Thursday as other Southeast Asian currencies were little changed.
Dealers said baht rose 0.8 percent to 40.13 to the U.S. dollar, its strongest since July 17, as the flow of new investment into the country boosts demand for the currency.
"Economy-wise, Thailand still isn't in too good a shape, but on the trade front, they are continuing to post surpluses, which is good for the currency," said Terence Ngooi, senior manager for strategic trading at Sanwa Bank in Singapore.
Thailand's current account -- an indicator of the flow of trade, services and investments into and out of a country -- has shown a surplus each month since Sept. 1997. Before that, no monthly surplus was recorded for 11 years.
Last year, Thai domestic demand for imported goods collapsed following the baht's devaluation. Yet, the weaker currency made Thai exports more competitive and boosted demand for the country's currency to pay for Thai goods and services.
Other Southeast Asian currencies were little changed as traders looked to more volatile currencies like the Deutsche mark and Japanese yen for money-making opportunities.
"Traders are steering away from trading the Asian currencies -- the risks are greater and there are fewer opportunities to make money," said Derek Kwok, chief trader at Credit Agricole Indosuez.
The rupiah was little changed at 11,020 to the U.S. dollar. The Malaysian ringgit was at 3.80, where it has stood since the exchange rate was fixed by the government on Sept. 2. The Singapore dollar rose 0.4 percent to 1.7212. The Philippine peso was little changed at 44.459.
Earlier this month, Malaysia introduced capital controls that included a ban on trading the ringgit outside the country. The move -- aimed at stopping speculation that sent the ringgit on a roller-coaster ride for most of the last 12 months -- raised fears other Asian countries may do the same, increasing the risk of being unable to settle trades.
The yen fell against the dollar for a fifth day, touching a two-week low, as currency traders remained skeptical Japan will be able to restore health to the debt-plagued banking industry anytime soon.
U.S. President Bill Clinton on Tuesday urged Japanese Prime Minister Keizo Obuchi to use public money to aid troubled banks, according to U.S. Deputy Treasury Secretary Lawrence Summers. Yet Japan's opposition parties are reluctant to do so.
"Despite the U.S. request, the Japanese problem isn't likely to be settled easily because of the wide gap between the ruling and opposition parties," said Tetsuhisa Hayashi, a foreign exchange manager at Bank of Tokyo-Mitsubishi Ltd. "The yen was sold because of the credit risk."
The yen reached 137.22 to the dollar, its lowest since Sept. 9. It was recently quoted at 136.84, down from 135.58 in late New York trading Wednesday.
The Australian dollar was little changed, paring earlier losses, as the U.S. dollar weakened after Federal Reserve Chairman Alan Greenspan hinted the U.S. may cut interest rates.
Still, gains in the Australian dollar where checked by investor concerns that a national election to be held on Oct. 3, could result in the winning party failing to secure a big enough majority to manage the economy effectively.
The Australian dollar, or Aussie, was little changed at to 58.17 U.S. cents from 58.00 cents late yesterday.
"In the medium term, talk of a rate cut will be a positive for the Aussie," said Geoff Bowmer, vice-president of foreign exchange at Bankers Trust Australia. "But the impact .. will be limited in the short term until investors" see the election outcome.
Investors are concerned the right wing One-Nation party, campaigning on a platform of protectionism, could hold the balance of power. Latest opinion polls show voter support for Prime Minister John Howard's conservative coalition at 42 percent and the opposition Labor party at 43 percent with One Nation at 6 percent.