What's with the Baht? ???

[WinterGael]

I'm sure this concerns many farang living in Thailand, and it really has me wondering what is going on with the Baht and why.

 

Coming to Thailand is a life-long dream.  Unfortunately,  the crash of '08, annual income slashed by 65% due to health issues, and a financially disastrous marriage and divorce, my retirement income was wiped out, but I still have an income a little better than what most English teachers make here.  That is until lately. 

 

When my wife and I got married in January 2017 I was getting 26.6 to 27.3 baht/Canadian dollar.  Right now it's at 24.3 baht/dollar and going down.  All major currencies seem to be falling against the Baht.

 

I've been going back and see that historically, the baht has fairly sreadily traded at around 28 B/$C until within 1 year of the Junta taking over, when it dropped to around 26 B/$C.  

 

I don't get this because Thailand economy at the time didn't warrant that kind of drop.  It's only been in the past year that the economy has started to improve.  Sort of ...

 

I was away for 4 months.  When I got back the number of small 'restraunts' in our village has more than doubled.  There are a lot of homes up for sale, a number forced by the bank for default on loan.  My brother-in-law has worked as an electrician for 16 years and makes 18000B/month with a yearly bonus of 16000B: this was cut to 8000 B this year.  My other brother-in-law is now working 2 jobs, as is his wife, to try and pay down debt.

 

This seems to be an ongoing story with neighbours, friends, and family here, which belies a success and growing economy.   Lots of investmentby China,  though.  Still, it doesn't explain the strength of the baht.  At this rate, it is going to have significant downside with regard to exports and tourism.  (I already have friends and family who are looking at other countries due to baht.)

 

So what is up?  I've talked to friends who have left Thailand in the past year because of this.  If it keeps up, we may need to go, too.  Believe me, my wife not happy about this. ???

[simoh1490]

Conspiracy theorists will tell you it's the Bangkok elite who are keeping THB strong for their own purposes. Sane people on the otherhand will point to extreme Dollar weakness and a Thai economy that is in far better shape than many of its western counterparts - low external debt, high foreign currency reserves, current account surplus, balance trade surplus etc etc. All of that makes the Baht a currency that is in demand from tourists who visit here in record numbers and from exports which are paid in foreign currency and ultimately used to buy THB, it's the supply and demand of THB that makes it so strong. BOT is not especially happy with THB being so strong and it has taken steps to weaken currency controls and this has been positive, not positive enough however to prevent Trump from labelling Thailand a currency manipulator but what can be done when everyone wants to buy the Baht.

[ukrules]

27 minutes ago, WinterGael said:

All major currencies seem to be falling against the Baht.

The Baht is rising in value, the others are the same.

[ExpatOilWorker]

There is light at the end of the tunnel:

 

https://www.bloomberg.com/news/articles/2018-03-06/asia-s-biggest-currency-run-in-two-decades-may-be-about-to-end

[MaeJoMTB]

19 hours ago, WinterGael said:

This seems to be an ongoing story with neighbours, friends, and family here, which belies a success and growing economy.   Lots of investmentby China,  though.  Still, it doesn't explain the strength of the baht.  At this rate, it is going to have significant downside with regard to exports and tourism.  (I already have friends and family who are looking at other countries due to baht.)

 

Yeah, it's a funny old country,

UK was getting 50bht to the pound for ages, then Brexit dropped it to 42 a year or so back.

Funny thing is before Brexit I was getting 70 peso, and now the rate is 72 peso.

 

It's only the Thai Baht that is doing well in Asia.

If I were starting out here again, it would be in the Philippines.

[simoh1490]

1 hour ago, ExpatOilWorker said:

There is light at the end of the tunnel:

 

https://www.bloomberg.com/news/articles/2018-03-06/asia-s-biggest-currency-run-in-two-decades-may-be-about-to-end

Rupiah and Peso are very different things from the Baht. And even if the Baht were to weaken, against what, against the Pound? The Pound is already in trouble and it has further down to go, the best that I can imagine is a Baht where any future weakness is offset by even greater Pound weakness.

