What goes up must come down – the battle of the baht

[webfact]

What goes up must come down – the battle of the baht

By The Thaiger

 

 

The Thai baht continues to be the best performing currency in Asia. The Thai currency is riding a 6-year high against the USD and, this year, has surged 8% against the US currency.

 

But the strong baht is causing knock-on effects to the rest of the Thai economy, battering exports and stifling tourist growth. Economists note Thailand’s solid economic fundamentals and stability, the current account surplus and high foreign reserves, together, are reasons the baht is so attractive to investors and currency speculators.

 

So what can be done by Thai public servants and Bank of Thailand lever-pullers to dampen speculation on the poplar currency? In July 2019, the BOT lowered the cap on the outstanding balance of non-resident accounts by a third and cut its supply of three and six-month bonds at auctions in July and August. The BOT has also signalled plans to further relax restrictions on outward portfolio investment by Thai investors, which could stem currency appreciation.

 

Then in August 2019, the BOT cut the policy rate by 25 basis points from 1.75 to 1.5%, a shift in the BOT policy stance since raising the rate by 25 basis points eight months before.

 

The large amount of foreign exchange reserves (39.9% of the Thai GDP and over 200% of the IMF’s standard reserve adequacy metric) may put Thailand on the US watch list for currency manipulators. But overall, bold intervention by the BOT is unlikely despite the current challenges.

 

Economist say that to try and tame offshore fund inflows, which are currently causing a rapid appreciation of the baht, could be effective at least in the short to medium term. But they warn that capital controls also have long-lasting adverse consequences, affecting the country’s economic credibility and financial markets.

 

The most requested measure by Thailand’s business sector is for the BOT to cut the policy rate again. A common belief is that further rate cuts would make the Thai baht less attractive for foreign investors, reducing pressure on the baht.

 

The bottomline for Thailand’s central bank should not be to subsidise a cheap export sales strategy if it interferes with the BOT’s main priority of economic stability. Exchange rate fluctuations are a modern fact of life for a floated international currency.

 

As Sir Isaac said, more in reference to gravity than international currency trading, “what goes up must come down.” Eventually.

 

Source: https://thethaiger.com/hot-news/economy/what-does-up-must-come-down-the-battle-of-the-baht

 

 

-- © Copyright The Thaiger 2019-09-05

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[darksidedog]

Can't come down quick enough for me.

[RichardColeman]

7 minutes ago, webfact said:

But the strong baht is causing knock-on effects to the rest of the Thai economy, battering exports and stifling tourist growth. 

Complete rubbish - Tourism is booming according to TAT and exports are growing at 3-6%, or atleast this lot tell me it is..

 

[wisperone]

Unfortunately many may not have much left by the time it does come down. Slowly working down peoples nest egg.

[worgeordie]

With so much black money around after all these big projects been implemented,

and money from internal corruption,they will be reluctant to lower the Bht,which

is much more important for them,than what is good for the country.otherwise the

THB would have been devalued by now.

regards worgeordie

 

 

[Chelseafan]

I buy around $20m of shrimp from Thailand and I've just moved my sourcing to Vietnam. Thailand is just too expensive. I've also heard that the buyer of Jasmine rice is also looking to resource. If they don't do something quick their export market is going to implode and the knock-on effect on local jobs is going to be catastrophic.

[Emdog]

I was living in Japan in 1985, around 200 yen to dollar. When I left had choice of travellers checks in yen or dollars. Foolishly went with dollar. Soon dollar dropped like a rock and stayed there. Currently about 105 yen to dollar.

Don't hold your breath on baht.... first came here in 1982 when baht exchange was around 23 to dollar (okay, prices different then....)

[Pib]

 

Quote

As Sir Isaac said, more in reference to gravity than international currency trading, “what goes up must come down.” Eventually.

"Eventually" all the continents will merge again....and the Andromeda & Milky Way galaxies will merge.  If it takes that long for the baht to come down then I don't think I'll be around to see "eventually."

[NCC1701A]

Baht strong like Army. Strong good. Weak bad. 

[smedly]

1 hour ago, webfact said:

The Thai baht continues to be the best performing currency in Asia

best performing for who or what ?

 

just because a currency is out of control and rising fast doesn't mean there is anything "best" or good about it, there is a very good argument to say it is performing very badly when measured against the Thai economy especially exports and tourism 

 

It is out of control and that is very dangerous - Thailand have lost it and now need drastic intervention which is not the way to do things

 

They need to start printing money

[Mavideol]

1 hour ago, darksidedog said:

Can't come down quick enough for me.

and that makes 2 of us..... more on their way

[smedly]

40 minutes ago, worgeordie said:

With so much black money around after all these big projects been implemented,

and money from internal corruption,they will be reluctant to lower the Bht,which

is much more important for them,than what is good for the country.otherwise the

THB would have been devalued by now.

regards worgeordie

 

 

100% correct and something I have said myself

 

History tells us that dictator and corruption riddled countries eventually go down the sh I tter and it happens very quickly

[Mavideol]

4 minutes ago, smedly said:

best performing for who or what ?

 

just because a currency is out of control and rising fast doesn't mean there is anything "best" or good about it, there is a very good argument to say it is performing very badly when measured against the Thai economy especially exports and tourism 

 

It is out of control and that is very dangerous - Thailand have lost it and now need drastic intervention which is not the way to do things

 

They need to start printing money

correct... I am tired of always receiving this crappy old damaged bills, print (many) new ones fast

[brokenbone]

15 minutes ago, smedly said:

best performing for who or what ?

