Bank of Thailand explains sudden appreciation of Baht

[Jonathan Fairfield]

Bank of Thailand explains sudden appreciation of Baht

 

Mathee Supapongse

 

Mathee Supapongse, Deputy Governor of the Bank of Thailand, said on Tuesday (December 31) that the appreciation of the Thai Baht on the evening of December 30 to below 30 to the US dollar was out of line with its economic fundamentals.

 

The move was mainly prompted by certain corporations and investors trading in what he described as thin market conditions, which caused an imbalance of FX flows and a spike in volatility. The USD depreciation against regional currencies also contributed to the move. The average reference rate (THBREF) for the day was Bt30.121 to the US$.

 

Better market conditions and more balanced flows will resume after the New Year holidays. The BOT will closely monitor the market and act as necessary to steer the exchange rate back into line with Thailand’s economic fundamentals.

 

Source: https://www.nationthailand.com/news/30380025

 

-- © Copyright The Nation Thailand 2019-12-31

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[MeePeeMai]

Why does the THB to USD always seem to dip at the end/beginning of the month right about the time I transfer my monthly pension to my bank here?  Is this a deliberate action (I wonder)?

[chowny77]

I am just waiting for the baht to explode as too many people are already in debt and the housing building boom is out of control. Possibly a re-occurrence of 1997. No way the banks can talk their way out of obviously making the baht strong with no financial backing.

[marko kok prong]

He think us falang are all butterballs

[kevin612]

Pm said to prevent the baht from rising taking measures, Thai expert said Thai baht will fall. The outcome is: Thai currency is keep rising. Thai experts are garbage.

Edited December 31, 2019 by kevin612

[smedly]

42 minutes ago, Jonathan Fairfield said:

said on Tuesday (December 31) that the appreciation of the Thai Baht on the evening of December 30 to below 30 to the US dollar was out of line with its economic fundamentals.

evidently your fundamentals are wrong and you have lost control of your economy 

 

you have left it too late and the baht has been manipulated out of your control by big hedges, this is what happens when greed becomes priority over economy by those who have little interest in it

 

Too late

[Maverell]

35 minutes ago, MeePeeMai said:

Why does the THB to USD always seem to dip at the end/beginning of the month right about the time I transfer my monthly pension to my bank here?  Is this a deliberate action (I wonder)?

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

[saengd]

7 minutes ago, smedly said:

evidently your fundamentals are wrong and you have lost control of your economy 

 

you have left it too late and the baht has been manipulated out of your control by big hedges, this is what happens when greed becomes priority over economy by those who have little interest in it

 

Too late

How exactly do the big hedge funds manipulate or take a position against a restricted currency that is not fully convertible and one that overseas banks are only allowed to hold in limited amounts?

[saengd]

53 minutes ago, MeePeeMai said:

Why does the THB to USD always seem to dip at the end/beginning of the month right about the time I transfer my monthly pension to my bank here?  Is this a deliberate action (I wonder)?

I can't see that it does but maybe I missed something. Any movement in the value of the pair, especially at the same time each month, will probably be due to recurring payments that need to be made on loans or perhaps conversion of inbound pension money or maturing investment funds perhaps. THB is a very small currency so it doesn't take much to make it move one way or the other.

 

Another poster mentioned the same thing happens with THB/GBP. The rate for that pair is derived from THB/USD so any movement on one pair will reflect in a movement of the other pair....there is no real GBP/THB per se, not in its own right, it's a manufactured conversion from the value of USD.

Edited December 31, 2019 by saengd

[KC 71]

11 minutes ago, Maverell said:

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

I noticed that too,is it perhaps because most people get their salaries at the end of the month ? not sure.

oh well ,i might stock up,just in case ????

 

14 minutes ago, Maverell said:

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

 

[scubascuba3]

52 minutes ago, chowny77 said:

I am just waiting for the baht to explode as too many people are already in debt and the housing building boom is out of control. Possibly a re-occurrence of 1997. No way the banks can talk their way out of obviously making the baht strong with no financial backing.