Edited March 6, 2018 by simoh1490

[eggers]

The strength of a currency is dependent on the country economic, political & international situation & for some years Thai conditions  have been stronger than other countries. So that translates into the Baht remaining strong against all others currencies, plus, most other countries have had problems/issues that affected their currencies anyway.

  

[MaeJoMTB]

2 minutes ago, eggers said:

The strength of a currency is dependent on the country economic, political & international situation & for some years Thai conditions  have been stronger than other countries. So that translates into the Baht remaining strong against all others currencies, plus, most other countries have had problems/issues that affected their currencies anyway.

  

A banana republic, crop prices at all time low, big companies fleeing and the people up to their eyes in debt ........ strong.

Not in any reality I live in.

Edited March 6, 2018 by MaeJoMTB

[theguyfromanotherforum]

21 hours ago, WinterGael said:

but I still have an income a little better than what most English teachers make here.  That is until lately. 

 

Simple. Get an English teaching job.

[RichardColeman]

I look at it this way, if my wife and I can live OK with the pound/baht dropping to 42, then we will be OK when it rises again - eventually.  

[ostyan]

21 hours ago, simoh1490 said:

tourists who visit here in record numbers

I don't know. I just hear hotel managers, restaurants and others connected to tourism crying about their decreasing income.

[ostyan]

21 hours ago, WinterGael said:

I still have an income a little better than what most English teachers make here.  That is until lately. 

 

When my wife and I got married in January 2017 I was getting 26.6 to 27.3 baht/Canadian dollar. 

A native English teacher normally earns at least 30-35k

[LALes]

So far, this is the Trade War Decade.  Every country is trying to keep their currency cheap to make their exports

look more appealing.  It is a race to the bottom, if you will.  Thailand is no different from any other country in the

current world currency war.  The baht is strong and they can't keep it down for long before it starts rising again.

Bank Of Thailand will come out with another "encyclical" soon decrying the current strength of the baht and they

will attempt to weaken it.  And so it goes.

[MaeJoMTB]

13 minutes ago, LALes said:

So far, this is the Trade War Decade.  Every country is trying to keep their currency cheap to make their exports

look more appealing.  It is a race to the bottom, if you will.  Thailand is no different from any other country in the

current world currency war.  The baht is strong and they can't keep it down for long before it starts rising again.

Bank Of Thailand will come out with another "encyclical" soon decrying the current strength of the baht and they

will attempt to weaken it.  And so it goes.

Thailand NEVER attempts to weaken the baht, they are proud of it, they want it to be the strongest currency in the world.

I guess you believe Thailand saying it wants democracy, and wants to get rid of sex workers.

Haven't you worked it out yet, they ALWAYS do the opposite to what they say.

Until they can't ......... then overnight it drops to 30% of it's current value. 

[Henryford]

It's not that the baht is strong it's that the other "funny money" currencies are weak. If the Western countries print trillions of monopoly money and run massive annual deficits it's not surprising their currencies are worthless. Whatever else might be wrong with the Thai economy they haven't resorted to the printing press to fund their development.

[blazes]

Could have something to do with the relatively high interest rates on bank accounts in Thailand (and the virtual absence of interest rates in Canada).

 

Besides, Canada is dependent on what Trump tweets in the middle of the night....

[Catoni]

2 hours ago, MaeJoMTB said:

 

Yeah, it's a funny old country,

UK was getting 50bht to the pound for ages, then Brexit dropped it to 42 a year or so back.

Funny thing is before Brexit I was getting 70 peso, and now the rate is 72 peso.

 

It's only the Thai Baht that is doing well in Asia.

If I were starting out here again, it would be in the Philippines.

     Yes.. Philippines does attract (except for Mindanao and a few other areas).   But if you are Buddhist...there are only a very few small Buddhist temples in the Phil....  only in Manila and Cebu and maybe three others in the rest of the country. And probably less than thirty Buddhist monks in the whole country.  Philippines is about 90% - 95% Christian...  mostly Catholic.  

