Why the baht has been weakening

[CaptHaddock]

For those who prefer explanations of an economist over unsubstantiated opinion:

 

https://www.cfr.org/blog/thailand-currency-manipulator

[1FinickyOne]

I don't see the baht weakening, but strengthening... and I check regularly. The baht has been strengthening against the dollar... Not that long ago we were getting 36 to the dollar and now down to about 33 - - 

[tonray]

1 minute ago, kenk24 said:

I don't see the baht weakening, but strengthening... and I check regularly. The baht has been strengthening against the dollar... Not that long ago we were getting 36 to the dollar and now down to about 33 - - 

Very True....Trump and company are costing me $150 per month.....sigh

 

http://www.xe.com/currencycharts/?from=USD&to=THB&view=1Y

[CaptHaddock]

Depends on your time frame.  Very recently the baht has declined some, but certainly over the past year or more it has gained.

 

[lannarebirth]

The THB has been strengthening against the USD for the past 23 1/2 months. What your blogger sees as currency manipulation I see as fiscal prudence. Would that the boom/bust Western economies display as much fiscally prudent behaviour.

[1FinickyOne]

maybe look at a longer range chart - - I believe last year I was getting 35-36 area... these things can be plotted by the minute but most people tend to look at it over a longer term... not 15 minutes ago... Jan 1st this year I had my calculations at 35.9 - - and so now at 33.12, I feel a weakening... a couple of days ago it was 33.09 - I do not consider .03 in the last couple of days a strengthening that I would even mention.

[CaptHaddock]

8 minutes ago, lannarebirth said:

The THB has been strengthening against the USD for the past 23 1/2 months. What your blogger sees as currency manipulation I see as fiscal prudence. Would that the boom/bust Western economies display as much fiscally prudent behaviour.

Thanks for your contribution of unsubstantiated, if strident, opinion.

 

Now let's look at the data to see if a pattern of fiscal prudence emerges.  First, government spending, which we see is up since the beloved coup.

 

But increased spending might still be prudent if debt does not increase as well.  Here's govt debt to GDP.   So, debt spiked after the global financial crisis of 2008, which was a universal phenomenon.  During the Yingluck regime, 2011 to 2014, debt starts low and increases.  In the current period since the coup govt debt does not show a clear trend.

 

 

GDP is up over this period, due to the continued recovery of the world economy.  So, changes in debt-to-GDP ratio may reflect GDP growth more than reduction of debt or deficits, if any.

[lannarebirth]

35 minutes ago, kenk24 said:

maybe look at a longer range chart - - I believe last year I was getting 35-36 area... these things can be plotted by the minute but most people tend to look at it over a longer term... not 15 minutes ago... Jan 1st this year I had my calculations at 35.9 - - and so now at 33.12, I feel a weakening... a couple of days ago it was 33.09 - I do not consider .03 in the last couple of days a strengthening that I would even mention.

 

As the number of THB it takes to buy one USD decreases it is said to be strengthening against the USD.

[tonray]

1 hour ago, CaptHaddock said:

Depends on your time frame.  Very recently the baht has declined some, but certainly over the past year or more it has gained.

 

 

You are looking at a chart of the past 1 month...went from 36 baht to the dollar to about 33 baht to the dollar since last November. Baht has been strengthening against the dollar....anyway you look at it.

[CaptHaddock]

8 minutes ago, tonray said:

 

You are looking at a chart of the past 1 month...went from 36 baht to the dollar to about 33 baht to the dollar since last November. Baht has been strengthening against the dollar....anyway you look at it.

We look at exchange rates for different purposes.  Some of us watch them for timing of inflows from assets abroad.  If you are deciding when to do such a conversion the most recent little uptick is the most significant part of that graph.  If, on the other hand, you are summarizing rate changes during the month that last little blip is insignificant.  Perhaps I should have identified my perspective clearly.

 

Even in the larger view, though, that last uptick may be quite significant if it represents a decision by the BOT to intervene to start a period of weakening the baht.  The evidence that Setser presents for baht manipulation suggest that we may see further weakening.

[lannarebirth]

4 minutes ago, CaptHaddock said:

We look at exchange rates for different purposes.  Some of us watch them for timing of inflows from assets abroad.  If you are deciding when to do such a conversion the most recent little uptick is the most significant part of that graph.  If, on the other hand, you are summarizing rate changes during the month that last little blip is insignificant.  Perhaps I should have identified my perspective clearly.

