William Pesek on a baht that won't go down
By Jon Fernquest |
In his column at Bloomberg news William Pesek touched upon the strong baht and how many economists are puzzled by why it remains so strong:
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," says Benjamin Pedley, an investment strategist at LGT Group in Singapore.Economist Mikka Pineda of Roubini Global Economics LLC 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 Asia's best performer 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. (Source: Pesek at Bloomberg)
Vocabulary:
puzzled by - confusing and difficult to understand
currency's rally - the value of the currency increases for a while
fundamentals - the underlying capabilities of an economy to produce
defies - goes against, not consistent with
defies logic and fundamentals - does not make sense
conundrum - a difficult to solve problem or puzzle
trade balance - roughly, exports - imports
capital outflows - investment money flowing out of a country
