Currency Exchange Rates Thread

[grinder]

Hey Jimbo do not leave South Korea with won: it is a worthless currency outside the ROK. The spread between buying and selling won in Thailand is over 10 per cent. Buy US dollars at the airport or at your friendly bank.

[Eric C]

http://bangkokpost.com/Business/10Jul2007_biz32.php

Eased rules cause baht to surge
Capital inflow after swap rules changed

PARISTA YUTHAMANOP

The baht continued to gain ground against the US dollar yesterday, reaching a new 10-year high at 33.77/8 to the greenback. The gain came as the Bank of Thailand announced that it would allow foreign investors to renew swap contracts with local banks for certain transactions over a one-month window. The move aims to reduce the gap between local and offshore rates. The baht was quoted at 31.65 to the dollar in offshore trade.

Most Asian currencies closed higher yesterday against the dollar on expectations of stronger economic growth and continued capital inflows into the region. Regional equity markets also closed higher, with Sydney, Mumbai, Hong Kong, Jakarta and Seoul all closing at all-time highs.

Suchart Sakkankosone, the senior director for the central bank's exchange control and credits department, said hat foreign investors could now hedge their currency exposure for certain transactions with local banks.

The rule change would help reduce the gap between the onshore and offshore markets, he said.

The baht has effectively been split between the onshore and offshore markets since last December, when the Bank of Thailand imposed stringent capital controls to curb ''hot'' capital inflows that had led to a 15% appreciation of the baht in 2006.

Mr Suchart said the regulatory change would help foreign banks and non-resident investors who had undertaken currency swaps with hedging in the offshore market. These markets came under pressure due to low liquidity following the 30% reserve rule on inflows imposed on Dec 18.

The central bank would now allow foreign investors to hedge their exposure in the domestic market for transactions matched with an underlying investment as long as that investment originated before Dec 19, 2006.

Investors unable to complete the transaction within the timeframe could apply for an exemption from the central bank.

Mr Suchart said that onshore swaps for qualifying transactions would be exempted from the 30% reserve rule, and could be taken from July 16 through Aug 17.

He said the thin liquidity in the offshore market meant that investors closing open positions faced higher financing costs due to the baht's scarcity. This in turn resulted in further pressure on offshore rates for the baht to appreciate, which had a psychological impact on domestic rates.

''Before the 30% reserve rule was imposed, there was no rule that hedging had to be made with Thai institutions. As a result, some foreign investors undertook hedging transactions with foreign institutions,'' he said.

Mr Suchart stressed that foreign investors could sell dollars onshore to close contracts only to match their actual investment transactions priced at existing market rates.

The offshore contract could only be closed with an onshore contract at the maturity date of the original deal, he added.

The Dec 18 rule required foreign investors to set aside a 30% reserve for inflows into certain asset classes.

But the rule has been made largely moot, with exemptions offered for foreign direct investment and equity investments. The central bank has also waived the rule for inflows fully hedged against currency risk.

Usara Wilaipich, a senior economist with Standard Chartered Bank, said the measure would help to narrow differentials between onshore and offshore baht exchange rates.

''In the end, the measure will help to improve sentiment. The closer gap between the two markets should prove supportive for the central bank's lifting of the 30% reserve requirement in the future,'' she said.

But a local treasurer, who asked not to be named, said the measure could result in more Thai currency circulating in the offshore market.

''The measure would help to bring the offshore baht rate and swap premiums closer to the onshore market. But it may fail to address the long-term problem,'' he said.

The measure would increase the central bank's workload as it limited the screening process to a one-month period.

''The central bank should allow investors to obtain baht liquidity gradually, instead of setting 'golden minutes'. There could be limitations as to how well the central bank could screen cases,'' the trader said.

Thiti Tantikulanan, the head of capital markets at Kasikornbank, said that recent trends indicated that the baht would continue to appreciate.

The currency could possibly reach 33.70 to the dollar by the end of the week.

