Thailand fights against its own currency's success

[webfact]

Thailand fights against its own currency's success

Bangkok struggles to weaken baht without drawing US trade pressure

YOHEI MURAMATSU and MARIMI KISHIMOTO, Nikkei staff writers

 

Baht banknotes featuring Thailand's King Maha Vajiralongkorn   © Reuters

 

BANGKOK -- Thailand is trying to coax the baht down from six-year high territory as the currency's strength threatens local manufacturing and tourism.

 

The central bank has cut interest rates and eased capital controls to rein in emerging Asia's best-performing currency this year.

 

It is an ironic twist for a country that became the epicenter of the 1997 Asian financial crisis after its currency collapsed. Thailand now finds that its relatively sound fundamentals have made it a safe haven for capital in Southeast Asia.

 

This has resulted in a rising currency that renders Thai exports less competitive in the global market and makes the country more expensive for foreigners to go on holiday.

 

Full story: https://asia.nikkei.com/Business/Markets/Currencies/Thailand-fights-against-its-own-currency-s-success

 

-- NIKKEI ASIAN REVIEW 2019-11-13

[RotBenz8888]

4 minutes ago, webfact said:

Thailand now finds that its relatively sound fundamentals

Sure, but the condo bubble hasn't bust yet.

[trainman34014]

If they were serious they would devalue the Baht by around 20% in the same way Malaysia did two or three years ago.  Truth is they are not interested and just give Lip Service to the matter !

[HeyHeyHey]

They don't fight currency appreciation, they fuel it.

 

It will hurt Thailand in the long term, but it won't hurt the top families who control the country as they invest and live overseas. That is all that matters.

[Artisi]

3 minutes ago, HeyHeyHey said:

They don't fight currency appreciation, they fuel it.

 

It will hurt Thailand in the long term, but it won't hurt the top families who control the country as they invest and live overseas. That is all that matters.

Correct, big profits here, means fatter O/S bank balances after transfer. 

[JAG]

Success is obviously a "relative" concept. If the strengthening of the currency is threatening to, or is, harming tourism and manufacturing,  and damaging exports, then perhaps it is not a success? 

[uncleeagle]

7 minutes ago, trainman34014 said:

If they were serious they would devalue the Baht by around 20% in the same way Malaysia did two or three years ago.  Truth is they are not interested and just give Lip Service to the matter !

Why do people always claim currencie have been devalued when in fact they simply fell due to market forces. The Malaysian Ringit was not devalued, it fell because of various factors such as the 1MDB scandal and has so far not recovered. There was no “devaluation”.

[keith101]

Should the central bank move too strongly to cool down the baht, it risks triggering U.S. sanctions against Thailand as a currency manipulator. In a May semiannual foreign exchange report, the U.S. Treasury Department placed neighboring Singapore, Malaysia and Vietnam on its "monitoring list" of trading partners whose currency practices were deemed to merit attention.

 

If Thailand's fiscal policy is to reduce the value of the baht it can only benefit US importers of Thai goods . It would also see a benefit here in larger exports and increased tourism so they should tell the US Treasury to go f themselves imo .

[overherebc]

1 hour ago, RotBenz8888 said:

Sure, but the condo bubble hasn't bust yet.

Big bust or small bust?

Lek, Yai

Mai pen rai.

[dotpoom]

1 hour ago, RotBenz8888 said:

Sure, but the condo bubble hasn't bust yet.

What bubble...can't give property away in these times?

[CNXexpat]

1 hour ago, RotBenz8888 said:

Sure, but the condo bubble hasn't bust yet.

I read since years that it will burst soon, but nothing happened. 

[CNXexpat]

1 hour ago, trainman34014 said:

If they were serious they would devalue the Baht by around 20% in the same way Malaysia did two or three years ago.  Truth is they are not interested and just give Lip Service to the matter !

Not so easy as you think. They can´t say: "Today the value of our currency is 20% less". The US would like to do it also, but they can´t. If one country starts with it, a currency war will come soon, because other countries will do the same.

[JimGant]

59 minutes ago, keith101 said:

If Thailand's fiscal policy is to reduce the value of the baht it can only benefit US importers of Thai goods . It would also see a benefit here in larger exports and increased tourism so they should tell the US Treasury to go f themselves imo .

Well, US importers -- unlike Thai exporters -- aren't necessarily hurt by the strong baht. It just means they'll buy more tee shirts from Vietnam, and less from Thailand. And US exporters? Well, whatever it is that Thailand buys from the US is, because of the cheaper dollar, more competitive with other suppliers of exports to Thailand.

 

But, yeah, US Treasury go f yourself. The baht is strong because of solid economic fundamentals, not manipulation. Yes, it had to begin with a "Thai impeachment" (coup) that overthrew an inept democratically elected government -- but after Trump, I'm not too enamored with 'democratically elected governments.' [Today's The Economist shows how Trump got all the high school drop out votes, while Hillary got the college grad votes -- so, not just Thailand has a political class warfare situation, where the winner may be an idiot....so, yeah, maybe a need for managed democracy....]

