Thai baht soars to six-month high against US dollar

The Thai baht opened at 34.78 against the US dollar today, strengthening from yesterday’s close of 35 to a six-month high.

The baht’s sudden rise is down to the Bank of Thailand’s (BOT) hiking the policy rate by a quarter point earlier this week.

The BOT remains committed to a gradual monetary tightening policy, raising the policy rate from 1% to 1.25% on Wednesday.

Economic growth this year is expected to be at 3.2%, lower than the prior projection of 3.3%, according to the central bank. The BOT also cut its 2023 growth forecast to 3.7% from 3.8%.

Thailand’s currency is facing pressure from the depreciating US dollar, gold sales, and foreign investors possibly buying more Thai bonds amid continuous drops in the US 10-Year bond yields.

Investors might want to sell the baht now as it edges near the support level of 34.75. Once it hits the support level, it could depreciate again.

Although, US labour data coming out this weak could impact the baht’s value. Low employment rates could help the baht but high levels of employment could weaken the baht, so it’s up to investors whether to hold out and see.

Krungthai market specialist Poon Panichpibool advised investors to use hedging tools in the highly-volatile currency market.

Economists have high hopes for the baht in the long run. Capital Market Research Specialist at Kasikorn Bank Kittika Boonsrang predicts…

“I expect the Thai baht to get a high that could be around 33.50 to 34.00 per US dollar by the end of next year.”

The forecast will only be achievable if Thailand pumps up exports and ramps up tourist arrivals, added Kittika.

Other regional currencies have also strengthened against the greenback amid hopes that China will ease up their Covid-19 restrictions.

Currencies have been highly sensitive to the Federal Reserve’s aggressive monetary tightening this year which was designed to fix high inflation rates in the US.

Source - The Thaiger

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Thai baht plunges to 38 against US dollar for first time in 16 years

The volatile Thai baht has depreciated to 38 against the US dollar even faster than foreseen by economists. The last time the baht reached 38 to the dollar was 16 years and two months ago on July 26, 2006.

The baht has hit the 38 mark even earlier than expected by the Head of Capital at Kasikorn Bank Kobsidthi Silpachai, who just a few days ago predicted that the baht would depreciate to 36.50 – 38 against the US dollar within the next month.

The baht’s depreciation is attributed to the rising strength of the US dollar. The dollar index has risen to 114, causing several currencies worldwide to depreciate. The US dollar continues to grow in value due to continued federal fund hikes.

The dollar has flown in 2022 amid the Federal Reserves’ aggressive interest rate hikes, Europe’s energy crisis, and China’s Covid-19 lockdowns. Cambridge University economist Mohamed El-Erian said the strength of the US dollar is bad news for the world economy…

“What is clear is we have this relentless increase in yields, this relentless appreciation of the dollar. They are both bad news for corporates and for the economy.”

Amid pressure from high inflation rates and the depreciating baht, Thailand’s Monetary Policy Committee will meet today to discuss raising the policy rate from 0.75% to 1%. The policy rate hike will increase interest rates between Thailand and the US with the goal of temporarily strengthening the baht and “supporting economic recovery.”

In the long term, Thailand is relying on the recovery of the tourism industry to strengthen the nation’s currency. K Bank predicts that the baht will rise to 35 to the US dollar before long as continually growing tourist arrivals pump money into the economy.

The Tourism Authority of Thailand predicts that Thailand will welcome a total of 9.3 million tourist arrivals in 2022.

Source: Bangkok Biz News / The Thaiger

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PayPal is cancelling personal accounts in Thailand from next year

PayPal will no longer be available to the vast majority of people in Thailand from February 2022.

PayPal recently announced that anyone in Thailand who set up a personal account before March 2021, will no longer be able to receive payments or even have a balance on their account from February 2022.

“PayPal is preparing to relaunch services in Thailand. If your account was opened prior to March 7, 2021, you will need to take some action to continue using your account in Thailand, the company says on its website.

The move essentially means that as of February next year, PayPal will no longer be available to customers with personal accounts in Thailand.

For people who rely on PayPal to receive payments from overseas, they will no longer be able to do so without a registered business account.

Online teachers, freelance workers, digital nomads or even people in Thailand who use PayPal to receive money from friends and family overseas will have to find an alternative.
In order to get a registered business account, people will need to be registered via the Thai government’s Know Your Business (KYB) scheme.

Registration for a business account requires applicants to submit their 13 digit registration number, as well as the identification documents of all company shareholders with more than 25% stake in the company. In addition, anyone who is authorised to use said business account is also required to submit their identification documents.

Furthermore, business accounts will then be charged 7% VAT on all transactions, while domestic transactions can only be made in Thai baht and must be linked to a Thai bank account.

Business customers will also no longer be able to transfer money bank accounts in the United States.

The move has come about after the Thai government overhauled regulation of the country’s fintech sector.

This means that PayPal has been forced to adhere to a new regulatory framework in order to be able to operate in Thailand.

However, speculation online says the move is to do with Thailand cracking down on money laundering.

Last year PayPal announced it was no longer accepting new registrations for accounts from people in Thailand.

Source - ASIAN NOW

 

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Travel wallet YouTrip sees unstoppable Thai baht as opportunity

YouTrip, the provider of a multi-currency travel wallet service in Asia, thinks it could be a beneficiary of Thailand’s high-flying baht.

The baht’s climb spurs foreign-exchange demand by encouraging Thais to travel and shop abroad, YouTrip’s Chief Executive Officer Caecilia Chu said in an interview in Bangkok. The company rolled out its service in Singapore last year and in Thailand this month.

“This is the best time to enter the market,” Chu said. “People want to buy things outside of Thailand because the currency is so strong.”

YouTrip offers a multi-currency travel e-wallet with a prepaid Mastercard. Users charge up the wallet from their smartphones. The card lets travelers pay overseas with no fees in 150 currencies at wholesale exchange rates, according to the firm.

The service is trying to disrupt a sector that can involve either time-consuming, cash-heavy trips to money changers, or the use of traditional bank cards with fees and exchange-rate markups.

The firm’s revenue comes from commissions paid by merchants for purchases using the card.

The Thai baht has appreciated more than 9% against the dollar in the past year, the most in emerging markets, data compiled by Bloomberg show. The jump has hurt the trade-led Thai economy, which is on course for the weakest growth in 2019 in five years.

The slowdown could crimp outbound tourism temporarily but many analysts see long-term potential. Chu said about 11 million Thais go overseas for holiday each year, spending an estimated 400 billion baht ($13.2 billion).

She aims to sign up 400,000 Thai customers in the first year. The “untapped opportunity” stems from the fact they undertake foreign-exchange transactions in cash, Chu said.

YouTrip, which also has a base in Hong Kong, plans to expand into at most two more Southeast Asian markets over the next year, Chu said. The firm raised S$25.5 million ($18.7 million) in funding in May.

Source - TheJakartaPost