Bot Intervention Weakening...fewer Spikes

[topfield]

Saw this all in May '97. That time the BOT were holding the floodgates in a desparate attemt to hold the baht from falling .

The exact same situation prevails now but in reverse with the BOT desparately holding the floodgates to prevent the baht from rising..

The 1997 intervention falied as market forces became too strong . Same will happen this time.

TIP : If you need or will be needing to buy baht , you should buy in Thailand NOW.

36 to the dollar / around 71 to the pound . Current rate outside Thailand 35 to the dollar 69 to the pound (approx)

[churchill]

Saw this all in May '97. That time the BOT were holding the floodgates in a desparate attemt to hold the baht from falling .

The exact same situation prevails now but in reverse with the BOT desparately holding the floodgates to prevent the baht from rising..

The 1997 intervention falied as market forces became too strong . Same will happen this time.

TIP : If you need or will be needing to buy baht , you should buy in Thailand NOW.

36 to the dollar / around 71 to the pound . Current rate outside Thailand 35 to the dollar 69 to the pound (approx)

They are mad - Most sensible countries are selling dollars to buy euros , gold etc - Why is Thailand doing the opposite - They cannot stop a falling dollar ! They are throwing Thai's hard earned cash down the drain .

[samran]

Why? ......cause they've probably taken the position that a strong baht is even more problematic for the Thai economy than meddling in the markets (edit), given that so many labour intensive insdustries are export orientated. Dry up their markets, the then you have lots of unemployed in a economy where I'd argue there is already lots of under employment.

Given that Thailand isn't rich enough to hand out dole cheques to all these people on the streets, you'd have to wonder what the consequences are.

Now, you may believe me or you may not, but the powers that be are actually reform minded (though I wouldn't blame you if you didn't, given their record of late), but what are you going to do when faced with a situation that might mean lots of unemployed, TRT leaning voters out on the street? Thats right...do what needs to be done.

Reform the Thai economy? Yes, but these things take time, thats what they'll tell you.

The other key difference between now and 1997 was that back then many people actually borrowed offshore (where lower interest rates prevailed) to fund the many empty buildings and factories that are only just starting to be re-built. When the baht crashed, peoples liabilities doubled, causing a massive contraction in liquidity in Thailand. Many people went under, and we know the rest of the story.

[tomyamg00ng]

Market intervention works in the very short term, but it doesnt in the long term. The market forces are stronger than one government. It takes years for the underlying fundamentals to accumulate and the current baht price is the result of these fundamentals. Intervention at the last hour can t change the market forces.

Thailands exports went up 16.9% last year, helping to support the baht. However these exporters dont want to change this into baht, for the reason it will make the baht stronger and make their exports more expensive.

Despite this thailand ended up with a trade surplus of nealry 3 billion USD. Meaning 3 billion more usd(in baht) came into the country than left it.

Also released today is that BankThai took aloss last year of nearly 4 billion baht due to non-performing loans. Tourism will continue to support the baht, unless people start leaving en masse, which isnt that likely unless more bombs.

Its hard to know what way the baht will go. It is unpredictable. The best thing is to be positioned for either possibilty.

Edited January 22, 2007 by tomyamg00ng

[alexth]

Have any of you guys seen Rambo succesfully managing a financial insitution?

[britmaveric]

Actually reverse will occur baht is going to tank, just a matter of time.

[tomyamg00ng]

This is about a 6 month daily chart of the USD THB. For those of you worried about the strength of the baht, you can protect yourself.

Howevr you will have to choose a level of leverage which suits your spending profile.

Let me explain. If you look at the chart here (attachment). If you had choosen to sell baht at 36 and it then went down to 35. This represents 100 points. Thats means if you had sold at 36 at 1 dollar per point movement you would have made 100 dollars.

At 5 dollar per point movement you would have made 500 dollar. Now depending on how much usd you transfer into baht then you have to work out what your average spending is per month and how much in USD terms are you losing every month if the baht goes from say 37 to 36. This is only 100 baht in every 100USD

Lets say you spend 2000USD per month then you are losing 2000 baht per month. Now the drop which has been quick from 40 baht to 35 means that spending 2000 USD a month means you are now losing 10,000 baht per month. A fair chunk over a year.

