Thai central bank chief says 'very worried' about strength of baht

[Melbun]

15 hours ago, RotBenz8888 said:

He's not alone....

Hands up any Thai businesses that want a mini recession >??????????

[Curmudgeon1]

15 hours ago, Mavideol said:

he was just venting, he's not worried at all, if he were worried he would have made a move (depreciating the baht) long time ago, he knows tourists are less than expected, exports are slowing on a daily basis and yet the bath still very strong

Cannot depreciate or get labeled for currency manipulation..... China gets criticism but thailand would get consequences 

[AussieBob18]

The Head of the Central Bank of a country that is extremely reliant on its GDP and economic growth through Tourism and Trade is worried that the Baht is far far above historial levels as compared against all the worlds top currencies.

 

I never would have thought that there was anything wrong with the Thai economy - if I believed all the Thai apologist replies myself and so many others have got in response to our 'negative' statements about the Thai economy. 

 

The Thai economy stats are fabricated and the Baht is at an unsustainable level - they are both going to crash - it is inevitable.   

[Skeptic7]

15 hours ago, racket said:

They are out of ammo to do anything about it, and they don't want to repeat the mistakes of 1997. 

But we do! ????

[Lee4Life]

      They keep saying that the strengthening of the baht is the result of huge foreign reserves, but they don't explain the source of those reserves. Where did they come from, or where are they coming from?

[Five and Nine Bkk]

Unfortunately there is not much a central bank can do. Currencies are driven by balance of payments and the capital investment in Thailand is massive with the trade conflict between China & USA. Not great for those of us in the tourist industry - Expect another 18 months minimum, if Thailand's government stays intact.

[AussieBob18]

If anyone thinks that what these two graphs show below is sustainable or realistic - then they have no real idea about economics and currency exchange rates:

 

 

 

 

[Thaidream]

32 minutes ago, Angry Dragon said:

hope you're right.  there's precedent for the THB in the 20s - common before the 1997 financial crisis.  banks in much better shape than the 90s so a baht in the 20s is sustainable, especially when looking at the fundamentals in Thailand vs the US, Europe or the UK.

When the Baht was  20 to the US Dollar- it was pegged to the dollar and didn't move.  The peg was released and the Baht floated-  the rate rose to around 25 baht to 1pDollAR. It didn't matter then- everything was cheap  but this is not 1971 when I was here- it's 2019  and inflation is rearing its head in Thailand.0

 

In 1997 panedomium in the markets as Thailand attempted to use foreign reserves to keep the Baht stable almost depleting  the account and then depreciated the Baht letting it fall.  The IMF intervene and the Baht stabilized and returned to its  market rate of around 40 to the Dollar.  

 

Since the 1997  crisis when banks folded due to  corrupt practices- Thailand has changed laws and allows the float to be a basket of currencies.  Thailand has seen huge growth; a rebulding of its reserves; massive inbound tourism and hot money.

 

If the central bank wanted to stop and somewhat reverse the current situation- it could intervene at certain points; stop the hot money with capital controls raising taxes and not allowing instant repatriation.  the central bank has done it before so it knows how to do it.

 

I don't think the Thai Government wants to see the Baht depreciate as it is on a buying spree from aborad - weapons; foreign contracts; infrastructure uogrades that need imported equipment, repayment of foreign debt.  At present, the Thai budget i nott in balance- it is running a deficit and needs foreign funds to keep it running.

 

Unitil there is a change in thinking at the top- nothing will help and the bank of Thailand knows it.

[samran]

1 hour ago, WalkingOrders said:

Reasonable remarks. He doesn't really have many bullets to use, nor can he control the entire Thai economy. I think the real danger in his eyes would be a baht crash coinciding with an economic downturn. I've thought about this one alot, and the solution is to bring up the ability of Thai's to buy more imports I guess, but how do you do that? Certainly not overnight. Should the Government buy building materials from abroad? Take on some debt In a building program? Pay for Thai students to study abroad to increase the national brain power? I suppose the answer to all of that could be yes yes and yes. But none of that would have immediate affect, but in the long term that is the solution. I don't see much expansion in the ability of ordinary Thai to buy from abroad. I never have looked at anything like wages rise or fall in Thailand, or income distribution or things like that, maybe some here have. I just wonder how high the baht can go?

