simoh1490

There will probably be some further capital outflows resulting from the US Fed hike in base rates but I suspect much of that has already taken place, as people sell THB investments in say Thai bonds or the SET and repatriate those funds into USD, THB is likely to weaken to some lesser degree. But the SET continues to offer good value as does the local bond market, remember that interest rates here are still higher than in the US so I suspect we're noway near the tipping point which makes overseas investors believe the Thai market no longer offers good value. And since USD/THB trades historically in a fairly wide range of between 29 and 36, I wouldn't be surprised to see it hit 36.5 or thereabouts but not much more.

GBP/THB is a different story however since GBP is also on a downward path which is likely to balance against THB value and result in little change to the forex rate of that pair - I would look for the pair to trade between 40 and 45, based on what happens with Brexit and trade related issues that impact SE Asia.

5 hours ago, elzach said:

 

They are not "depleting", but they sure as heck are "spending" them, to sustain the baht.

 

For someone so "adept" at BOT dealings (and with 3 posts total at Thaivisa, if I may add), you included a link to 1-month figures? Let's analyze the situation more in depth, shall we?

 

Using the link you provided at BOT, I came up with these figures (at month mid-point):

March '13: $178 billion

March '14: $168 billion

March '15: $152 billion

March '16: $170 billion

March '17: $181 billion

 

The above may seem not bad at all, till we look at the Tourist Receipts over the same period:

 

 

 

These are USD on the right. In 2016 Thailand earned $71.5 billion (!) in tourist receipts:

http://www.voanews.com/a/ap-record-32-million-foreign-tourists-visit-thailand-in-2016/3699721.html

 

A big chunk of that should have been added to the foreign exchange reserves every year. Where is that money going?? Over the last 5 years Thailand made over $260 billion in tourist receipts alone. But, over that same period, foreign reserves added only $3 billion.  You must be kidding.

 

He's a better reflection of Thailand's economy:

In other words, going nowhere. The currency should have been reflecting that. But the Bank of Thailand is "managing" it all right.

By all means feel free to adjust the dates in the link provided to review a period of greater than one month!

There is no direct correlation between the level of BOT foreign currency reserves and Tourist Receipts, neither is there a direct relationship between the level of those  reserves and Foreign Direct Investment. That is because Thailand is an export driven economy whereby only a very small percentage of export bills are settled in THB, the remainder are settled in a range of foreign currencies but mostly USD which accounts for 61% of all export bills. If you really wanted to try and estimate the extent of possible market intervention by BOT on the Thai currency, you would need to come up with a pretty sophisticated matrix which measures average tourist foreign currency receipts, plus the value of export bills paid in foreign currency, less import bills settled in currencies other than THB (think imported oil), plus capital inflows, less capital outflows and then repeat that process for twelve months to determine an average rate of increase, an almost impossible task! An easier and more practical way in which to evaluate the level of BOT foreign currency reserves is to look at the start and end values, one year apart, doing that reveals they have grown by USD 12 billion over the past year.

The Thai currency strengthens solely because it is purchased against USD, that happens when export bills are settled and exporters exchange their USD for THB, it also happens when capital inflows invest in the SET etc and when tourists exchange USD for THB - THB is weakened when the reverse takes place and the difference between the two actions determines whether THB strengthens or weakens. For BOT to purposely weaken the currency they would need to sell THB and buy USD, that would have the effect of increasing BOT's foreign currency reserves abnormally, not depleting them!

Lastly, BOT has been relaxing foreign currency controls by allowing exporters to retain foreign currency earnings whereas previously they were required to convert them into THB quite quickly, they are now allowed to hang on to that foreign currency and invest it both at home and overseas and that has an impact on the rate at which central bank foreign currency reserves grow.

On 10/03/2017 at 11:07 AM, elzach said:

The THB is a "managed" currency, as other pointed out, by the BOT.

 

All you need to look at, to understand that there's something fishy with the THB for over the last 12 months, is the following:

USD to Malaysian Ringgit: up 16.5% from its 52-week low

USD to Philippine Peso: up 19% from its 52-week low

USD to THB? up 4%.  Hmmm is the baht and the Thai economy so inherently strong?

No, the BOT has been busy buying up THB. Their foreign reserves are depleting. One reason is prestige/face, authoritarian regimes have a tendency to do that, plus of course holdings by key people retain their value. (I'm trying to be diplomatic). China is a prime example, from 2011 to 2014 the yuan gained about 11% on the USD, for no real economic reason. In just over the last 12-15 months, it has collapsed by 13% to the USD (this time for real economic reasons). The lesson is, you can only sustain your currency for so long, even if you're China. Imagine Thailand.

Edit: Another reason is of course incoming tourism, which at 10-15% of GDP, is nothing to sneeze at. And even though many here scorn Chinese tourism, the fact is, the Chinese fill all of those malls' shopping bags. When was the last time you saw farang tourists stocking up on Prada or Coach gifts?

Thailand central bank operates what is known as a managed float, this means that THB is allowed to float freely according to market forces, BOT will however intervene in forex markets to smooth out currency volatility, particularly in relationship to USD, this in order to support onshore exporters. The second area where the central bank will intervene is to manage THB against a basket of AEAN currencies, this being a requirement of ASEAN membership - as regional currency swaps with local trading partners are established, the need for BOT's intervention will reduce.

On 10/03/2017 at 11:07 AM, elzach said:

The THB is a "managed" currency, as other pointed out, by the BOT.

 

All you need to look at, to understand that there's something fishy with the THB for over the last 12 months, is the following:

USD to Malaysian Ringgit: up 16.5% from its 52-week low

USD to Philippine Peso: up 19% from its 52-week low

USD to THB? up 4%.  Hmmm is the baht and the Thai economy so inherently strong?

No, the BOT has been busy buying up THB. Their foreign reserves are depleting. One reason is prestige/face, authoritarian regimes have a tendency to do that, plus of course holdings by key people retain their value. (I'm trying to be diplomatic). China is a prime example, from 2011 to 2014 the yuan gained about 11% on the USD, for no real economic reason. In just over the last 12-15 months, it has collapsed by 13% to the USD (this time for real economic reasons). The lesson is, you can only sustain your currency for so long, even if you're China. Imagine Thailand.

Edit: Another reason is of course incoming tourism, which at 10-15% of GDP, is nothing to sneeze at. And even though many here scorn Chinese tourism, the fact is, the Chinese fill all of those malls' shopping bags. When was the last time you saw farang tourists stocking up on Prada or Coach gifts?

"the BOT has been busy buying up THB. Their foreign reserves are depleting".

You seem confused about the meaning of the word depleting, perhaps you intended to write, increasing!

http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=94&language=eng

8 minutes ago, Jaymk said:

So, I went to Sriphat as directed, and tried to make an appointment with Dr. Ampica. I was told that she's not in until 5:00pm, but that I have to show up at 6:30am, and wait in the queue to make sure I'm seen. I'm a bit confused, because I was told all this despite making an appointment. So I have to arrive at 6:30am and wait until 5pm to make sure I don't lose my appointment slot? Very confused. Does anyone know if I can just show up, take a number, and then go back in the afternoon, or do I have to sit it out for 10 hours?

I think you misunderstood, the queue opens at 6:30am and patients can start to get queue numbers any time after that, obviously the sooner you collect your queue number the quicker you will be seen after 5pm when the doctor arrives - there is not requirement for you to remain in the building once you have your number, simply get your number, go away and do your thing for the day and return at 5pm.