 

Even in the larger view, though, that last uptick may be quite significant if it represents a decision by the BOT to intervene to start a period of weakening the baht.  The evidence that Setser presents for baht manipulation suggest that we may see further weakening.

 

It is possible that the USD:THB has made a bottom here as there is strong support in the 33 area. That said, the "uptick" you see isn't there yet. You don't want to see it breach 33 to the downside. All will be known within a week or so. 

[1FinickyOne]

38 minutes ago, lannarebirth said:

 

As the number of THB it takes to buy one USD decreases it is said to be strengthening against the USD.

That is exactly the point I am trying to make - - the OP asks why the baht is weakening and I do not see it weakening... 

[CaptHaddock]

8 minutes ago, kenk24 said:

That is exactly the point I am trying to make - - the OP asks why the baht is weakening and I do not see it weakening... 

Since about Sept 19 until now, the period of interest to me, if not, perhaps, to you, the number of baht to the dollar has increased representing a decrease in the value of the baht.  Is there something difficult to understand here?

[sandyf]

6 minutes ago, kenk24 said:

That is exactly the point I am trying to make - - the OP asks why the baht is weakening and I do not see it weakening... 

You are quite right. Thailand has 95.5% of its foreign reserves held in foreign currency with only just over 4% in gold and SDR's This makes the Baht vulnerable to short term fluctuations in other currencies, particularly the dollar, but the long term trend has been to get stronger.

[1FinickyOne]

32 minutes ago, CaptHaddock said:

Since about Sept 19 until now, the period of interest to me, if not, perhaps, to you, the number of baht to the dollar has increased representing a decrease in the value of the baht.  Is there something difficult to understand here?

The only thing difficult to understand is why you would choose such a short period of time - I would not imagine that many people here are day traders... maybe you would find more like minds on a trading forum... if that is the period of time that interests you, and that small a fluctuation, maybe state that in your op

[Suradit69]

2 hours ago, kenk24 said:

The only thing difficult to understand is why you would choose such a short period of time - I would not imagine that many people here are day traders... maybe you would find more like minds on a trading forum... if that is the period of time that interests you, and that small a fluctuation, maybe state that in your op

Yes, for most pe,pole buying baht monthly or quarterly, the baht is stronger or, more realistically, the dollar is weaker . 

 

The o/p following his first post is simply trying to recover fr.om the absurdity of his original post.

[hawker9000]

3 hours ago, CaptHaddock said:

Since about Sept 19 until now, the period of interest to me, if not, perhaps, to you, the number of baht to the dollar has increased representing a decrease in the value of the baht.  Is there something difficult to understand here?

Lol.  So since Sep 19 (72 hours) you've noticed the baht has "weakened" against the dollar by, what, 3 satang?   You can have a change like that over the course of a single hour!  What significance could you possibly find in such a small and short-term reading?  A movement that small is just "noise".  You should maybe explore the concept of 'moving averages'...

[dotpoom]

6 hours ago, kenk24 said:

I don't see the baht weakening, but strengthening... and I check regularly. The baht has been strengthening against the dollar... Not that long ago we were getting 36 to the dollar and now down to about 33 - - 

I heard on Bloomberg it's the dollar that's weakening.

[KhunBENQ]

Euro is around a two year high against the Baht.

For me the Baht has weakened (fortunately).

But I don't expect it to last long.

 

Look at the red line (April to today).

 

 

[KhunBENQ]

USD vs. THB is a different story.

And I guess that is the reason for intervention by the Bank of Thailand.

Keep above 33?

I hope they have learned since 1997.

 

Even a slight rise of the battered Pound wakes optimism

 

[watcharacters]

13 minutes ago, KhunBENQ said:

USD vs. THB is a different story.

And I guess that is the reason for intervention by the Bank of Thailand.

Keep above 33?

I hope they have learned since 1997.

 

Even a slight rise of the battered Pound wakes optimism

 

 

 

 

I hope the OP grasps what you've  posted and feels somewhat sated..

