Forex swings affect results of bank’s treasury units
Written by Writer on Tuesday, October 28th, 2008
Forex swings affect results of banks’ treasury units
SOMRUEDI BANCHONGDUANG
Fluctuations in foreign-exchange rates resulted in volatile performance by the treasury units of local banks in the third quarter.
Kasikornbank, the country’s fourth-largest bank, posted a third-quarter gain on foreign exchange of 338.75 million baht, down 69.24% from the previous quarter. Third-ranked Siam Commercial Bank said its foreign-exchange gains fall 32.78% to 1.19 billion baht in the third quarter from 806 million in the second.
Market leader Bangkok Bank, however, posted a 7.81% increase in forex gains for the quarter to 1.05 billion baht in the third, while Krung Thai Bank, the country’s second largest, posted a rise of 8.87% for the quarter to 323.24 million.
TMB also showed an 8.25% increase in forex gains to 274 million baht in the third quarter, while Bank of Ayudhya posted flat growth with a third-quarter gain of 234 million.
The sharp gyrations in the money and currency markets resulted in volatility for the whole sector. Kasikornbank, in a note to the Stock Exchange of Thailand, said the decline in exchange gains came due to fluctuations in the money market and investment hedging transactions, but said there was no significant impact overall to the bank’s investment portfolio.
The baht, which most analysts had expected to appreciate this year, has turned sharply bearish together with other Asian currencies as the global financial crisis has spurred a flight to the US dollar.
The baht traded at around 34 to the dollar in the third quarter compared with 32.5 in the previous quarter. The dollar in recent weeks has gained ground against all emerging market currencies as investors have dumped assets to reduce their portfolio risk and meet demand for cash in their home markets.
KBank president Prasarn Trairatvorakul said high dollar demand in September, at the height of the current crisis, resulted in a sharp decline in the baht.
The bank maintained its positions through the month, resulting in lower exchange gains for the third quarter, he said. “But the baht has since normalised this month and our portfolio position now shows a gain.”
One Bangkok Bank dealer said the baht was likely to trade between 34.4 to 34.8 to the dollar this week.
He said the unit would track regional currency movements and the actions Asian central banks might take to help ease the impact of the financial crisis, including additional interest rate cuts.
Most analysts expect the US Federal Reserve to cut short-term rates by up to a half-point this week to help lift the US economy out of recession.
Bangkok Post
Tuesday October 28, 2008
