The Thai Baht Reached a New 6-Year High. Here’s Why It’s Surging

[holy cow cm]

7 minutes ago, Mavideol said:

that's a simple/good explanation, unfortunately too much for her and so many other Thai people that can't see further than the tip of their nose,,, if they could see a wider picture/wider effect they may change their opinion

Yep. My wife tells me the same on food prices. She had had to last year and just had to again raise her menu prices to help reduce the costs burden. And with that the consumer gets hit. this country is not doing well at all. It is in a sputter spiral down. 

[30la]

5 hours ago, AussieBob18 said:

As it all things related to big finance, what always eventually comes after an absolutely bloated over-value, is a massive crash and over-devaluation.  The Baht is eventually going to crash and when it does it will crash big time - be prepared. 

 

This happens when incompetents can do what they want!

[Pedrogaz]

Currencies go up and down. One of the major factors in a strengthening currency is the demand for the currency.....Thailand has an export surplus so the baht will have a tendency to rise, like Japanese Yen. Currencies that import more than they export (including services) tend to depreciate.

Note that there are many other factors in currency movement beyond surpluses, for example interest rates which are relatively high in Thailand vs the rest of the world....one can borrow in US$ at 2% and invest here at 4% earning yourself 2% practically risk free....it is called the carry trade.

Currency manipulation is frowned upon by the US as they feel it confers a secret advantage on the exporter....hence their labeling of China as a currency manipulator. 

Currency cycles tend to be long lived so don't expect major reductions in the strength of the Baht now as it has momentum, and absent a major reduction in interest rates, it will stay firm in the medium term.

 

 

[mehrdad]

I wondered every news good or bad ,,, every agreement between china with US and not agreement or brexit can not stop strength thai baht and thai baht is going up and upper and we watching 

[POMRAKSIAM]

I do not understand economics but I do know a steaming pile when I see and smell it. Something is NOT right.....

[madmen]

6 hours ago, AussieBob18 said:

be prepared. 

for what lol

[WillyPlatt]

5 hours ago, canopus1969 said:

Nonsense – just look at the fundamentals 

 

Correct. Asia is booming. Meanwhile Blighty cannot even jump the first hurdle at the grand national.

Stale mate and that means sterling at best will hover in the 38 or 39 baht range for high season. Could well come down again.

Pattaya is really struggling and think its time for me to finish with my current girl.

Too much money and drama when i am on the ground. Downside is i will miss the company but just cannot afford it.

[puck2]

The Thai currency remains strong although you cannot say the same about the Thai exports. In the economical theories the Baht rate should go down, but it doesn't. Hence there must be another reason to explain this dissent. Look at the interest rates in the EU, USA and Thailand.

 

1. The ECB has a negative deposit facility of (minus) -0,50%, the Swiss National Bank negative -0,75%

2. The Bank of England gives you an Official Bank Rate of 0,75%, the US FED a Federal Fund rate of +1,75 – +2%. Normally the money should flow into these banks, but … you don't trust them so much because of the current political and economical instability, caused by BREXIT and TRUMP.

3. The THB recently dropped by 0,25% to 1,50%. The THB is attractive, because of some good background conditions, as for instance low public debts, holding a lot of foreign currencies.

 

So, if you would be a bank manager and you would expect a today surplus you would not transfer it to your central bank in the EU, GB or USA because of the negative reasons mentioned in #1 and #2. Respecting the geological time difference you would transfer it to Thailnd for a safe +1,5% interest.

 

One reason why the THB is so strong.

[Number 6]

3 hours ago, Yinn said:

Problem?

 

Maybe can bring your money to thailand now is 30. Then not worry. Send it back when it 25. You can make profit.

 

We have more tourist coming, chinese make more factory in Thailand now. 

i think baht will be more stronger. Up to you. 

Chinese aren't making factories here. That's largely rumor and propaganda. Thailand will have export issues it doesn't have many trade agreements and the ones it does it does not honor.

 

The currency is a huge issue bringing in raw materials, paying labor...it's Chinese RMB at least initial investment. Then no corporation can be owned by foreigners so 49% what a laugh.

 

If Thai rice isn't competitive how would anything made in Thailand be competitive? Rice requires very little insofar as costs.

 

Chinese are building in Vietnam and Cambodia. Cheap, hard working people. Lack of red tape and regulation. Welcoming government. Currencies have reasonable cross rates.

Edited October 26, 2019 by Number 6

[CNXexpat]

Sooooo many experts at ThaiVisa they say it´s wrong and the Baht will fall in a short time. And the real financial experts still invest in Thailand and bring their money in. 

God, I read since YEARS that the real estate market will implode, the Baht will fall very deep, the economy is very bad, there will come huge protests against the government and so on. But what happens? Nothing of it.