[Shiver]

I read about 10 years ago the lessons learned from 1997 (which was before my time here) that they had implemented a basket of currencies now, so that could never happen again.  It reminded me of UK when they said the BOE had been given the power to set their own rates, so boom/bust was to be a thing of the past (like that happened).

 

What I'm getting to is this:  USD is a large part of that basket, and the plan as I understand it is for 2017/2018 to create another $15 Trillion (yeah well, it's 20 Trillion in the hole already, but the more the merrier right? cough..).  If the dollar is being diluted and THB is pegged to it, how far backwards can that peg bend without snapping?  My first thought is perhaps they'll start making more THB to relax the tension a little, but the whole world being in a race to the bottom just screams inflation, and inflation without appropriate interest rates is going to cost the social side as counterparty in a very rude and moody way.

 

If it were honest money then USD should be heading for about 26.8 baht by end of Q1 2018 by my own back of an envelope calcs.  At the same time I find that sticks in my throat as a possibility as it would devastate the economy.

 

I don't think there is a good answer if we're going to stick with a fiat inflationary model, but something has to give.  No doubt that will be you and I.

 

Euro is enjoying a reverse-halo effect at the moment.  Where that will go I don't know, but suspect it is at the top of a cycle.

[firestar]

The EUR has strenghen against ALL currencies since the elections in Netherlands and France of pro-EU candidates nothing to do with BHT.

 

The OP's very slight 72 hours weakening against the dollar (apart from ridiculously trying to fit his narrative) is Fed anouncing it would probably raise interest rated again before end of the year and tapering quantitative easing.

 

_______

[does]

6 hours ago, lannarebirth said:

The THB has been strengthening against the USD for the past 23 1/2 months. What your blogger sees as currency manipulation I see as fiscal prudence. Would that the boom/bust Western economies display as much fiscally prudent behaviour.

I much like your quote from E. Roosevelt.

[fletchsmile]

No economist in their right mind would claim that a period of 3 days from 19 Sep to 22 Sep (today) represents persistent manipulation under the conditions we've experienced this week. A 3 day time frame under conditions like this week is nothing more than noise.

 

The THB has been strengthening vs USD for the last 2 years not weakening. 

 

I think OP has misunderstood the article and is trying to claim the 3 days time frame as justification.

 

I suspect the author of the article was actually referring to BOT consistently buying USD over the last 2 years to prevent the THB appreciating even faster than it has done as well as smooth day to day fluctuations. In my view this is different from persistent intervention/manipulation to depreciate your currency below your starting point. 

[paulhen]

I have an interest in FX hedging of the $CAD since Brexit was announced. I did not step in as I did not feel it prudent to buy until I was able to overlay multiple currencies historical charts to look at convergences and divergences in light of historical valuations and compared to some base currencies such as the Swiss Franc. I was unable to find any Fx charting website that would accomodate this except for ONE and it was an expensive subscription service. I was horrified that Fx traders at my two banks in Singapore had no way to formulate such for themselves much less for a client.

 

Does anyone have any insights where one can get such data/charts overlaying more than two at a time with date ranges as far back as ten years or more? 

[bazza73]

I understand the Thai government pegs the baht against the USD. Otherwise the USD would possibly be even weaker. Bear in mind Thailand with its low labor costs has become a fairly substantial vehicle producer and exporter, which does its exchange rate no harm at all.

I find it interesting that whenever there is a crisis, such as the North Korean fat boy launching a missile or testing a nuke, the Swiss franc invariably spikes upwards. Looks like that is the safe haven currency today.

[Prometheus33]

9 hours ago, kenk24 said:

I don't see the baht weakening, but strengthening... and I check regularly. The baht has been strengthening against the dollar... Not that long ago we were getting 36 to the dollar and now down to about 33 - - 

.......... Absolutely , in September 2015 I got THB 36 to 1 U.S. Dollar , in 2016 I got THB 35 to the Dollar , in June this year I got 33.80 to 34 .. 

THB has gradually strengthened .. 

[Jonnapat]

Everyone is talking in dollars. If you look at sterling, the baht is weaker because of the pound's recent gains against the dollar.

[1FinickyOne]

4 hours ago, dotpoom said:

I heard on Bloomberg it's the dollar that's weakening.

The dollar is weakening in reference to the pound and euro - that is correct... I doubt anyone on Bloomberg cares about what it is doing in regards to the baht... where it is also weakening.