India, Thailand Risk Landing on Currency Manipulator Watchlist

By Lilian Karunungan

 

- RBI and BOT have been stemming appreciation pressure: ANZ

- North Asian central banks have been intervening less: Schroder

 

India and Thailand may have to give freer rein to the rupee and baht this year to avoid triggering U.S. accusations that they’re manipulating their currencies to support exports.

 

The Reserve Bank of India has already exceeded a key threshold on how much it can intervene to curb the rupee’s gains that the U.S. monitors, according to Nomura Holdings Inc. Policy makers in Thailand have also passed this level with the baht, said Bank of Tokyo-Mitsubishi UFJ Ltd.

 

Should the two countries’ central banks seek to assuage U.S. concerns -- and avoid a range of possible penalties -- it would likely lead to gains for their currencies, potentially reducing their export competitiveness. For all the efforts of policy makers last year, the baht appreciated almost 10 percent against the dollar, while the rupee climbed 6.4 percent.

 

Full story: https://www.bloomberg.com/news/articles/2018-01-03/india-thailand-risk-fx-manipulator-watchlist-as-reserves-swell

 

-- Bloomberg 2018-01-04

A warning was posted about 4 or 5 months ago saying the Thai Baht would be at its strongest against the dollar for many years, I seem to remember that this 'warning' widely reported in the media came three months before they said it would happen.

 

It happened as announced. Either someone was hard at work polishing the crystal balls late last summer or they're controlling it to a great degree.

Not so good news for those generating income/pensions abroad that is used to spend in Thailand...

I would have thought that the 'alleged manipulation' currently taking place in Thailand was targeted at keeping the Baht higher than it otherwise would be in a completely free market.   There main reasons IMO: 

1. The Baht is historically higher than average as compared to the past 20 years (given some big fluctuations), and

2.  Those that matter more (you know who) would want a high Baht as it benefits them and their businesses (when buying things like Mercedes, Oil, Production Equipment, Jewelry, etc etc), and

3.  A higher Baht means more 'value' from all the Tourists, whose numbers continue to grow despite the Baht being higher than average. 

 

Unlike both India and China, Thailand is not an economy that relies heavily on exports.  Last year Thailand Exports totalled US$71.9 Billion and its Imports totalled US$71.8 Billion.  IMO the Baht would go down a lot over time if any 'alleged manipulation' stopped.

 

If tourists numbers drop a lot over several years, and 'those that matter' accept a bit of short term pain (costs of imports) for a long term benefit (increased exports), then the Baht would be 'manipulated' to be lower.  But I doubt both those factors will happen - a drop in tourists could happen, but the other one is very very unlikely.  

 

All central banks manipulate their currencies , why single out India and Thailand ? It's not the THB strength , it's the others weakness.

35 minutes ago, ELVIS123456 said:

I would have thought that the 'alleged manipulation' currently taking place in Thailand was targeted at keeping the Baht higher than it otherwise would be in a completely free market.   There main reasons IMO: 

1. The Baht is historically higher than average as compared to the past 20 years (given some big fluctuations), and

2.  Those that matter more (you know who) would want a high Baht as it benefits them and their businesses (when buying things like Mercedes, Oil, Production Equipment, Jewelry, etc etc), and

3.  A higher Baht means more 'value' from all the Tourists, whose numbers continue to grow despite the Baht being higher than average. 

 

Unlike both India and China, Thailand is not an economy that relies heavily on exports.  Last year Thailand Exports totalled US$71.9 Billion and its Imports totalled US$71.8 Billion.  IMO the Baht would go down a lot over time if any 'alleged manipulation' stopped.

 

If tourists numbers drop a lot over several years, and 'those that matter' accept a bit of short term pain (costs of imports) for a long term benefit (increased exports), then the Baht would be 'manipulated' to be lower.  But I doubt both those factors will happen - a drop in tourists could happen, but the other one is very very unlikely.  

 

Wishful dreaming, fact is Thrump and others want the baht up and the baht is already strong so it won't go down there is even pressure to keep it up so its bad news for all of those getting income from abroad and spending it here. It will be so for many more years. I can only dream of a baht 30% lower then what is is now and it was that way when i first came here. But for now and the future this wont change the rate of the baht will be like this or worse for us for a long while. 

15 minutes ago, robblok said:

Wishful dreaming, fact is Thrump and others want the baht up and the baht is already strong so it won't go down there is even pressure to keep it up so its bad news for all of those getting income from abroad and spending it here. It will be so for many more years. I can only dream of a baht 30% lower then what is is now and it was that way when i first came here. But for now and the future this wont change the rate of the baht will be like this or worse for us for a long while. 

