Thailand is a tourism mecca on account of its breathtaking beauty, welcoming culture and affordability. It's still a reasonably priced place, though the baht's gains might imperil the appeal and economic growth of Thailand. Such concerns explain why the central bank governor, Tarisa Watanagase, refuses to lift controls on foreign capital entering the country.
Currency speculators are betting on even bigger gains in the baht following a Dec. 23 election. Investors widely expect that the central bank will soon lift the controls imposed in late 2006. Bank of America says the baht may appreciate 8.5 percent by the end of 2008. Letting the baht rise is a nod to the reality that, like it or not, Asian currencies are in demand. For all the Thai efforts to cap the baht, the most likely direction for Asian exchange rates and equities is up.
"Because the Bank of Thailand has limited market power relative to other central banks, its currency is a canary in the coal mine for what other currencies should do," said Mark Matthews, the head of Asia-Pacific equity strategy at Merrill Lynch in Hong Kong. Thailand is indeed on the front lines of a phenomenon new to Asia: living with stronger currencies. While Matthews doubts the baht is overvalued, others are puzzled by the currency's rally. "The Thai baht is a very strange beast and defies logic and fundamentals," said Benjamin Pedley, an investment strategist at LGT in Singapore. Mikka Pineda, an economist with Roubini Global Economics in New York, calls it the "baht conundrum." Why it is that even with so-so growth (estimated to be 4.5 percent this year), lower interest rates and political uncertainties, the baht is the best performer in Asia versus the dollar this year? In a recent report, Pineda concluded the baht's strength reflects the unique combination of an improving trade balance, foreign demand for Thai stocks and restrictions on capital outflows.
Whatever forces are lifting the baht, though, they're not about to go away. The phenomenon is more of a blessing than a curse for Thailand for three reasons:
- One, it's helping to offset the inflationary effects of rising oil prices.
- Two, it's a sign of confidence both in the outlook and asset markets of the nation. Rising stocks and falling bond yields are nothing to complain about in a nation still struggling to raise per capita income above $8,600 as measured in purchasing-power parity terms.
- Three, it will force Thailand to keep pace with rival emerging economies. It ranked 28th in the World Economic Forum's 2007-2008 Global Competitiveness Index, behind Estonia, Chile and Malaysia. For all its promise, Thailand still needs to figure out how to compete with China and India on a cost basis and Japan, Singapore and South Korea technologically.
Manufacturing has long been the fuel driving Thai growth, though services increasingly account for rising employment and prosperity. The baht's rise also serves as a reminder that Thailand needs to nurture entrepreneurship to create more good-paying jobs.
Asia really has no choice here; it will just have to live with stronger currencies. [via International Herald Tribune]
Sierra Tangos
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20 Million Baht fire at South Pattaya Japanese Restaurant - Police and Fire Rescue Units rushed to the South Pattaya Ro
ad in the early hours of Sunday Morning after a fire was reported at the Kabuto Yakiniku Japanese Restaurant. The owner of the establishment, Khun Sakdar, soon arrived but was powerless to stop the flames and looked on as his restaurant, which has been opened for 2 years, became engulfed in flames and was completely destroyed. Fire Investigators inspected the venue after the fire had been put out but could not determine the exact cause of the blaze which caused an estimated 20 Million Baht’s worth of damage. [via Pattaya City News]
- An unprecedented 2.9 million people voted in the advance voting held on Saturday and Sunday for voters who cannot vote on Dec 23.
- Rumour has it that Malibu Bar in Soi Post Office is up for sale
- Vista named #1 biggest tech disappointment of 2007 by PC World [via Engadget]
- Keeley Hazell Wallpaper x 3
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TrackThePack - It's a week before the Christmas holiday, you're tech-savvy enough to have ordered all your gifts onlin
e, but now you've got an email box full of package tracking numbers from a dozen companies and you need to know they'll reach their destinations in time. You need TrackThePack. Now you can go to one website to track packages from more than one shipping company. But, like the website says, TrackThePack is in beta, so be nice! [via eHub]
- There are as many passwords and user names to routers as stars in the sky and even if you’ve used one before, you’ll ask: “is it admin - admin, or admin - password, or user - admin?” Now you can stop wondering, since Routerpasswords has all the answers. Just select your router, click find password and it will list all default user names and passwords for the routers of that company. This is an immensely helpful tool if you’re trying to work out someone else’s router problem, or your own, in case you’ve lost the manual. I’m afraid if you’ve changed your password from the default one this won’t work, but then shame on you for not remembering! [via gHacks]
- Sneak peak, Sandra Nilsson, Playboy's Miss January 2008
- Bush team humiliated by Papua New Guinea team - yes strange as it may sound, this was a headline in the Toronto Star regarding the UN Climate Conference in Bali. This article could well be an eye opener for many Americans as it highlights just how far America's standing has fallen in the world community, under Bush.
- The Bush administration is hammering out an agreement to freeze interest rates for five years on subprime mortgages to prevent foreclosures. Republicans are very concerned about losing their houses - specifically the White House and both Houses of Congress in the next election. [via Jim Barach]
- The Bush administration made a dramatic U-Turn at the U.N. climate change conference in Bali, first rejecting and then accepting a compromise aimed at reducing carbon dioxide emissions around the world. But being the Bush administration, they made the U-Turn in a single-occupant, fully loaded Hummer screeching figure 8's through a rain forest. [via Gorsefeathers, RadioOnline.com]
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