[yimlitnoy]

Why have you kept your money in CAD?  The trend has been going down for more than 10 years already, enough time for you to react, the bottom is not far I suppose, the CAD is at a 10 years low against the THB:

 

 

Edited March 6, 2018 by yimlitnoy

[Halfaboy]

Do I see it correct that also the volumes are decreasing ? If so, what would be the reason for this.

[yimlitnoy]

Stability?  Better opportunities elsewhere...

[Krataiboy]

1 hour ago, RichardColeman said:

I look at it this way, if my wife and I can live OK with the pound/baht dropping to 42, then we will be OK when it rises again - eventually.  

A question of if, not when. The way the Brexit debacle is going, we could all be pushing up daisies by the time the pound bounces back.

Edited March 6, 2018 by Krataiboy

[simoh1490]

10 minutes ago, Halfaboy said:

Do I see it correct that also the volumes are decreasing ? If so, what would be the reason for this.

Fewer Canadian dollars are buying even fewer Thai Baht, that's fewer tourists and less FDI.

 

MJM - it's not correct to say that BOT never tries to weaken the Baht. They have gone through extended periods where they spent large amounts of foreign currency reserves trying to do just that but it's a no win proposition. The answer lays in changing the rules governing currency controls such as allowing exporters to invest foreign currency overseas and that has been done quite recently.

[simoh1490]

1 hour ago, ostyan said:

I don't know. I just hear hotel managers, restaurants and others connected to tourism crying about their decreasing income.

Once again, the profile of tourism in Thailand changes from time to time, usually as one region of tourists stops coming and a new one starts. That means new destinations, new hotels, different restaurant types, different style of entertainment etc etc. Chinese tourists aren't too interested in Pattaya and the go-go's, they also don't want to sit in bars and drink all day - Chiang Mai and the North benefits from such tourists but Pattaya and Phuket suffer. When it changes again next time, perhaps the pendulum will swing the other way, who knows. I remember around 2008 when western tourists were in decline, all the bar owners kept saying how Pattaya was about to die, the smart ones transformed their business to keep up with the changes.

[Kaoboi Bebobp]

Even in the 2008 crash year, the Cdn$ was getting 27-28 baht. I was checking into all this a couple of days ago when I got barely 24 baht on a wire transfer from Canada. (Thank you, Kbank.) I questioned a savvy investor friend of mine and he said much the same thing as simoh1490 in post No. 2, plus a whole lot more, leading to his final statement:  "Expect the dollar to fall more." 

 

Having just moved back to Thailand from Vietnam, where we get pretty good exchange rate on top of much cheaper cost of living, this latest news has given me pause. However, there were other (non-economic) issues I could not live with there.

Edited March 6, 2018 by Kaoboi Bebobp

[manchega]

I suspect the baht to get stronger and stronger until the military leave power.  then it will reset to its proper value. 

some will be left more affluential than when the military coup occured than others.

 

[theguyfromanotherforum]

57 minutes ago, MaeJoMTB said:

 

Until they can't ......... then overnight it drops to 30% of it's current value. 

 

Yes, I believe this will happen. The question is when? I think Thailand has another 20 years to go and we don't live forever.

[csabo]

Was it supposed to stay the same forever or only move in your favor? Show me a chart that does that for any currency in and country for anytime and I'll join your bandwagon. Until then you better stock up on tissues before the price goes up again. 

[Ban Phe Dezza]

Hi I have been here 18 years since I retired 

The $AU is crap against the Baht

pension I/O requirements not even close to their monthly requirement.

Financially P.I is a better case for me 

Problem what do I do with my Thai Partner?

[Boon Mee]

Find someone at the Central Bank to spill the beans for the answer to the question. Good luck. 

[simoh1490]

11 minutes ago, manchega said:

I suspect the baht to get stronger and stronger until the military leave power.  then it will reset to its proper value. 

some will be left more affluential than when the military coup occured than others.

 

And what is its proper value and how does that reset happen, do people simply stop buying THB, if so that means tourism drops off to zero and Thailand doesn't export anything? Would you perhaps like to change your answer?