The Global Currency Investor A Quarterly Analysis of 50 World ...

More documents

Recommendations

Info

Jan 09Jul 09Jan 10Jul 10Jan 11Jul 11Jan 07Jan 08Jan 09Jan 10Jan 11COUNTRY REPORT: ThailandOutlook: NeutralS&P Moody's Rates Policy 3m 5y 10y[30-Sep-2011]Rating (LC) A- Stable Baa1 Stable3.50% 3.60% 3.52% 3.65%Economy and Interest Rate OutlookThailand‟s economy has slowed somewhat in recent months, with the inevitable maturing of thebusiness cycle and the tsunami in Japan (whose companies have significant manufacturing plantoutsourced to Thailand) counting against economic growth. However, policy remains relativelyexpansionary, with the new Puea Thai government, under Yingluck Shinawatra, working hard todeliver on election promises (see below). Expansionary fiscal policy, combined with still relativelylow policy interest rates is helping the economy to see out a post-boom dip in 2011, while growthshould pick up next year. The Bank of Thailand edged interest rates up in a gradual mannerthrough much of this year in order to combat inflation, which accelerated to 4% y/y through thesummer. Inflation will remain elevated thanks to base effects for the remainder of this year, butshould ease of next. However, there remains some grounds for uncertainty given that thegovernment plans to increase subsidies for some products and eliminate them for others, as well asraising the minimum wage. This uncertainty is likely to keep the Bank of Thailand watchful for theforeseeable future.The Thai baht has been an underperformer regionally in 2011, though in recent weeks it hasperformed better, as it is closely managed against the now-resurgent US dollar. A continuation ofmarket turbulence would certainly be a positive for the baht against more volatile regionalcurrencies such as the Indonesian rupiah or Philippine peso.393735USD/THBJPY/THB (RHS)0.500.450.4010.08.06.04.0CPI inflation y/y %330.352.031290.300.250.0-2.0-4.0270.20-6.02010 2011 (f) 2012 (f)Real Growth (%) 7.8 3.6 5.0CPI (%)* 3.0 4.0 3.5Current account (% GDP) 4.6 4.2 4.0Fiscal balance (% GDP) -2.0 -2.9 -2.0Government Debt (% GDP) 28.3 28.0 26.4Daily volumesFX Reserves*End of YearSpot FXUSD450 mn300 mn181.9 bnSource: IMF, S&P, Bloomberg, BarclaysPoliticsPrime Minister: Yingluck ShinawatraNext election: 2015Yingluck Shinawatra, sister of ex-PMThaksin, came from a relative unknown toclinch a decisive victory in elections at theend of June. She has immediately set towork on realising populist promises likereducing fuel costs, providing medical coverfor the poor and free laptops for children.However, elements of the losing DP partyremain adamant that they will take thegovernment to court, arguing that Thanksin(who is banned from politics) played anactive role in the election campaign.26Confidential – not for redistribution. This material must be read in in conjunction with the “Important Information” statement provided on the last herein. page.
Jan 09Jul 09Jan 10Jul 10Jan 11Jul 11Jan 07Jan 08Jan 09Jan 10Jan 11COUNTRY REPORT: VietnamOutlook: NeutralS&P Moody's Rates Policy 3m 5y 10y[30-Sep-2011]Rating (LC) BB Stable B1 Stable9.00% 13.60% 12.41% 12.67%Economy and Interest Rate OutlookPolicymakers in Vietnam have had a difficult time in trying to promote strong economic growthwithout prompting inflationary pressures. Economic growth has slowed under the weight of tightercredit conditions, which prompted the new Governor of the State Bank of Vietnam to cut the reverserepo rate by 1% in August . The Bank at the same time raised the US dollar reserve requirement todiscourage dollarisation of the economy - something that typically occurs when inflation starts to getout of control. The inflation rate has recently shot back up, and is now running about 20% y/y. Baseeffects alone should allow for the headline figure to fall significantly over coming months, givingcredibility to the central bank's efforts to promote growth by easing credit conditions. Nevertheless itis clear that Vietnam has some way to go before getting its macro dynamics into the stable framenow enjoyed throughout most other emerging markets.After consistent managed depreciations by the central bank against the US dollar (see chart), thelimited discount of the unofficial Vietnamese dong over the official rate suggests that, for now, thecurrency is around market fair value. That said with the inflation rate so volatile, it seems more thanlikely that the currency will continue to face depreciation pressure going forward.21,00020,000USD/VNDJPY/VND (RHS)28030.025.020.0CPI inflation y/y %19,00024015.018,00020010.05.017,0001600.02010 2011 (f) 2012 (f)Real Growth (%) 6.8 5.8 6.0CPI (%)* 11.8 19.0 9.2Current account (% GDP) -8.9 -7.5 -6.3Fiscal balance (% GDP) -7.0 -6.2 -6.4Government Debt (% GDP) 51.6 49.4 46.6Daily volumesFX Reserves*End of YearSpot FXUSD300mn4-12 mn11.8 bnSource: IMF, S&P, Bloomberg, BarclaysPoliticsPrime Minister: Nguyen Tan DungNext election: May 2015The relatively reformist Nguyen Tan Dung wasre-elected Prime Minister in July by theNational Assembly. He is seen as a relativemoderate. However, the elevation of theconservative Truong Tan Sang to Presidentsuggests that the liberal wing of the Party islosing some influence.27Confidential – not for redistribution. This material must be read in in conjunction with the “Important Information” statement provided on the last herein. page.
Page 1 and 2: The Global Currency InvestorA Quart
Page 6: Regional Summary: Asia & Emerging E
Page 10 and 11: Jan 09Jul 09Jan 10Jul 10Jan 11Jul 1
Page 14 and 15: Currency Reports: Asia14Confidentia
Page 28 and 29: Currency Reports: Europe28Confident
Page 34 and 35: Jan 09Jul 09Jan 10Jul 10Jan 11Jan 0
Page 46 and 47: Currency Reports: The Americas46Con
Page 54 and 55: Currency Reports:Africa and Middle
Page 62 and 63: Jan 09Jul 09Jan 10Jul 10Jan 09Apr 0
Page 64: Important InformationThis document

The Global Currency Investor A Quarterly Analysis of 50 World ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?