Maybe right but timing it is very difficult

[madmen]

13 minutes ago, KC 71 said:

I noticed that too,is it perhaps because most people get their salaries at the end of the month ? not sure.

oh well ,i might stock up,just in case ????

 

 

Looks good to me

[Monomial]

36 minutes ago, Maverell said:

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

 

I don't claim to understand these things, but it does make sense. Bills come due at the end of the month/beginning of the following month. Thus, there is a demand for Baht. Individuals and businesses are forced to sell foreign currency in order to obtain Baht to meet their liabilities. Since a disproportianate amount of Baht is needed at the end of the month vs. any other time for salaries, one would expect due to supply and demand for the Baht to rise in value during this period. It should similarly drop during the middle of the month when demand for Baht is at its lowest.

 

Sadly, I never see the "dropping" part. Once the Baht has risen, it seems to stay stuck. And that goes back to my previous rant about how hard it is for anyone to send foreign currency out of the country. The "once a Baht, always a Baht" policy of the BoT seems to be working as intended.

 

Edited December 31, 2019 by Monomial

[zydeco]

1 hour ago, MeePeeMai said:

Why does the THB to USD always seem to dip at the end/beginning of the month right about the time I transfer my monthly pension to my bank here?  Is this a deliberate action (I wonder)?

Because that is when Social Security makes its automatic deposit into Thai bank accounts.

[ramrod711]

Let's create a completely fictional scenario, there is a rogue unelected government. Leaders of said fictional government fear that they may end up persona non grata just like leaders of past nonfictional governments. It may be in the interests of such a government to have a very strong baht so that they could buy foreign currency at a reduced rate. All theoretical conjecture of course and no factual information to back it up.

Edited December 31, 2019 by ramrod711

[saengd]

5 minutes ago, ramrod711 said:

Let's create a completely fictional scenario, there is a rogue unelected government. Leaders of said fictional government fear that they may end up persona non grata just like leaders of past nonfictional governments. It may be in the interests of such a government to have a very strong baht so that they could buy foreign currency at a reduced rate. All theoretical conjecture of course and no factual information to back it up.

Not bad, let's make another completely fictional scenario:

 

A group of foreigners get together to have a group whinge about the overly strong local currency and complain about how it is interfering with the number of bottles of Chang they can buy at the 7/11. To mask their complete lack of understanding of how economics and FOREX works they agree over time that the government is corrupt and is manipulating the currency for their own ends and that everyone including the Central Bank is on on the act. When asked to provide proof of their claim the group replies, yada yada yada yackety yada....when presented with evidence their claim cannot possibly be correct the group responds with yada yackety yada yada yackety yada. All theoretical conjecture of course but with oodles of factual information to back it up.

[AussieBob18]

35 minutes ago, Monomial said:

I don't claim to understand these things, but it does make sense. Bills come due at the end of the month/beginning of the following month. Thus, there is a demand for Baht. Individuals and businesses are forced to sell foreign currency in order to obtain Baht to meet their liabilities. Since a disproportianate amount of Baht is needed at the end of the month vs. any other time for salaries, one would expect due to supply and demand for the Baht to rise in value during this period. It should similarly drop during the middle of the month when demand for Baht is at its lowest.

Sadly, I never see the "dropping" part. Once the Baht has risen, it seems to stay stuck. And that goes back to my previous rant about how hard it is for anyone to send foreign currency out of the country. The "once a Baht, always a Baht" policy of the BoT seems to be working as intended.

No one fully understanbds it all - but histroy always has a way of repeating itself, and economics always has a way of re-adjusting things.  When the Baht adjustment happens  - the longer it takes to adjust - the harder will be the adjustment. 

[Jane Dough]

For decades it was pegged around 25 baht to a US dollar. People bemoaning the days of 40/35 should note that.