If you had sold the USD/THB at 40 with a gearing of 1 dollar per point movement then you would have made £500 dollars which would have cancelled it out some way. If you had used 5 dollar per point then you would have made 2500 dollar.

Of course the trade could have went up and the dollar could have moved up from 36 where you sold,say, and went to 38 you would be -200 USD, but because your getting a better rate in your spending this offsets the loss.

Currency movements can be nasty but their are ways of protecting yourself, with some risk involved. But if you manage it right, and use small leverage then it can be ideal. You can actually make money in it as well.

I helped a friend of mine a few weeks ago where he was transferring money back and forward, a fairly large sum, and he made nearly 3000USD in about a week.

PS I may have got some of the sums wrong but Im just highligting the theory.

There are other factors to consider in this regarding time, for instance the baht might not change too much now for months meaning your short tarde will stop off setting because you continue to spend each month. The secret is to get in on a trend.

[Briggsy]

Is your surname Leeson?

[tomyamg00ng]

LOL, no my surnames not Leeson. Leeson certainly brought a stigma to the word "short selling" However I dare say this has more to do with the media portrayal of Leeson. The media focus on the losers always. They never asked who were the winners in the Baring banks scandal. Where did that 2 billion go to...?Someone got it in this zero sum game. But the media never care to ask. A look at the CTA trading records for those few months during the barings bank scandal will show that there were a few CTA's with gains of 30% Dunn Capital Managment, JW Henry to name two. They were short and cleaned up.

Leeson was heavly over leveraged in the Nikei 225, he kept buying but when the market tanked he was screwed.

I use some techinques to profit in the fx market. I dont take risks, I risk only 3 percent of my account at one time, and I ve thoroughly backtested my system over many years of data.

The system tells me the exact entry,

how much to buy

where to exit

how much to risk.

risk/reward ratio.

While I ve no way of knowing the direction of the baht, and I dont know if a trade will be successful when I put it on, i know that in the long run the probabilties are tipped in my favour. Wins and losses are randomly distributed.

And anyone who claims they can predict currency movements are liars.

Edited January 22, 2007 by tomyamg00ng

[samran]

Actually reverse will occur baht is going to tank, just a matter of time.

interesting, though what do you base this assumption on?

[jing jing]

Actually reverse will occur baht is going to tank, just a matter of time.

interesting, though what do you base this assumption on?

Wishful thinking? This seems to be the gentleman's canned response on this particular topic, always given with no supporting argument whatsoever. Given the cyclical nature of currency valuations, eventually he's bound to be right, although it may not happen in our lifetimes.

Someone posted a while ago - I forget who it was - that the baht would see 35 to the dollar before it would see 40 again; IIRC it was around 38 at that time and I was skeptical of such a forecast, but it has indeed come true. Others on that same thread were predicting 45 baht to the dollar.

I guess it's true that hope springs eternal.

[britmaveric]

Actually reverse will occur baht is going to tank, just a matter of time.

interesting, though what do you base this assumption on?

Well instability of govt for starters, knee jerk reactions, and no sound economic reason speculators are pooring heaps of dosh into bht.

Seems to me that this would then create optimal short selling for the major speculators.

[tomyamg00ng]

Actually reverse will occur baht is going to tank, just a matter of time.

interesting, though what do you base this assumption on?

Well instability of govt for starters, knee jerk reactions, and no sound economic reason speculators are pooring heaps of dosh into bht.

Seems to me that this would then create optimal short selling for the major speculators.

define "sound economic reasons"

How do you know speculators are pouring heaps of dosh into baht?

How would this create optimal short selling for the major speculators?

And if you know the baht is going to tank why arent you positioned to make a gain.

Your assumption has no more than a coin toss of being right. Its a 50/50 what way it will go.

All we can say is that its in a downtrend now and has been insteep decline for that last 3 months. The last 3 weeks has seen high volatility, and a congestion around the 35 mark. No ones where it will go next...

[bkkandrew]

Actually reverse will occur baht is going to tank, just a matter of time.

interesting, though what do you base this assumption on?

Well instability of govt for starters, knee jerk reactions, and no sound economic reason speculators are pooring heaps of dosh into bht.

Seems to me that this would then create optimal short selling for the major speculators.

