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UBS ASEAN and India Economist Edward Teather says should the Chinese Yuan decline 10 per cent against the US dollar, the Baht risks recording 40-80 per cent of the decline in the Chinese Yuan against the US Dollar in reflection of the August 11-12 devaluation of the Chinese Yuan.

Teather denies UBS believes a 10 per cent devaluation is possible, but says such analysis is significant as a 10 per cent decline would prompt larger declines in most Asian currencies.

UBS believes the People’s Bank of China will continue defending the RMB before resorting to tightening existing controls. Ultimately, UBS does not think this move will be effective given the exchange rate was not able to adjust sufficiently. UBS sees the RMB depreciating at the end of 2015 to 6.5 against the USD and 6.8 by the end of 2016. Overall, UBS does not see a hard landing for China.

UBS advises the Bank of Thailand (BOT) to not be on the defence against such fluctuations by drawing “a line in the sand”, but to “lean into the wind” as a defence would impact domestic growth. Despite the BOT keeping the policy rate at 1.5 per cent, against expectations of UBS, UBS still sees a potential cut from the BOT. UBS sees the Thai Baht more stable than its neighbours as the market sees modest foreign investment. Exports will not improve, but a pickup for the economy is expected with a boost from car sales, stabilisation of credit growth, and upcoming infrastructure spending from the government.

UBS says Asian markets may face a short adjustment when it comes to an interest rate hike from the Federal Reserve, but overall currencies will be able to adjust appropriately.

THAI in top three

Thai Airways International (THAI) was recently placed in the top three in four categories at the 2015 Business Traveller Asia-Pacific Awards ceremony in Hong Kong.

At the recent 2015 Business Traveller Asia-Pacific Awards ceremony, THAI placed second for Best Economy Class and in the top three for Best Asia-Pacific Airline, Best Frequent-Flyer Programme – Royal Orchid Plus, and Best Airline Lounge in Asia-Pacific – at Suvarnabhumi Airport.