''The baht is likely to continue to strengthen due to strong fundamentals. For instance, Kasikorn Research Center projects the current account surplus this year to be as high as $12.5 billion,'' he said.

Mr Thiti said the central bank's rule change yesterday would have no real impact on the currency, noting that the baht continued to strengthen in intraday trade.

[happychappy]

On the topic of exchange rates, I flew out of suvarnabhumi, I Went to one of the Exchange booths to change 5,000 baht into Dollars, up on the board in a Red Digital Display were the current exchange rates. U.S. Dollar 34.30. Handed my 5,000 baht over, and the Bitch handed me 143 dollars. I asked her if she had made a mistake, so she started pounding her calculator ( out of view ) then put it on the counter with the figure 143 displaying. I asked her if she could show me, on the calculator, how she arrived at this figure. She told me that i would not understand, So i told her, I understand you are a thief, and reached over the counter and took my Baht back. Went to another counter, asked the girl how many dollars for 5,000 baht, her calculator came up with 150 dollars. These girls must be making a fortune in fiddles.

[buddahas]

I think it's time for me to get a job, as my dreams of having an export business are crashing along with the US dollar.

http://www.forbes.com/markets/feeds/...fx4138800.html

[russellsimpson]

Yes. Bad fucking news for me. Christ, I was buying in at $1.45, slowly watching it slide. I've lost thousands.

No big deal while I stay overseas, but once I get back to Canada it bites, big time.

I still don't understand why that damn Canadian dollar has appreciated so much, against almost every other currency. Fucking hell I'm almost hoping for another Quebec separation crisis.

Oh well, what can I do? Bitch.

[laoshi]

Oil and interest rates chaps. Can is oil US is lowering interest rates. expect more of the same.

I so want to short oil but just can't find the incentive...

[esoteric1]

Originally Posted by buddahas

crashing along with the US dollar.

US Dollar below .79 today...down .52 at 78.67 currently

[russellsimpson]

Oil and interest rates chaps. Can is oil US is lowering interest rates. expect more of the same.

Gosh. I hope not. I ain't gonna bail now.

Anybody looking for sound financial advice in welcome to contact me. I can give you my advice and then you can go and do the absolute opposite. I tell you, it's a sure bet, you'll never loose.

[laoshi]

You needed to hedge it Russ. I don't know your exact position but I'm presuming you're holding the currency? If so take a long or short position in the opposite direction. At the very least you'll not lose any more and can sell a rally and hold the currency...

[esoteric1]

did you hedge/spread your short Dow bet l?

[laoshi]

Originally Posted by esoteric1

did you hedge/spread your short Dow bet l?

Fair point! Not to any extent, but I put a big margin on the trade and will add at certain points. Remember, equity indexes fall three times faster than they rise...

[esoteric1]

Originally Posted by laoshi

Remember, equity indexes fall three times faster than they rise...

true dat. I tink if you can just hold on till the initial exhilaration from the paper job wears off, you'll be right in the long run.

[laoshi]

I hope so. I'm short from 13480 stops at 14500 and orders to open at 1400 and 14200...

[esoteric1]

Looks like the Saudis may be cutting and running....from the US Dollar that is:

Fears of dollar collapse as Saudis take fright

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

http://www.telegraph.co.uk/money/mai...cnsaudi119.xml

[Sanuk Canuk]

This one is completely tied to the price of oil and the Debt to GDP ratios. The dollar might hit parity but it wont stay there forever, Canadian manufacturing will collapse if things continue in this way for too long. In any event it shows the economic power of Canada's near north oil sands deposits in this energy starved world.

Might be a good time to buy American equities though. Over time I am sure the American currency will get stronger and you could look to get a currency lift on American stocks in the long run.

On the other hand the fact that Canada has been aggressively paying down its debt while America has been increasing its federal debt suggests it might be a long time before the American dollar recovers relative to the Canadian dollar.