 

Sorry, I digress. But, the strong baht will probably be with us for quite awhile, as the fundamentals will remain solid for the forseeable future (plus, daily good news, like Thai real wage increases are near the top of the list in Asia). So, for those of us who were forced to bring over 800k baht for annual extensions -- sit back and enjoy the appreciation.

[Baerboxer]

1 hour ago, JAG said:

Success is obviously a "relative" concept. If the strengthening of the currency is threatening to, or is, harming tourism and manufacturing,  and damaging exports, then perhaps it is not a success? 

 

It is for the "important people" John. And as long as they're all doing well out of it, nothing will change.

[miamiman123]

Cognitive dissonance ....I can’t and won’t sell that 13 year Mitsubishi Pajero for 400,000 baht. It’s like new and I bought it for 1.3 million just 13 years ago. 
ddduh? 

[Guderian]

The personal debt crisis will implode sooner or later, taking the economy with it.

[david555]

And still ….not allowing online transfers out unless working permit …..would help maybe (?) loosing some foreign currency....?

[jlwilliamsjr18]

Come on folks...we've been here before.  When it gets to the point tourist turn elsewhere (i.e Philippines) and the elite 500 have stashed enough dollars, you'll see a change.  You will not see a consumer advantage. Inflation will fly like an eagle.  Brace yourselves, this ain't no joke.  Recession is just around the corner. 

[PatOngo]

2 hours ago, webfact said:

Thailand fights against its own currency's success

Ten on one I hope! Kick it while it's on the ground!

[jlwilliamsjr18]

20 minutes ago, Guderian said:

The personal debt crisis will implode sooner or later, taking the economy with it.

Yup...

https://www.thailand-business-news.com/banking/75454-thailands-dangerous-debt-addiction.html

 

[soalbundy]

47 minutes ago, Baerboxer said:

 

It is for the "important people" John. And as long as they're all doing well out of it, nothing will change.

Just how do you think the wealthy are holding up the value of the Baht ? There is almost nothing the Bank of Thailand can do without getting a bloody nose from the US

[30la]

2 hours ago, webfact said:

It is an ironic twist for a country that became the epicenter of the 1997 Asian financial crisis

Not the Bath is strong, the Central Bank holds it high for rich friends who can speculate so without any risk!
You are causing the next financial crisis, believe me this will become much heavier than the 97' that many of us have seen!

[ukrules]

An increase of a currencies value of some 20%+ over a relatively short period of time is not a success, it's a complete lack of any kind of control, or worse still - the opposite, a total and complete manipulated control. Either / or.

[30la]

1 minute ago, soalbundy said:

Just how do you think the wealthy are holding up the value of the Baht ? There is almost nothing the Bank of Thailand can do without getting a bloody nose from the US

For now the Americans are happy with the situation, the question is: how long?

[trainman34014]

1 hour ago, CNXexpat said:

Not so easy as you think. They can´t say: "Today the value of our currency is 20% less". The US would like to do it also, but they can´t. If one country starts with it, a currency war will come soon, because other countries will do the same.

That didn't happen in the case of Malaysia as far as i recall !

[hsovereign]

3 hours ago, trainman34014 said:

If they were serious they would devalue the Baht by around 20% in the same way Malaysia did two or three years ago.  Truth is they are not interested and just give Lip Service to the matter !

The Malaysians didn't devalue their currency, it lost about 5% in 2016 for various global economic reasons. 

[nervona81732]

For currency devaluation 9 how do you spell George Soros. 

[Chongalulu]

3 hours ago, keith101 said:

Should the central bank move too strongly to cool down the baht, it risks triggering U.S. sanctions against Thailand as a currency manipulator. In a May semiannual foreign exchange report, the U.S. Treasury Department placed neighboring Singapore, Malaysia and Vietnam on its "monitoring list" of trading partners whose currency practices were deemed to merit attention.

 

If Thailand's fiscal policy is to reduce the value of the baht it can only benefit US importers of Thai goods . It would also see a benefit here in larger exports and increased tourism so they should tell the US Treasury to go f themselves imo .

Your last sentence is simply evidence of poor economic understanding. Currency manipulation would result in US tariffs on Thai products and bring to the fore the large Thai tariffs on imports. . They’ve only recently been hit with loss of GSP exemptions. Trump has served notice and as the Chinese discovered it’s no idle threat.

[smedly]

simple truth - too late

 

should have had a handle on this 5 years ago but due too corrupt greedy officials thieving and wanting to launder their loot overseas they have shafted the Thai economy to a point were it is now out of control

 

only drastic action will correct this  and as I predicted 2 years ago will crash the BAHT

[ttrd]

4 hours ago, trainman34014 said:

If they were serious they would devalue the Baht by around 20% in the same way Malaysia did two or three years ago.  Truth is they are not interested and just give Lip Service to the matter !

It's not about seriousness and all about the total picture of impact - known and unknown ...

 

https://www.economicshelp.org/blog/1299/economics/advantages-and-disadvantages-of-devaluation/

Edited November 13, 2019 by ttrd