[AussieBob18]

Here is some interesting data for the TV experts to consider.

 

The forex market is the biggest market in the world, accounting for an average of $5.1 trillion worth of trades each day.

Here are the top 10 most traded currencies, which are involved in nearly 90% of trades:

 

US dollar (USD)
Euro (EUR)
Japanese yen (JPY)
Pound sterling (GBP)
Australian dollar (AUD)
Canadian dollar (CAD)
Swiss franc (CHF)
Chinese renminbi (CNH)
Swedish krona (SEK)
New Zealand dollar (NZD)

 

The Thai Baht is not even on the list of top 90%.

In fact the Thai Baht is the 24th traded currency on volume at 0.5% of total trades.

https://en.wikipedia.org/wiki/Template:Most_traded_currencies

 

The high Baht has absolutely nothing to do with the trade value of the currency.

 

 

  

[AussieBob18]

Meanwhile lets compare the Baht against a few 'real' currencies who value is set based mainly on currency trades:

 

 

 

[CNXexpat]

16 minutes ago, AussieBob18 said:

Here is some interesting data for the TV experts to consider.

 

The forex market is the biggest market in the world, accounting for an average of $5.1 trillion worth of trades each day.

Here are the top 10 most traded currencies, which are involved in nearly 90% of trades:

 

US dollar (USD)
Euro (EUR)
Japanese yen (JPY)
Pound sterling (GBP)
Australian dollar (AUD)
Canadian dollar (CAD)
Swiss franc (CHF)
Chinese renminbi (CNH)
Swedish krona (SEK)
New Zealand dollar (NZD)

 

The Thai Baht is not even on the list of top 90%.

In fact the Thai Baht is the 24th traded currency on volume at 0.5% of total trades.

https://en.wikipedia.org/wiki/Template:Most_traded_currencies

 

The high Baht has absolutely nothing to do with the trade value of the currency.

 

 

  

It has nothing to do with trading the currency. Many companies and also private people are investing in Thailand and bring their money in. 

[saengd]

25 minutes ago, AussieBob18 said:

Here is some interesting data for the TV experts to consider.

 

The forex market is the biggest market in the world, accounting for an average of $5.1 trillion worth of trades each day.

Here are the top 10 most traded currencies, which are involved in nearly 90% of trades:

 

US dollar (USD)
Euro (EUR)
Japanese yen (JPY)
Pound sterling (GBP)
Australian dollar (AUD)
Canadian dollar (CAD)
Swiss franc (CHF)
Chinese renminbi (CNH)
Swedish krona (SEK)
New Zealand dollar (NZD)

 

The Thai Baht is not even on the list of top 90%.

In fact the Thai Baht is the 24th traded currency on volume at 0.5% of total trades.

https://en.wikipedia.org/wiki/Template:Most_traded_currencies

 

The high Baht has absolutely nothing to do with the trade value of the currency.

 

 

  

The Thai Baht is not a freely convertible currency, there are restriction on how much THB may be taken out of the country and how much may be held by foreign banks. There is about THB 45 bill. traded every day which for a small boutique currency is a huge amount.

 

https://www.fxcm.com/markets/insights/thb-thai-baht/

 

EDIT to correct 30 to 45 billion

Edited October 26, 2019 by saengd

[AussieBob18]

The Thai Baht is seriously highly over inflated as shown in my posts above, and there is another big point to note. The Thai official interest rates (resaerve bank) is not that high on the world stage - not at all:

https://en.wikipedia.org/wiki/List_of_countries_by_central_bank_interest_rates

 

So why is the Baht high and why did it start increasing against all the main real currencies since 2014 (The Junta).  It aint trade, it aint toursim, it aint attractive interest rates. It is the 'policies' of the Thai Junta. And why has it been 'allowed'? Because implemnting policies that result in increasing ones own currency rate is not a problem on the world stage - it is when countries manipulate to decrease their rates (and thus make their exports more attractive) that other countries (like USA) take action.   

 

In answer to 'when' my response is 'no one can say'. But it will crash and IMO it will be bad.  The Junta are military people who do not understand business. Like the TAT people lied for years about Tourism - they lie about economic performance.  Eventually, just like what happened in 2008 to the world (GFC) the Thai economy is going to have its own FC. Thailand is growing against all the major currencies that are traded everyday - and yet the Thai currency is a total of 0.5% of that trade?? It is inevitable. 