 

1 hour ago, khunjeff said:

He actually graduated from Thammasat at age 18 (he had turned down a scholarship in California to stay closer to home) and got his PhD in Economics from Harvard at age 24, but sure, let's make the usual "Thais are so uneducated" jokes, why not.

Probably the only two economic literate and intelligent posts on this entire thread which is littered in self interested 'me me me-isms' from people who moved country and didn't take into account currency variations.

 

The fact is, Verathai would wipe the floor with about anyone moaning on this thread. And he'd do it in better English too. Those who think he's doing the bidding of Prayuth also know nothing about the dynamics of the BOT and the government of the day, the BOT being probably the only stubbornly independent organisation within the Thai government.

 

To say he hasn't noticed the issue is <deleted>. Anyone following this debate knows that the BOT is watching it, but as others said, what really can you do. The same clowns who move to Thailand to escape 'nanny states' all of a sudden want him to intervene to make there pensions go further. Talk about hypocritical.

 

The problem is, the central bank rate is already low. Lowering it any more will have minimal impact. You don't devalue your way to prosperity.

 

And to make rash statements isn't part of any central bank governors remit, so asking him to do any more than he is doing publicly is a foolish request. 

 

Are Thai companies and individuals benefiting from a high baht? Probably and they'd be stupid not to. Investing overseas - and borrowing baht domestically at low interest rates to fund these expansions - makes sense, and the capital outflows, such as they exist, help alleviate the pressure on a stronger baht. So you can't be moaning about the fact that people are taking advantage of it and not recognise the benefits it has on not making the baht even stronger.

 

That the government is incompetent is another issue not related to the BOT. Anyone who's ever been for a meeting there will know they aren't a bunch of dozers.

 

IMHO, a strong baht is a good thing for Thailand right now, and I suspect the BOT know this. Post AFC, Thai companies have gotten addicted to a weak baht to support their export industry. Whether that be manufacturing or tourism. Its ultimately led to laziness and low productivity grown as they've been able to muddle through and get value not through any real innovation, but due to a cheap currency. Government hasn't done anything to encourage anything differently. Education and vocational skills training is still lousy.

 

A protracted period of 2-3 years of strong baht will make domestic businesses focus and either get better, or wither. Export focused businesses, if they get through this patch, will genuinely be globally competitive as they will have restructured and not be reliant on the weak currency to make their sales for them.  As it should be. What will be left will be stronger and more productive economy.

 

 

[AussieBob18]

4 minutes ago, Five and Nine Bkk said:

Unfortunately there is not much a central bank can do. Currencies are driven by balance of payments and the capital investment in Thailand is massive with the trade conflict between China & USA. Not great for those of us in the tourist industry - Expect another 18 months minimum, if Thailand's government stays intact.

The Thai Junta Govt put in place policies to keep the Baht high - such as the amount of Baht allowed to be removed from the country and other 'controls', how much the BOT actually sells the currency the keep its value down, setting the reserve interest rates, and a lot of other policies.  This was done by the Junta for many reasons including paying for military purchases, for infrastructure projects provided by China (through rich Thai family/friends), and for the purchase of overseas goods and proeprty by themselves and their elite supporters, and other reasons.  It is only because it is no longer a Junta 100%, and he probably wont be shot, is that the Head of the Reserve Bank is speaking out about it.  The Junta has forced the Baht way too high and it will cause a crash eventually - he knows it and he is saying it.

[Millcx]

16 hours ago, RotBenz8888 said:

He's not alone....

It will collapse Thailand ... That’s for sure ... Hold on to your handrails coz it’s coming

[Millcx]

3 minutes ago, AussieBob18 said:

The Thai Junta Govt put in place policies to keep the Baht high - such as the amount of Baht allowed to be removed from the country and other 'controls', how much the BOT actually sells the currency the keep its value down, setting the reserve interest rates, and a lot of other policies.  This was done by the Junta for many reasons including paying for military purchases, for infrastructure projects provided by China (through rich Thai family/friends), and for the purchase of overseas goods and proeprty by themselves and their elite supporters, and other reasons.  It is only because it is no longer a Junta 100%, and he probably wont be shot, is that the Head of the Reserve Bank is speaking out about it.  The Junta has forced the Baht way too high and it will cause a crash eventually - he knows it and he is saying it.

