Baht to maintain strength despite softening yuan: experts

By PHUWIT LIMVIPHUWAT
THE NATION

 

Tim Leelahaphan, Standard Chartered Bank economist.

 

The depreciation of the yuan against the US Dollar will not significantly impact the baht’s strength, but will cause investor sentiment to drop and leading to an outflow of capital from Thailand’s stock market, market experts and economists agree.

 

On Monday morning, the yuan depreciated by 7 per cent against the US dollar, marking the first time the renminbi has depreciated against the dollar since May 2008.

 

“The baht has not depreciated after the yuan’s weakening earlier [Monday] as Thailand’s market is still seen by foreign investors as a safe haven,” said Tim Leelahaphan, Standard Chartered Bank’s economist in an interview with The Nation.

 

The yuan’s depreciation may cause market sentiment in Thailand to drop briefly, leading to an outflow of capital from the Kingdom’s equity market, he said.

 

The Stock Exchange of Thailand (SET) reported a Bt2.6 billion outflow of foreign investment when the market closed on Monday.

 

However, Tim expects Thailand’s bond market to continue performing strongly.

 

On Monday, Thailand’s bond market saw in inflow of Bt1.46 billion from foreign companies, according to the Thai Bond Market Association (ThaiBMA).

The yuan’s depreciation, Tim said, will reinforce investors’ sentiment that Thailand is a relatively safe market in which to invest, especially after it’s stability and sovereignty ratings have been improved recently by rating agencies.

 

The baht was valued at Bt30.8 per US dollar on Monday, according to the Bank of Thailand.

 

Standard Chartered predicts the baht will remain below Bt31 per US dollar in the upcoming weeks, but expects it to depreciate back to around Bt31 baht by the end of the year.

 

Mana Nimitvanich, first vice president of Krungthai Bank’s Global Business Development and Strategy Group, said in a separate interview that the yuan’s depreciation will cause the market to worry that the trade war will worsen, leading to outflows from Thailand’s stock market.

 

Meanwhile, the baht has not been significantly impacted by recent events, he said. The country’s bond market is also expected to continue witnessing inflow as Thailand is still seen as a safe haven.

 

However, if the market is correct in predicting that the yuan’s depreciation will lead to retaliation from President Trump, further escalating the ongoing trade war, the economic fundamentals of Thailand and other countries in the region will be negatively impacted by Trump’s tariffs.

 

Source: https://www.nationthailand.com/news/30374278

 

-- © Copyright The Nation Thailand 2019-08-06

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Thailand's economy considered a safe haven?  LMAO!  With a plunging SET, disappearing tourists, new government based on the former government, falling exports...still think it's a safe haven?  Rather, BoT still drunk on hot money inflows--and does not care about the economy.

6 hours ago, webfact said:

Thailand is still seen as a safe haven.

I guess they'll start making cuckoo clocks soon

So I guess that kind of confirms that the Chinese really have stashed their cash here in anticipation of problems back at home.

Is the outflow, the same people doing a bit of an exit into different currencies such as Euro/Aus$/GBP.

16 minutes ago, Isaan sailor said:

Thailand's economy considered a safe haven?  LMAO!  With a plunging SET, disappearing tourists, new government based on the former government, falling exports...still think it's a safe haven?  Rather, BoT still drunk on hot money inflows--and does not care about the economy.

As a sailor, you probably appreciate the importance of water, or lack of. With the ongoing drought and extremely low dam levels, the next nine months will be very interesting to watch as the government struggles with lowering water levels and a rising baht.

You can't grow crops with paper money.

As i have told many times on this forum - we are going into a recession its very obvious and the provisioning is incompetent to deal with such economical turn

Where are the subsidies for farmers? Where is the investment in economy? We cannot just wait on the EEC like a golden egg.