 

just because a currency is out of control and rising fast doesn't mean there is anything "best" or good about it, there is a very good argument to say it is performing very badly when measured against the Thai economy especially exports and tourism 

 

It is out of control and that is very dangerous - Thailand have lost it and now need drastic intervention which is not the way to do things

 

They need to start printing money

its good for those who's income comes in thai baht,

for instance, would you consider it bad if brittish pound

rise up to 80 pound vs 1 THB ?

or would you get aroused ?

Edited September 5, 2019 by brokenbone

[anon7854]

1% of thai people own 60 % of Thailands wealth. If that doesnt tell you anything about currency manipulation nothing will. And I am pretty sure a lot of wealth is in foreign currency. Stocking up on foreign currency is a smart move , I must say. Especially when for less baht you buy more euro/dollar. No sane millionaire would keep their assets in thai baht.

[Mac98]

2 hours ago, smedly said:

best performing for who or what ?

 

just because a currency is out of control and rising fast doesn't mean there is anything "best" or good about it, there is a very good argument to say it is performing very badly when measured against the Thai economy especially exports and tourism 

 

It is out of control and that is very dangerous - Thailand have lost it and now need drastic intervention which is not the way to do things

 

They need to start printing money

Yes, and if they used that money to pay off household debts for Thais, and hospital bills for uninsured farang, it would once again be "Let the good times roll" in Thailand.

[hotchilli]

When the elite have finished buying overseas they will drop the value to ease the concern at home.

[Percy P]

Is the bottle half full or half empty.  The reason the Baht is high against the western currency and some asian is that their currency has collapsed. A few years ago I gave 14 Baht/Myr now I'm paying 7.14B/Myr. As the Malaysian Ringgit has collapsed due to the corruption.

Edited September 5, 2019 by Percy P

[BestB]

3 hours ago, Chelseafan said:

I buy around $20m of shrimp from Thailand and I've just moved my sourcing to Vietnam. Thailand is just too expensive. I've also heard that the buyer of Jasmine rice is also looking to resource. If they don't do something quick their export market is going to implode and the knock-on effect on local jobs is going to be catastrophic.

Any chance I could get contact info for you thai and possibly viet sources?

 

have been trying to find for years but not getting anywhere as I need 20 ft container on monthly basis 

[BestB]

Nice OP and very simply summed up but no real suggestions on what to actually do, latest interest cut did little to nothing , whatever makes business sector think another cut will do much more ?

[billd766]

3 hours ago, Mavideol said:

and that makes 2 of us..... more on their way

Me too.

[Ozziepat]

Thai government is buying extensively and benefits from a "strong" Baht. Banks hold massive Thai debts and do not want to be repaid in devalued Baht. So the central bank will continue to maintain status quo. There are obvious losers in this currency game, and they will continue to lose. Rinse, repeat until the cries of pain from some significant loser group (NI ex-pats) reach a level that forces non-trivial correction.

[Number 6]

3 hours ago, brokenbone said:

its good for those who's income comes in thai baht,

for instance, would you consider it bad if brittish pound

rise up to 80 pound vs 1 THB ?

or would you get aroused ?

A few years after meeting my wife I decided to go back to work. In 5+ years during the assault on the dollar I've doubled my salary in addition to being paid in Thai baht. I'm alright Jack.

[Number 6]

20 minutes ago, Ozziepat said:

Thai government is buying extensively and benefits from a "strong" Baht. Banks hold massive Thai debts and do not want to be repaid in devalued Baht. So the central bank will continue to maintain status quo. There are obvious losers in this currency game, and they will continue to lose. Rinse, repeat until the cries of pain from some significant loser group (NI ex-pats) reach a level that forces non-trivial correction.

Baht is baht. It would only be *devalued* in relation to international currencies. I'm lost. It's domestic debt.

[BestB]

Just now, Number 6 said:

A few years after meeting my wife I decided to go back to work. In 5+ years during the assault on the dollar I've doubled my salary in addition to being paid in Thai baht. I'm alright Jack.

I earn thai baht, very happy but my business is loosing customers so while I am getting good money into dollars my biz is loosing money, so in the end i am back to where I started ????

[Percy P]

5 hours ago, RichardColeman said:

Complete rubbish - Tourism is booming according to TAT and exports are growing at 3-6%, or atleast this lot tell me it is..

 

And that is solely why the Baht is strong . No tourists then no won wants the Baht. Its a case of supply and demand. Why do you think they give some counyries free visas. 

Edited September 5, 2019 by Percy P
Addition

[batata]

3 hours ago, smedly said:

They need to start printing money

it would be nice if they started yesterday rather than today, would make my life easier

[batata]

36 minutes ago, billd766 said:

Me too.

and 1 more... (unfortunately) we will have more company soon 555

[Percy P]

1 hour ago, Mac98 said:

Yes, and if they used that money to pay off household debts for Thais, and hospital bills for uninsured farang, it would once again be "Let the good times roll" in Thailand.

Foreign currency is keeping Thailands head above water. Foreign debts are not paid in Baht  The more their are tourists the more foreign currency..The last economic collapse was because the Banks were giben permission to use the Foreign reserve .Then it was cap in hand to the IMF and I was getting 90 B/£ now 37/£. I can only say well done T/Land. But are the people getting the benefit fron tourists money. I think not..Tourists in most cases are spending twice as much for an item in their own countries money  but the shop keeper are getting the same as 10 years ago.

[wisperone]

2 hours ago, Number 6 said:

A few years after meeting my wife I decided to go back to work. In 5+ years during the assault on the dollar I've doubled my salary in addition to being paid in Thai baht. I'm alright Jack.

While that's good for you, and I'm happy for you, there are a lot of Brit and Aussie pensioners feeling the pain as their purchasing power dwindles more and more. Feel sorry for these guys trying to survive.