"pooring heaps of dosh into bht" [sic]

I think that anyone taking advice based on your economic assessments is on a sticky wicket...

THB will depriciate for reasons that are not immediately apparent to you (aka - beyond you ken), but will largely be offset by the ongoing decline of the USD. Pegging to the USD seems to be the blinkered aim of BoT, ignoring the appriciating YEN, GBP and EURO.

[britmaveric]

Bkkandy - hardly mate, my advice is as good as any here I'm afraid. Forex is pure speculative in nature, if you look at long term trends then you would know this might very well be a short term downward trend. Baht by all accounts is weak and logic says it should falter at the end of the day. Will it? Your guess is as good as mine, since its seems to be relatively immune to all external factors.

[Briggsy]

Am I right in saying that the Baht has devalued and not recovered its previous value twice in the last 30 years?

That is sufficient reason for me not to play with Baht in any investment portfolio/ forex trading strategy. I am not a gambler and I prefer to think long term.

[OlRedEyes]

I am very puzzled as to why the Baht is so strong, even though it's against the weakening $. It doesn't seem to make much sense, taking all the factors I can think of into account. It makes me nervous. I have visions of blocked floodgates suddenly unblocking. That would be good for me bringing in USD and GBP, but it could rattle things here seriously, especially under the current circumstances.

[topfield]

Saw this all in May '97. That time the BOT were holding the floodgates in a desparate attemt to hold the baht from falling .

The exact same situation prevails now but in reverse with the BOT desparately holding the floodgates to prevent the baht from rising..

The 1997 intervention falied as market forces became too strong . Same will happen this time.

TIP : If you need or will be needing to buy baht , you should buy in Thailand NOW.

36 to the dollar / around 71 to the pound . Current rate outside Thailand 35 to the dollar 69 to the pound (approx)

tomyanggoong wrote : "And anyone who claims they can predict currency movements are liars."

Former Prime Minister Taksin was able to predict the devaluation of the baht and his was the only major Co not to suffer losses in the '97 crisis !!

Was he a liar ??

Edited January 23, 2007 by topfield

[samran]

Saw this all in May '97. That time the BOT were holding the floodgates in a desparate attemt to hold the baht from falling .

The exact same situation prevails now but in reverse with the BOT desparately holding the floodgates to prevent the baht from rising..

The 1997 intervention falied as market forces became too strong . Same will happen this time.

TIP : If you need or will be needing to buy baht , you should buy in Thailand NOW.

36 to the dollar / around 71 to the pound . Current rate outside Thailand 35 to the dollar 69 to the pound (approx)

tomyanggoong wrote : "And anyone who claims they can predict currency movements are liars."

Former Prime Minister Taksin was able to predict the devaluation of the baht and his was the only major Co not to suffer losses in the '97 crisis !!

Was he a liar ??

probably helped that he was deputy PM at the time and knew that the BOT had no more reserves to prop up the baht.

[steveromagnino]

probably helped that he was deputy PM at the time and knew that the BOT had no more reserves to prop up the baht.

I am sorry but I find it hard to believe that the reason that Chavalit and Taksin alledgedly made large amounts of money from currency speculation has anything to do with the fact that they were the policy makers at the time.

Your hypothesis makes no sense.

It is similar to by brother, who when he was young, used to build small houses and other shapes out of his mashed potato, while eating dinner.

My mother used to tell him not to. But is wasn't often we ate potato, so he never perfected the 4 storey shophouse slum that he had planned.

I like to think of that story, whenever people tell me that you can make money easily speculating on currency.

Because....it is a nice story.

[tomyamg00ng]

Saw this all in May '97. That time the BOT were holding the floodgates in a desparate attemt to hold the baht from falling .

The exact same situation prevails now but in reverse with the BOT desparately holding the floodgates to prevent the baht from rising..

The 1997 intervention falied as market forces became too strong . Same will happen this time.

TIP : If you need or will be needing to buy baht , you should buy in Thailand NOW.

36 to the dollar / around 71 to the pound . Current rate outside Thailand 35 to the dollar 69 to the pound (approx)

tomyanggoong wrote : "And anyone who claims they can predict currency movements are liars."

Former Prime Minister Taksin was able to predict the devaluation of the baht and his was the only major Co not to suffer losses in the '97 crisis !!

Was he a liar ??