The strong baht is the worst thing because interest rates are still the same with no adjustment at all - soon they will lose control of their export market to other nations if that has not already happened and we will see by next quarters reports

The crops are all that is left - but that is no pillar the tourism accounts for approximately 80% of the cashflow here and with tourists leaving in droves and making it hard to do business for foreign investors we have a perfect mix of another financial crisis

Long Gold, Short Stocks, Look to accumulate land and agriculture during this next wave when rubber and rice have completely crashed imho

By the way check the housing market bubble - easily over 3x overpriced - compare thai prices to london for example you will laugh your head off at build quality and comparison to services such as university and employers - its a joke completely overpriced with some of the worst pollution and commute in the world and very unsafe roads. The housing market is so overpriced with no gardens or room for a family just tiny box condos easily 2 to 6 times above fair value - total joke with a strong baht this is a coiled spring ready for a complete melt down to all time lows

You can buy a piece of real masonry, grade A listed buildings in the UK with history going back hundreds of years for what they want to sell a condo that will maybe last the next 10 years before rebar has completely rotten out and you can hear your neighbour take a crap with no garden and toxic air blowing in your tiny balcony - get real its going to crash so hard and no one is expecting it 

They are all on credit up to the eyeballs this will fall so hard it will cause mass depression and suicide

19 minutes ago, MartiniMan said:

soon they will lose control of their export market to other nations if that has not already happened

already happening and they don't care... when China and USA started their trade feud a smart country would have depreciated their currency to increase their exports, Thailand didn't bother, Vietnam, Taiwan and Malaysia (just to mention a few) did and investment just poured in... yesterday China again depreciated their currency to increase exports but Thailand still saying not to worry, they really must have a big stack of reserves somewhere, no need for fresh money

2 hours ago, Isaan sailor said:

Thailand's economy considered a safe haven?  LMAO!  With a plunging SET, disappearing tourists, new government based on the former government, falling exports...still think it's a safe haven?  Rather, BoT still drunk on hot money inflows--and does not care about the economy.

Now go and check the cash surplus - last time I looked only 7 countries on the planet had higher dollar cash reserves - Thailand even has more than Germany !!

 

Thailand is a VERY rich country that has enough reserves to ride out storms - that's what makes it a safe haven - and once a country gets that reputation it is very hard to shift it (see yen).

 

The baht will be strong for many many years to come.

31 minutes ago, MartiniMan said:

By the way check the housing market bubble - easily over 3x overpriced - compare thai prices to london for example you will laugh your head off at build quality and comparison to services such as university and employers - its a joke completely overpriced with some of the worst pollution and commute in the world and very unsafe roads. The housing market is so overpriced with no gardens or room for a family just tiny box condos easily 2 to 6 times above fair value - total joke with a strong baht this is a coiled spring ready for a complete melt down to all time lows

You forgot to add IMO at the end of that given none of it is based in fact but heavy on wishful thinking

11 minutes ago, Mavideol said:

already happening and they don't care... when China and USA started their trade feud a smart country would have depreciated their currency to increase their exports, Thailand didn't bother, Vietnam, Taiwan and Malaysia (just to mention a few) did and investment just poured in... yesterday China again depreciated their currency to increase exports but Thailand still saying not to worry, they really must have a big stack of reserves somewhere, no need for fresh money

Why say 'somewhere' - just google it. Fresh money is also coming in (see below) - or put another way if you were buying currency would you be buying dollars, pounds or baht ? (Please say baht)

 

Foreign Exchange Reserves in Thailand increased to 215808.41 USD Million in June from 209955.74 USD Million in May of 2019

 

Countries with those levels of reserves can afford to sit and ride out storms - Thailand are sat in 12th place ahead of the UK, Germany, France or the US !!

19 minutes ago, Mavideol said:

already happening and they don't care... when China and USA started their trade feud a smart country would have depreciated their currency to increase their exports, Thailand didn't bother, Vietnam, Taiwan and Malaysia (just to mention a few) did and investment just poured in... yesterday China again depreciated their currency to increase exports but Thailand still saying not to worry, they really must have a big stack of reserves somewhere, no need for fresh money

Leaving aside currency manipulation as you have suggested has the potential to hammer your exports through sanctions - foreign Investment into Malaysia has been dropping for at least the last 4 years in a row, and I wouldn't be investing in Vietnam with China making noises about blocking their access out across waters China are claiming to be theirs. 

 

 

What they arent mentioning are the amount of investors pulling out. Billions of baht daily. 

A very precarious situation, if a sudden situation develops = rush to move from baht to a safer currency 

 

Interesting times

5 hours ago, RichardColeman said:

I guess they'll start making cuckoo clocks soon

And maybe chocolate too. ????

1 hour ago, Will E Vormer said:

What they arent mentioning are the amount of investors pulling out. Billions of baht daily. 

rubbish!

1 hour ago, Will E Vormer said:

What they arent mentioning are the amount of investors pulling out. Billions of baht daily. 