It’s coming and he’ll is coming with it

[HHTel]

While I accept the baht being at an all time high and is hurting Thai exports.  The other side of the coin means that imported goods are somewhat cheaper.

Why don't we see that reflected in the prices of imported goods at the retailers.  Thai greed??

[AussieBob18]

5 minutes ago, samran said:

 

Probably the only two economic literate and intelligent posts on this entire thread which is littered in self interested 'me me me-isms' from people who moved country and didn't take into account currency variations.

 

The fact is, Verathai would wipe the floor with about anyone moaning on this thread. And he'd do it in better English too. Those who think he's doing the bidding of Prayuth also know nothing about the dynamics of the BOT and the government of the day, the BOT being probably the only stubbornly independent organisation within the Thai government.

 

To say he hasn't noticed the issue is <deleted>. Anyone following this debate knows that the BOT is watching it, but as others said, what really can you do. The same clowns who move to Thailand to escape 'nanny states' all of a sudden want him to intervene to make there pensions go further. Talk about hypocritical.

 

The problem is, the central bank rate is already low. Lowering it any more will have minimal impact. You don't devalue your way to prosperity.

 

And to make rash statements isn't part of any central bank governors remit, so asking him to do any more than he is doing publicly is a foolish request. 

 

Are Thai companies and individuals benefiting from a high baht? Probably and they'd be stupid not to. Investing overseas - and borrowing baht domestically at low interest rates to fund these expansions - makes sense, and the capital outflows, such as they exist, help alleviate the pressure on a stronger baht. So you can't be moaning about the fact that people are taking advantage of it and not recognise the benefits it has on not making the baht even stronger.

 

That the government is incompetent is another issue not related to the BOT. Anyone who's ever been for a meeting there will know they aren't a bunch of dozers.

 

IMHO, a strong baht is a good thing for Thailand right now, and I suspect the BOT know this. Post AFC, Thai companies have gotten addicted to a weak baht to support their export industry. Whether that be manufacturing or tourism. Its ultimately led to laziness and low productivity grown as they've been able to muddle through and get value not through any real innovation, but due to a cheap currency. Government hasn't done anything to encourage anything differently. Education and vocational skills training is still lousy.

 

A protracted period of 2-3 years of strong baht will make domestic businesses focus and either get better, or wither. Export focused businesses, if they get through this patch, will genuinely be globally competitive as they will have restructured and not be reliant on the weak currency to make their sales for them.  As it should be. What will be left will be stronger and more productive economy.

 

There is merit in what you are saying, but you are seeing the silver lining in some very dark black clouds. What you advocate could happen in the flexible and professional export and tourist industries that exist within many western countries. But I see very little evidence that those very industries in Thailand, and the Govt organisations that direct and support those industries, have anything more than a rigid 3rd world mentality. They will not be able to respond positively and they will drive their businesses to achieve the same or better incomes, doing the same thing they have been doing for generations - and then they will shut down when that fails and blame the world economy. 

 

[Misab]

If worried = devalue the Baht

 

[AussieBob18]

Economics 101 - Parts A and B.

1.  What goes up too fast and too far, must come down fast and far;

2.  When the proverbial hits the fan, the best place to be is behind the fan and not in front of it.

 

 

[JohnHans]

"Asia's best performing currency"
Best does not mean "Good" its not good to have a strong economy.

"Strong" = non competitive.

"Best performing" = other economies doing better.

Right now governments who know the banking business well (Thailand not included) are borrowing and taking advantage of low interest rate loans from nations who have money to lend, China, Norway, (not Thailand) Thailand is not a rich nation it has a currency that's over priced. One thing we know is that Thailand rightly does not want to borrow from China as there are always too many strings attached, but the following countries are considered safe:

 

Information from https://www.investopedia.com/articles/personal-finance/051415/5-countries-lowest-interest-rates.asp ......