 

Rooster

[Monomial]

8 minutes ago, Jane Dough said:

For decades it was pegged around 25 baht to a US dollar. People bemoaning the days of 40/35 should note that.

 

Rooster

Yeah, and I moved here in 1999. My first transfer from USD was at 47.  25 is an anachronism of history I don't want to see repeated. I was angry I missed out on 51.

 

Edit: And my lunch on the side of the road was only 10 baht then vs. 60 baht today. Just because something was historically different has no bearing on today's reality.

Edited December 31, 2019 by Monomial

[JAG]

1 hour ago, ramrod711 said:

Let's create a completely fictional scenario, there is a rogue unelected government. Leaders of said fictional government fear that they may end up persona non grata just like leaders of past nonfictional governments. It may be in the interests of such a government to have a very strong baht so that they could buy foreign currency at a reduced rate. All theoretical conjecture of course and no factual information to back it up.

There is another equally fictional scenario. A government  (let us not comment on the manner of it's election) is beholden to and overwhelmingly governing in the interests of a very small but extremely wealthy section of the population.  This section  of the population has many property interests,  investments, funds and expenses (education for example) to be met in other countries, particularly "developed" western countries. A strong Baht is very much in their interests, and their interests overule other economic factors...

[ParkerN]

2 hours ago, marko kok prong said:

He think us falang are all butterballs

All Thais think us falangs are butterballs.

 

But then all Thais think Thais are smartypants too so how much faith can you really have in what they think?

 

If 'thinking' is the right word.

[sfokevin]

So it is not possible for the BOT to control a know interday fluctuation like this?... Isn't this what they are chartered to be doing... Provide a stable currency?

 

[EricTh]

The USD has dropped below 30 baht to 29.76 baht today for the first time since 2013.

 

https://www.xe.com/currencycharts/?from=USD&to=THB&view=1W

 

So all this talk about Thai strengthening is just useless talk.

 

If USD drops below 29, that will the lowest in more than 10 years.

[Michael Norman]

1 hour ago, ramrod711 said:

Let's create a completely fictional scenario, there is a rogue unelected government. Leaders of said fictional government fear that they may end up persona non grata just like leaders of past nonfictional governments. It may be in the interests of such a government to have a very strong baht so that they could buy foreign currency at a reduced rate. All theoretical conjecture of course and no factual information to back it up.

Unelected government like the government that is in power now?

[Mango Bob]

2 hours ago, Maverell said:

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

It also seems to dip every Friday which of course stays until the following Monday.

[wgdanson]

3 hours ago, MeePeeMai said:

Why does the THB to USD always seem to dip at the end/beginning of the month right about the time I transfer my monthly pension to my bank here?  Is this a deliberate action (I wonder)?

Change the date you transfer to 14th!

[zydeco]

29.75 now. Happy New Year! Donald is getting the cheap dollar he wanted. And Americans in Thailand are getting fried.

[Chivas]

1 hour ago, zydeco said:

29.75 now. Happy New Year! Donald is getting the cheap dollar he wanted. And Americans in Thailand are getting fried.

Wrong every nationality is getting fried as the benchmark Dollar/Baht ratio effects absolutely everyone exchanging money

[Lodestone]

1 hour ago, Chivas said:

Wrong every nationality is getting fried as the benchmark Dollar/Baht ratio effects absolutely everyone exchanging money

No, not at all. Every nationality that works in Thailand, earns a salary in Thai baht, and regularly wires some amount of their salary out of Thailand, is actually benefiting from this. And this is not a small group -- undoubtedly much larger than the number of moaning penniless pensioners that post on ThaiVisa.com

[EricTh]

3 hours ago, zydeco said:

29.75 now. Happy New Year! Donald is getting the cheap dollar he wanted. And Americans in Thailand are getting fried.

29.75 is not low enough.

 

Donald Trump wants it lower than 29 to break the record which is the lowest in the past 10 years.