What's new in business news: September 23, 2013
- Published: 23/09/2013 at 01:23 PM
- Online news:
Gold rise likely temporary only, wild swings in capital flows and baht likely & SME Bank's corrupt loans.
Gold's upswing 'tenuous at best'
The Fed's unexpected decision last week to maintain its US$85-billion asset purchase programme has given a big boost to equities, gold and bond markets.
The recent strong rebound in the spot gold price could be only short-lived. The Fed must eventually start retreating from its unconventional monetary easing a move that is expected no later than early next year. Markets' focus has switched to US economic indicators for hints about whether the Fed will begin tapering at its next meeting in December.
Gold fell by 19% this year, ending a 12-year bull run and losing some of its shine as an investment asset class on optimism that the advanced economies are strengthening. With gloomy prospects for the precious metal, some investors may take short positions which allow a profit to be made in a bear market. A short position is the sale of a borrowed security commodity or currency in expectation that the asset value will fall.
More wild swings in baht ahead
The Bank of Thailand is warning of a fresh round of wild swings in capital flows before the US Federal Reserve' s final two meetings of this year (Oct 29-30, Dec 17-18).
The baht jumped to 30.94/96 against the US dollar on Friday from 31.65/70 on Wednesday due mainly to massive offshore fund inflows into Thai equities and bonds after the Fed unexpectedly opted to maintain its US$85 billion in monthly asset purchases The baht has gained 4% from the year's low of 32.36 on Sept 6, when offshore fund outflows peaked on fears of US stimulus curbs
The Fed will eventually end its monetary stimulus programme if there are clear indications of a US economic recovery and the baht's movements in the months ahead will hinge mainly on US economic indicators as the Fed weighs scaling back its monthly asset purchases The Thai private sector has been urged to continue hedging against currency risk because the situation remains volatile
[Read the full story here ]
Central bank tells SME Bank fix lending procedures
Bank of Thailand has suggested that the Small and Medium Enterprise Development Bank of Thailand (SME Bank) close off loopholes that enable corrupt loans (corruption loopholes).
SME Bank has been under investigation over loans approved under past executives Falsified accounts have been highlighted as a main cause for non-performing loans (NPLs) after a central bank audit SME Bank's NPLs now stand at 32 billion baht, or 32% of outstanding loans with a target of 29%, by year-end.
Earlier this year, the bank entered a rehabilitation process and a probe that revealed a loan to five firms which actually had the same main shareholder Later, this shareholder sold out his stakes in these firms and borrowed even more from the SME Bank under his own name. Shortly afterwards, he was appointed a member of the bank's audit committee and, while serving in that role he used the cheques of the five companies he formerly owned as a guarantee for an additional 100-million-baht loan All these loans turned into NPLs. In another case, the Rubber Replanting Aid Fund made a payment that ended up in the pocket of someone unrelated to the fund after a series of mysterious accounting manipulations
[Read full story procedures" >here ]
About the author
- Writer: Jon Fernquest
Position: Assistent Manager Educational services