Negative thinking - fact is USA does not import a lot of stuff from Thailand (less than 1% of total) and the Baht is not a serious focus for Trump/USA. 

 

USA imports from China = $500+ Billion. From Japan = $130+ Billion. From Sth Korea = $60+ Billion. From India = $45+ Billion.  From Vietnam = $40+ Billion.  From Taiwan = $45+ Billion.  From Malaysia  $30+ Billion.  From Thailand it is $20* Billion (not in top 25).  

 

But Trump/USA is putting all 'deficit' countries on notice, and Thailand is a net deficit to USA like so many others in SEAsia. The amount is not big, and is way down the food chain compared to China etc. but the 'warning' was sent to all who Export more to USA than they Import from USA that they better not be manipulating its currency too much (like China and India). 

 

Perhaps Thailand will get caught up in this issue and the Baht will initially go up as a result (if any alleged manipulation is stopped), but IMO over time the Baht will go much lower than it currently sits.  Certainly I do want that, but my thinking is more influenced by what the economic realities are for Thailand and its economic relevance to USA. 

 

In Australia some years ago the AUD$ was over US$1 - which was way over the top and was due to both economic and political factors at that time.  Now is is back to where it 'should' be - US$0.75   Over time currencies have a 'natural' movement range, as compared to other currencies, and it is inevitable that the Baht goes back to where it 'should' be in the future.

 

Stay positive - over time the Baht is going to fall - it may take a few years (or an election outcome), but it is going to fall back to where it 'should be' - IMO .

 

6 minutes ago, ELVIS123456 said:

Negative thinking - fact is USA does not import a lot of stuff from Thailand (less than 1% of total) and the Baht is not a serious focus for Trump/USA. 

 

USA imports from China = $500+ Billion. From Japan = $130+ Billion. From Sth Korea = $60+ Billion. From India = $45+ Billion.  From Vietnam = $40+ Billion.  From Taiwan = $45+ Billion.  From Malaysia  $30+ Billion.  From Thailand it is $20* Billion (not in top 25).  

 

But Trump/USA is putting all 'deficit' countries on notice, and Thailand is a net deficit to USA like so many others in SEAsia. The amount is not big, and is way down the food chain compared to China etc. but the 'warning' was sent to all who Export more to USA than they Import from USA that they better not be manipulating its currency too much (like China and India). 

 

Perhaps Thailand will get caught up in this issue and the Baht will initially go up as a result (if any alleged manipulation is stopped), but IMO over time the Baht will go much lower than it currently sits.  Certainly I do want that, but my thinking is more influenced by what the economic realities are for Thailand and its economic relevance to USA. 

 

In Australia some years ago the AUD$ was over US$1 - which was way over the top and was due to both economic and political factors at that time.  Now is is back to where it 'should' be - US$0.75   Over time currencies have a 'natural' movement range, as compared to other currencies, and it is inevitable that the Baht goes back to where it 'should' be in the future.

 

Stay positive - over time the Baht is going to fall - it may take a few years (or an election outcome), but it is going to fall back to where it 'should be' - IMO .

 

Your too positive, tourist numbers are not falling but growing, the baht will stay where it is or get even stronger. Better to accept the new reality then to dream for a higher exchange rate that will never come.

 

But its up to everyone to believe what they want, if I could really predict it I would be rich, i still think this is the new reality.

Sent from my SM-G955U using Thailand Forum - Thaivisa mobile app

Can someone polish their crystal balls,and predict when interest rates

will rise to say, at least 5%, because any money in the Banks is just been 

eroded by inflation,which is higher than rates offered.

 

regards Worgeordie

20 minutes ago, worgeordie said:

Can someone polish their crystal balls,and predict when interest rates

will rise to say, at least 5%, because any money in the Banks is just been 

eroded by inflation,which is higher than rates offered.

 

regards Worgeordie

5 % dream on... But yes would be very nice !

2 minutes ago, Boss said:

5 % dream on... But yes would be very nice !

So the days of 18%,the most I ever had here will never return,

the good old days when you hawked your cash around different

banks,always seen the Bank manager,and they wanted your cash

and offered .5% or more  over going rates if you really haggled,

even giving you presents.those days are gone,they dont want

to know you now,don't seem to want your money.