 

[saengd]

11 minutes ago, AussieBob18 said:

The Thai Baht is seriously highly over inflated as shown in my posts above, and there is another big point to note. The Thai official interest rates (resaerve bank) is not that high on the world stage - not at all:

https://en.wikipedia.org/wiki/List_of_countries_by_central_bank_interest_rates

 

So why is the Baht high and why did it start increasing against all the main real currencies since 2014 (The Junta).  It aint trade, it aint toursim, it aint attractive interest rates. It is the 'policies' of the Thai Junta. And why has it been 'allowed'? Because implemnting policies that result in increasing ones own currency rate is not a problem on the world stage - it is when countries manipulate to decrease their rates (and thus make their exports more attractive) that other countries (like USA) take action.   

 

In answer to 'when' my response is 'no one can say'. But it will crash and IMO it will be bad.  The Junta are military people who do not understand business. Like the TAT people lied for years about Tourism - they lie about economic performance.  Eventually, just like what happened in 2008 to the world (GFC) the Thai economy is going to have its own FC. Thailand is growing against all the major currencies that are traded everyday - and yet the Thai currency is a total of 0.5% of that trade?? It is inevitable. 

 

You're not reading what's been written or you've not understood, let me try again.

 

THB is a niche currency, it is very small in terms of distribution because it is restricted. Unlike other currencies on your top ten list, THB is not a reserve currency but is doesn't need to be so in order to be strong...it doesn't take much in the way of trades to influence the direction of THB because it is so small. That is one of the reasons why THB remains restricted, to avoid overseas funds from taking a position against it. If something is so small and the demand is so high, the impact on the currency is potentially very large, unlike USD or GBP which is very large and the corresponding volume of trades is high, the impact however is minimal.

 

EDIT TO ADD:

 

Just in case you're still not there on this point, turn the question around. You say, "It aint trade, it aint toursim, it aint attractive interest rates. It is the 'policies' of the Thai Junta". Perhaps you will explain to us how THB can increase in value if it's not by the usual and accepted means and what policies are these that have such a magical effect on THB? Simply, if a currency direction could be determined by policy alone, everyone would be doing it at the drop of a hat.

 

 

Edited October 26, 2019 by saengd

[johnsmith8888]

8 hours ago, AussieBob18 said:

As it all things related to big finance, what always eventually comes after an absolutely bloated over-value, is a massive crash and over-devaluation.  The Baht is eventually going to crash and when it does it will crash big time - be prepared. 

 

I hope so.. Mm

 

[Yinn]

2 hours ago, Number 6 said:

Chinese aren't making factories here. That's largely rumor and propaganda. Thailand will have export issues it doesn't have many trade agreements and the ones it does it does not honor.

Have you ever been Amata City Rayong? Amata city Chonburi? Hundreds of foreigner owned factory. Other place the same. 

You the rumor.

2 hours ago, Number 6 said:

 

The currency is a huge issue bringing in raw materials, paying labor...it's Chinese RMB at least initial investment. Then no corporation can be owned by foreigners so 49% what a laugh.

Wrong. That only the rule for small business. You think Toyota, BMW, Benz, Isuzu, caretpillar etc tc is 51% thai owned. 

You confused.

 

2 hours ago, Number 6 said:

 

If Thai rice isn't competitive how would anything made in Thailand be competitive? Rice requires very little insofar as costs.

Because thailand so successful rice is cheaper in low wage place. Thailand middle wage place. But have infrastructure so good, that why Thailand “Detroit of SEA”. 12th in the world car production = more money than grow rice.

 

2 hours ago, Number 6 said:

 

Chinese are building in Vietnam and Cambodia.

And thailand. 

 

2 hours ago, Number 6 said:

 

Cheap, hard working people. Lack of red tape and regulation. Welcoming government. Currencies have reasonable cross rates.

Good luck for them. No problem. 

Yes good, cheap worker. Thai business use them already. 

[CharlieH]

reported troll comment removed.

[nakluapattaya]

I have no idea what is going on with their currency. It makes no sense at all, what i see all over Thailand is loans, credit, and stuff like that. And its going strong, even Thai citizens can legally offer loans up to 15%. My gf does this she even lets her customers sign contracts takes a copy of their ID card. Its all small loans like 500-2000 baht max. But its a good business for her. She can legally let people sign contracts to pawn their motorbikes. I see it everywhere. Her friend works at a actual pawnshop, and the grandmother of a friend of mine got rich by this. She even inherited cars, and land from customers that didnt pay back.

Meanwhile in EU only banks are allowed to do this crime.

 

I myself am not interested in politics and economy, but i can imagine Thailand being modern like US and EU printing fiat currency like crazy, everything on loans, bla bla There should have been huge inflation. I have no idea why the baht is so expensive these days.

[observer90210]

6 year high of the THB will yield them a 6 year low on foreigner venue and expenditure

[zydeco]

3 hours ago, puck2 said:

Respecting the geological time difference you would transfer it to Thailnd for a safe +1,5% interest.

Would that be interest accrued over 500 million years or 750 million years?