 

Switzerland: The Swiss National Bank reported an unchanged benchmark three-month Libor of -0.75 percent as of September 2018. According to the central bank, the Swiss franc is highly valued in foreign exchange markets. Inflation forecasts were lowered for 2019 to 0.8% from 0.9% and for 2020 to 1.2% from 1.6%. Inflation for 2018 was 0.9%, and the GDP growth prediction for 2018 was increased from 2.5% to 3% from 2%. Interest rates in Switzerland averaged 0.8% from 2000 until 2018. The interest rate was highest in June 2000 when it reached 3.5% and lowest in January 2015 when it was -0.75%.

 

Denmark: The benchmark interest rate in Denmark was -0.65 percent when last recorded in 2018. The interest rate in Denmark averaged 2.81% from 1992 until 2018. The interest rate was highest in November 1992 when it reached 15% and lowest in February of 2015 at -0.75%.

 

Sweden: The central bank of Sweden reported a benchmark interest rate of -0.5% in September 2018. Sweden's economy is strong, and inflation is close to the central bank's 2% target. However, the central bank plans to continue its expansionary monetary policy and raise the repo rate by 25bps late in 2018 or early 2019. The interest rate in Sweden averaged 3.14% from 1994 until 2018 and was highest in July 1995 when it reached 8.91% and lowest in February 2016 at -0.50%.

 

Japan: The Bank of Japan reported an unchanged interest rate at -0.1% in September 2018 keeping the 10-year target for the Japanese government bond yield at around zero. Inflation in Japan is well below the 2% target rate; therefore, the Bank of Japan plans to retain a very low interest rate for an extended period. The interest rate in Japan averaged 2.82% from 1972 until 2018. The Japan interest rate was highest at 9% in December 1973 and lowest at -0.10% in January 2016.

 

Israel: The central bank of Israel announced an unchanged benchmark interest rate of 0.1% in August 2018. The inflation rate was approaching the target range of 1% to 3%. The annual inflation rate reached 1.4% in mid-2018, the highest since August 2017 when deflation ended. However, the central bank reported that a significant appreciation of the shekel could increase inflation. Overall, the country's economy has improved with a tight labor market and increasing wage levels. The interest rate in Israel averaged 5.63% from 1996 until 2018. It was highest in June 1996 when it reached 17% and lowest in February 2015 when the interest rate was 0.10%.

????

[JMSIII]

16 hours ago, racket said:

They are out of ammo to do anything about it, and they don't want to repeat the mistakes of 1997. 

The mistakes of 1997 was not the Thai gov't so much, as it was George Soros who has openly bragged about his shorting the Thai baht, as well as Malaysian ringgit, Indonesian rupiah, and the British pound.  Soros bragged in an interview for US television, that he can destroy a countries monetary system if he wants to, using the above country examples.  Soros is an insanely wealthy billionaire who ran a hedge fund called Quantum Fund.  I was a Silicon Valley stockbroker when he did this in 97 and remember this, and he made even more billions from doing this.

 

Soros has openly admitted that it was his "intelligence" that helped him survive the Nazi's in WWII.   What Soros thinks was so smart.....was his ratting out to the Nazi's, where the other Hungarian Jewish families and people were hiding.  Soros is an Hungarian Jew who aided and abetted the Nazi's to murder other Hungarian Jews... 

 

Soros is a very dirty SOB...  His bad things to destroy lives and societies, for profit and power, are still in full force today...  George Soros is evil.

 

And the Central Bank is as corrupt as you can get, manipulating currencies around the world for their owners greed and power...

[happy chappie]

Soon I'll be able to sell my old pcx scooter here and go back to the uk and buy a nice Mercedes with the cash and probably have some left over.

[malibukid]

i buy all my big ticket stuff now in the States or in other SEA countries where the import duties are not so draconian.  the money i save usually pays for the flight or a big chunk of it.  it's just insane to pay more with the current exchange rate.  this will come back and bite them and i think have woken up and smelled the coffee.

[samran]

5 minutes ago, AussieBob18 said:

There is merit in what you are saying, but you are seeing the silver lining in some very dark black clouds. What you advocate could happen in the flexible and professional export and tourist industries that exist within many western countries. But I see very little evidence that those very industries in Thailand, and the Govt organisations that direct and support those industries, have anything more than a rigid 3rd world mentality. They will not be able to respond positively and they will drive their businesses to achieve the same or better incomes, doing the same thing they have been doing for generations - and then they will shut down when that fails and blame the world economy. 