A very precarious situation, if a sudden situation develops = rush to move from baht to a safer currency 

 

Interesting times

Foreign Direct Investment in Thailand is expected to be 41000.00 THB Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Foreign Direct Investment in Thailand to stand at 36400.00 in 12 months time. In the long-term, the Thailand Foreign Direct Investment is projected to trend around 24000.00 THB Million in 2020, according to our econometric models.

 

Trading economics

 

Where do you get your information?  

5 hours ago, Handsome Gardener said:

Now go and check the cash surplus - last time I looked only 7 countries on the planet had higher dollar cash reserves - Thailand even has more than Germany !!

 

Thailand is a VERY rich country that has enough reserves to ride out storms - that's what makes it a safe haven - and once a country gets that reputation it is very hard to shift it (see yen).

 

The baht will be strong for many many years to come.

How can this be? I seem to recall a year or 2 ago reading that Thailand reserves were at an all time low. Almost depleted. Your comment makes no sense especially since we all know the leaders are wasting reserves to be a top military force complete with subs haha.. 

5 hours ago, Handsome Gardener said:

Now go and check the cash surplus - last time I looked only 7 countries on the planet had higher dollar cash reserves - Thailand even has more than Germany !!

 

Thailand is a VERY rich country that has enough reserves to ride out storms - that's what makes it a safe haven - and once a country gets that reputation it is very hard to shift it (see yen).

 

The baht will be strong for many many years to come.

200 billion dollars of foreign reserves doesn't make a country rich.

200 billion dollars of reserves allows them to manipulate their currency.

Loads of off books loans and absolutely no transparency

So I have my saving here in Thai in Baht, Does anyone recommend swapping it for another currency?

 

2 hours ago, thirdleg said:

200 billion dollars of foreign reserves doesn't make a country rich.

200 billion dollars of reserves allows them to manipulate their currency.

Loads of off books loans and absolutely no transparency

Said a hundred times but no one backs it up with facts or links.  Thailand does not manipulate currency or they would be where China is today - at war with Trump.  You guys are the transparent ones Thai hatred but nothing to back it up.  

16 minutes ago, Dancin Dna 11 said:

So I have my saving here in Thai in Baht, Does anyone recommend swapping it for another currency?

Guaranteed 100% of the Brits in the room would kill to be as smart as you with your savings in Thai baht.  I did the same thing 15 years ago and my British friends warned me about Thai banks being untrustworthy - now who is laughing.   

13 hours ago, marcusarelus said:

Said a hundred times but no one backs it up with facts or links.  Thailand does not manipulate currency or they would be where China is today - at war with Trump.  You guys are the transparent ones Thai hatred but nothing to back it up.  

I would get banned if I posted a bit of reality

There is no transparency in a junta government, so they can publish what they want

Surely even somebody as myopic as you must ask the question as to why they keep so many foreign reserves??!!

Why do you keep posting the same dribble

1 hour ago, thirdleg said:

I would get banned if I posted a bit of reality

There is no transparency in a junta government, so they can publish what they want

Surely even somebody as myopic as you must ask the question as to why they keep so many foreign reserves??!!

Why do you keep posting the same dribble

I know if you posted secret stuff they would ban you?  ????You mean that Thailand is not a currency manipulator?  The US government says they are not and China is.  Who do you believe USA of some person at the local pub? 

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1 hour ago, marcusarelus said:

I know if you posted secret stuff they would ban you?  ????You mean that Thailand is not a currency manipulator?  The US government says they are not and China is.  Who do you believe USA of some person at the local pub? 

USA don't care if they are making it stronger!!! They care about countries making it weaker

On 8/6/2019 at 10:02 AM, Isaan sailor said:

Thailand's economy considered a safe haven?  LMAO!  With a plunging SET, disappearing tourists, new government based on the former government, falling exports...still think it's a safe haven?  Rather, BoT still drunk on hot money inflows--and does not care about the economy.

 

Maybe you should send your erudite analysis to the Forex Traders and Investors who are backing the Thai Baht.

 

They'll no doubt give your opinion due consideration against theirs!

On 8/6/2019 at 8:11 PM, Dancin Dna 11 said:

So I have my saving here in Thai in Baht, Does anyone recommend swapping it for another currency?

 

 No. Unless you have a specific reason too; have very large amounts of money and want to hedge against unfavorable future moves in exchange rates; are an experienced forex trader; or simply like a gamble.