[marqus12]

2 hours ago, saengd said:

doesn't take much in the way of trades to influence the direction of THB because it is so small

 

2 hours ago, saengd said:

That is one of the reasons why THB remains restricted, to avoid overseas funds from taking a position against it.

Open Economies of this size in developing markets are included

in forex trading without restrictions.

 

Restrictions distort a market based on supply and demand
and do not adjust the exchange rate to the current economic situation.

 

Congratulations, you found the source of strength .

Edited October 26, 2019 by marqus12

[Isaan sailor]

Complete nonsense. BoT and the government have engineered this debacle, ongoing for the last two years.  It suites them fine—mission accomplished.  Besides, they all love hot money inflows—very profitable...

[saengd]

11 minutes ago, marqus12 said:

 

Open Economies of this size in developing markets are included

in forex trading without restrictions.

 

Restrictions distort a market based on supply and demand
and do not adjust the exchange rate to the current economic situation.

 

Congratulations, you found the source of strength .

"Open Economies of this size in developing markets are included in forex trading without restrictions".

 

I'm going to have to take a stab at what you mean by this but honestly I'm unsure!

 

You're trying to suggest that even though THB is a restricted currency that is not fully convertible, that does not have any impact on its traded value in the FOREX?

 

There are two FOREX markets for THB, onshore and offshore, the global FOREX market cannot impact the onshore market. If it wanted to, BOT could effectively make the value of THB whatever it wanted but in practise it doesn't, instead it follow the principles of managed float. When capital controls were introduced some years ago and a tax was imposed on short term FDI, the two exchange rates diverged, when the controls were lifted they became equal.  

[saengd]

3 minutes ago, Isaan sailor said:

Complete nonsense. BoT and the government have engineered this debacle, ongoing for the last two years.  It suites them fine—mission accomplished.  Besides, they all love hot money inflows—very profitable...

Ummm, which is why BOT has taken steps to reduce the flow of inbound hot money (FDI), because they love it so much!

 

 "Measures recently launched by the Bank of Thailand to stem speculative capital inflows have reduced hot money in the system, says a senior central bank official".

[Lacessit]

3 hours ago, CNXexpat said:

Sooooo many experts at ThaiVisa they say it´s wrong and the Baht will fall in a short time. And the real financial experts still invest in Thailand and bring their money in. 

God, I read since YEARS that the real estate market will implode, the Baht will fall very deep, the economy is very bad, there will come huge protests against the government and so on. But what happens? Nothing of it.

Try selling any property in Chiang Rai or Chiang Mai, and see what happens. That's why I will always rent.

The Chinese tourists? As mean as a s##thouse rat. Ask any shop or restaurant. Back off to avoid the spittle.

Debt levels? Astronomical among the average Thai.

Manufacturing? A strong baht means exports lose competitiveness. It's fine if you want to import tanks and helicopters.

I'm no prophet, but I think a crunch is coming.

[saengd]

3 minutes ago, Lacessit said:

Try selling any property in Chiang Rai or Chiang Mai, and see what happens. That's why I will always rent.

The Chinese tourists? As mean as a s##thouse rat. Ask any shop or restaurant. Back off to avoid the spittle.

Debt levels? Astronomical among the average Thai.

Manufacturing? A strong baht means exports lose competitiveness. It's fine if you want to import tanks and helicopters.

I'm no prophet, but I think a crunch is coming.

Three years ago my near neighbours were a mix of mostly Thai and a smattering of farang. Today, my neighbours are 95% Chinese, all having kids at Prem International school, around forty families in all. School fees are very high, they all rent for between 35/45k per month and can all be regarded as upper middle class, they spend money freely. Many of the husbands work offshore internationally, my next door neighbour works in Nigeria building the airport there. The farangs have all left, I'm the only one left in the area. Don't tell me Chinese people don't spend, they don't spend money in farang bars but they do spend, big time.

[Lacessit]

6 minutes ago, saengd said:

Three years ago my near neighbours were a mix of mostly Thai and a smattering of farang. Today, my neighbours are 95% Chinese, all having kids at Prem International school, around forty families in all. School fees are very high, they all rent for between 35/45k per month and can all be regarded as upper middle class, they spend money freely. Many of the husbands work offshore internationally, my next door neighbour works in Nigeria building the airport there. The farangs have all left, I'm the only one left in the area. Don't tell me Chinese people don't spend, they don't spend money in farang bars but they do spend, big time.

We are talking at cross-purposes. You are talking about your neighbours, I am talking about Chinese tourists coming in on the buses. Yes, I will tell you shops here detest them. But Chinese tourism is preferred by the government of the day. I think you can figure it out from there.

[the guest]

Pure and simple currency manipulation !