 

regards worgeordie

 

 

24 minutes ago, worgeordie said:

So the days of 18%,the most I ever had here will never return,

the good old days when you hawked your cash around different

banks,always seen the Bank manager,and they wanted your cash

and offered .5% or more  over going rates if you really haggled,

even giving you presents.those days are gone,they dont want

to know you now,don't seem to want your money.

 

Why would they want to borrow yours when they can borrow it from the Central Banks for 0.00001%?

 

My heart goes out to those who retired, counting on interest income based on historical rates.  Today, you have to give the Wall Streeters a shot at robbing you in order to beat inflation.

 

Edit:  Which, I'm pretty sure, is their goal.

 

 

Edited January 4, 20188 yr by impulse

Planning a holiday while the baht is up  just have to look where value is.

2 hours ago, BuaBS said:

All central banks manipulate their currencies , why single out India and Thailand ? It's not the THB strength , it's the others weakness.

Try reading the article.

 

Time spent in reconnaissance is seldom wasted-the reasons are there. 

Trump is concerned about the "freakishly strong" dollar and a further rise could have a big impact global trade, capital flows and markets. Some good insights here:

 

https://qz.com/879306/the-us-dollar-is-the-strongest-its-been-since-1986/

Get ready for 28 baht for us dollar.

I always assumed that the baht was loosely tied to the USD when comparing both to AUD but the last 6 months have not followed that pattern much to my cost.

However the USD is falling against its TWI so it is not just the baht rising. The baht is about at is average over the last 10 years but with big fluctuations above and below.

Came here in August 2001 ........got just over 19 baht to the A$. Now 25.

Now I'm a spoilt brat.

7 hours ago, ELVIS123456 said:

1. The Baht is historically higher than average as compared to the past 20 years (given some big fluctuations), and

Well, one could as well consider the period before the Asian financial crisis in 1997 when the Baht was averaging 25-26 Baht per USD for quite many years. I would not wonder if it reaches that level, given the pace at which the US federal spending and debt keeps growing.

8 hours ago, ELVIS123456 said:

I would have thought that the 'alleged manipulation' currently taking place in Thailand was targeted at keeping the Baht higher than it otherwise would be in a completely free market.   There main reasons IMO: 

1. The Baht is historically higher than average as compared to the past 20 years (given some big fluctuations), and

2.  Those that matter more (you know who) would want a high Baht as it benefits them and their businesses (when buying things like Mercedes, Oil, Production Equipment, Jewelry, etc etc), and

3.  A higher Baht means more 'value' from all the Tourists, whose numbers continue to grow despite the Baht being higher than average. 

 

Unlike both India and China, Thailand is not an economy that relies heavily on exports.  Last year Thailand Exports totalled US$71.9 Billion and its Imports totalled US$71.8 Billion.  IMO the Baht would go down a lot over time if any 'alleged manipulation' stopped.

 

If tourists numbers drop a lot over several years, and 'those that matter' accept a bit of short term pain (costs of imports) for a long term benefit (increased exports), then the Baht would be 'manipulated' to be lower.  But I doubt both those factors will happen - a drop in tourists could happen, but the other one is very very unlikely.  

 

What you've written is wrong!

 

THB has been strengthening for the past 20 years, that's why it's higher today than 20 years ago!

 

Thailands GDP is heavily reliant on exports, 69% of GDP is export led and has historically nearly always run a trade surplus! November exports alone are valued at over USD 21 bill. so your figure of 71 billion is nonsense!

 

Tourist numbers into Thailand have increased year on year, why they might suddenly drop escapes me.

 

People like to talk about currency manipulation, mostly because this is Thailand and it's good fun for many to make these claims. The fact is that BOT holds record levels of foreign currency reserves, over USD 220 billion and rising. BOT has purposely relaxed foreign currency holding rules allowing exporters to retain and invest that income overseas rather than as previously required, converting it into Baht within a year. That relaxation should dampen the value of THB, as will the fall in FDI. A major part of the problem has been that FDI has been chasing yield by investing in Thailand, simply because other economies, particularly the US, were in such bad shape! That's hardly currency manipulation, that's sour grapes on the part of DT. BOT has intervened in the FOREX markets, no question, but they've done so in an attempt to weaken THB, not strengthen it! Those guys who think the elite purposely keep THB strong for their own benefit, please show us how this is done by referencing sales of USD and purchase of THB, from BOT's foreign currency reserves.https://tradingeconomics.com/thailand/exports

 

 

 

 

Edited January 4, 20188 yr by simoh1490