He didnt predict it, he went with what the market was telling him and positioned himself accordingly. Also this is an extreme example, anyone can be right in a one off. George Soros and Warren Buffett were asked how do they predict currency movements. They laughed and said if they tried to predict currency movements they would have been broke years ago. This is also the advice of many traders who have compounded 20% a year for 20 years, R Dennis. SEykota, Jones-check them out.

Alan Greenspan also said predicting currency movement is like predicting the outcome of a toin coss. Take a large enough sample size of predictions and you will find that people will be right half the time.

Anyway as I ve said before you dont need to be able to know the direction to make money as paradoxical as it seems. There is a method to make money which enables you to ask and answer this question. QUESTION: DO I CARE WHICH WAY THE MARKETS GOES?

ANSWER: NO.

[steveromagnino]

Tomyamgoong; I think you need to do some research on the concept of insider trading :-)

Let's take that massive corruption out at the airport, and the number of the Shinawatra clan that allegedly were bidding and winning for contracts there, such as CTX. Only someone high up in the political order could orchestrate that.

Actually, now that I think about it...hold on, The former Prime Minister. He was a Shinawatra. And he was high up in the political order. I think maybe we should ask him to help us figure out how it happened!

Now multiply that by like 100 and that was 1997.

[backflip]

"Alan Greenspan also said predicting currency movement is like predicting the outcome of a toin coss"

A wealthy man, virtually all of Mr. Greenspan's investments are bank CDs, and obligations of the US government (US bills, bonds, and notes).

[samran]

Tomyamgoong; I think you need to do some research on the concept of insider trading :-)

Let's take that massive corruption out at the airport, and the number of the Shinawatra clan that allegedly were bidding and winning for contracts there, such as CTX. Only someone high up in the political order could orchestrate that.

Actually, now that I think about it...hold on, The former Prime Minister. He was a Shinawatra. And he was high up in the political order. I think maybe we should ask him to help us figure out how it happened!

Now multiply that by like 100 and that was 1997.

Say it ain't so Steve!

You mean the time I put together some scoring criteria for a contract to be awarded for a certain SE Asian government project, and 6 of the 'independent' judges came back with exactly the same score wasn't pure co-incidence? I mean, when their boss ordered them to adjorn to a room just before their results had to be read out, I'm sure they just wanted to chat abou the footy scores?

[bkkandrew]

Bkkandy - hardly mate, my advice is as good as any here I'm afraid. Forex is pure speculative in nature, if you look at long term trends then you would know this might very well be a short term downward trend. Baht by all accounts is weak and logic says it should falter at the end of the day. Will it? Your guess is as good as mine, since its seems to be relatively immune to all external factors.

How did I guess that you would shorten my name to Andy?

On a more serious note, you are simply being too simplistic. De facto pegging to USD with the shortsightedness of the BoT means that they are hidebound to the failures of the USD and the Fed regime in charge of the present debacle. I recall noting posts by you of impending crash of oil price to $25PB, USD at 50 to THB (and beyond) and all manner of nonsense without any economic justification behind your assertions.

I suggest that you constrain yourself to posting on topics you have knowledge on, rather than throwing in one-line 'say the first thing that comes into your head', dressed up as pears of wisdom. Some of us (myself included) deal with Forex as part of our job/business and comment thus ...

[george]

My sofisticated guess is:

1 USD = THB 38-39 before March 1, 2007.

[britmaveric]

My sofisticated guess is:

1 USD = THB 38-39 before March 1, 2007.

Spot on George!!!!

[bkkandrew]

My sofisticated guess is:

1 USD = THB 38-39 before March 1, 2007.

Do you want a bet on that?

[bkkandrew]

My sofisticated guess is:

1 USD = THB 38-39 before March 1, 2007.

Spot on George!!!!

How to respond to accusations of simplistic, one-line responses with no economic reasoning or back-up for justification...

Yes, you did it again!

[helitool]

www.ratesfx.com/predictions/pred-thb.html

RatesFX gives the baht/$us volatility as 1 month = 9.3 3 month = 7.37 1 year = 5.48

Which seems to indicate that this relationship will become less volatil as time goes on.

3 month low = 30.5724 3 month high = 35.3382

Doesn't look good for 38-39 in the near future.