 

Anyone's business who closes down will likely blame all and sundry, except for themselves. Granted, there is stuff the government can do, but it is the fundamental long term stuff. Education, training, infrastructure. Other than that I wouldn't let the Thai government get near my business with a ten foot barge poll - businesses need to fend for themselves. And you are right, this transition probably won't be pretty. 

 

The fact is that Thailand grew strongly through the 80's and early 90's - with a strong baht policy. Back then the AUD/THB was 17-18 baht to the dollar, the USD/THB was around 20-22.

 

Not that they need to replicate the conditions that created that (they were artificial and led to the AFC eventually), but nevertheless, Thai business can thrive and survive in these conditions, and to be honest, the probably need a strong baht to give them the kick up the @rse that they need.

 

 

[madmen]

3 minutes ago, AussieBob18 said:

Economics 101 - Parts A and B.

1.  What goes up too fast and too far, must come down fast and far;

2.  When the proverbial hits the fan, the best place to be is behind the fan and not in front of it.

 

 

Too fast? its been a very steady  and slow climb over the last several years and thats the scary part. Its not now going to fall off a cliff for no reason. If it does reverse it will take years and thats bad news for the guys that are living off western / income and investements where their money is "safe" lol

[malibukid]

1 hour ago, khunjeff said:

He actually graduated from Thammasat at age 18 (he had turned down a scholarship in California to stay closer to home) and got his PhD in Economics from Harvard at age 24, but sure, let's make the usual "Thais are so uneducated" jokes, why not.

than she should know better

[malibukid]

1 hour ago, MeggaF said:

Normally, when a currency rises significantly, imports flood in and the current account surplus shrinks. This reduces the attractivity of the currency and the exchange rate falls. Industrial and agricultural exports become more competitive and tourist numbers and spend per head (in Baht) would increase.

 

It would be simple to slash import duties to achieve this.

 

Unfortunately in LOS the importers, wholesalers and retailers earn mind blowing profits at the current level of the Baht AND belong to the 260 Families who control this country.....so it's not going to happen

simple stop shopping in Thailand

[malibukid]

1 hour ago, Truthhurts said:

I think the value of the baht has been purposely strengthened by those nasty thais with the sole purpose of disrupting all those expats who give so much and ask so little in return

How dare they strengthen their economy in the wake of the last global financial collapse. How dare they not consider the financial well being of relatively well off retired expats who have never paid a red cent of thai tax before VOLUNTARILY moving to thailand because the cost of living is so cheap compared to good old back home.

It's a disgrace. They are all out to get us and discriminate against us. It's not fair.I want my mummy

some of us do charity work here out of pocket and just don't sit on a barstool.  this hurts the needy.

[mikebell]

He's worried/laughing all the way to the bank.

[Peterphuket]

16 hours ago, CharlieH said:

Took you long enough to realize what we have all been feeling for months !

I think he just wake up.

[ubon farang]

17 hours ago, Artisi said:

Absolutely brilliant analysis to the problem, the man  should be promoted and given a massive pay rise. 

He probaly did get a masive payrise just forgot to tell anyone like the rest of them

[30la]

17 hours ago, snoop1130 said:

The baht <THB=TH> is Asia's best performing currency this year, rising 7.7% against the dollar, underpinned by the country's large current account surplus.

You really don't know what you are saying, last week: the strong of the Baht is not a problem for the Thai economy today: "We are very worried about the baht,"!
Decide once to tell the truth even if it hurts!
It seems to me that Thailand wants to reach first place in all possible rankings, road deaths, number of unemployed, number of tourists and so on, these are things that hurt your people so much!
Let me tell you one last thing: I have been keeping an eye on the Baht for months, the first two weeks of the month are fairly stable, in the last two weeks it is a continuous up and down, at the end of the month it has then reached the highest value of the month, I suspect: in this way many pensioners can be forced to leave the country due to a shortage of money (the pension transfers are done at the end of the month)! It's just a suspect!

[Time Traveller]

1 hour ago, Lee4Life said:

      They keep saying that the strengthening of the baht is the result of huge foreign reserves, but they don't explain the source of those reserves. Where did they come from, or where are they coming from?

Trade surpluses accumulated over the last 20 years.