Bank of Thailand explains sudden appreciation of Baht

[saengd]

3 hours ago, spidermike007 said:

A good friend of mine, who knows a Thai centi millionaire who owns a large hotel, and some other properties, said it was due to either the private banks, or the Bank of Thailand taking well over a trillion dollars in deposit from the Chicoms, in exchange for a high interest rate. Apparently top secret stuff. Makes alot of sense for the Chinese, and how would the army have the vision to say no to something like this? The Thai banking system is very stable, and the Chinese want an additional foothold into Thailand for manufacturing. 

 

If you think about all of the fundamentals in the Thai marketplace, and economy, and look at the decimated state of Thai tourism (massive numbers of low quality tourists do not mean much to the millions dependent on tourism for a living), if kind of makes sense. What else is propping up the baht? Exports are down, manufacturing is down, slow growth, and poorly mismanaged economy, tourism income and bookings are way down, and there are not enough foreign inflows coming into the markets to justify the level of the baht. 

With all due respect SM, that's not even remotely probable, two months ago China was demanding Thailand pay for the high speed rail link in USD!

 

"the Bank of Thailand taking well over a trillion dollars in deposit from the Chicoms, in exchange for a high interest rate".

[Ramen087]

1 hour ago, zydeco said:

Sure. Love how the billionaire bankers took "responsibility for their own decisions" back in 2008, with government bailouts and the Fed spraying liquidity through a firehouse to help them for the next 11 years.

The bailout you refer to was actually a loan to financial institutions. It was repaid and the US Government made fifteen billion + dollars on it.  

https://money.cnn.com/2014/12/19/news/companies/government-bailouts-end/

 

You may notice it was the auto bailout that lost money.

[Traubert]

3 hours ago, spidermike007 said:

A good friend of mine, who knows a Thai centi millionaire who owns a large hotel, and some other properties, said it was due to either the private banks, or the Bank of Thailand taking well over a trillion dollars in deposit from the Chicoms, in exchange for a high interest rate. Apparently top secret stuff. Makes alot of sense for the Chinese, and how would the army have the vision to say no to something like this? The Thai banking system is very stable, and the Chinese want an additional foothold into Thailand for manufacturing. 

 

If you think about all of the fundamentals in the Thai marketplace, and economy, and look at the decimated state of Thai tourism (massive numbers of low quality tourists do not mean much to the millions dependent on tourism for a living), if kind of makes sense. What else is propping up the baht? Exports are down, manufacturing is down, slow growth, and poorly mismanaged economy, tourism income and bookings are way down, and there are not enough foreign inflows coming into the markets to justify the level of the baht. 

One trillion dollars is the entire Chinese FCR.

 

It really didn't happen.

[Ketyo]

erm, the appreciation of the Baht has been happening for years...   thin trading is not really the root cause of the Baht's appreciation. If he thinks that his response will be to do nothing. And the Baht will continue to rise. Shouldn't he be fired for incompetence or lying?

Edited January 1, 2020 by Ketyo

[saengd]

13 minutes ago, Ketyo said:

erm, the appreciation of the Baht has been happening for years...   thin trading is not really the root cause of the Baht's appreciation. If he thinks that his response will be to do nothing. And the Baht will continue to rise. Shouldn't he be fired for incompetence or lying?

It's not the Baht rising it was the Dollar falling, have you not read the thread.

[dhind1]

22 hours 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.

That’s good. Very good. Speculation of course. 

[passon]

1 hour ago, saengd said:

You use the word "excuses" several times to describe some of the things that have been said about the strength of THB yet you haven't really offered up an alternate "excuse", instead you've focused on declining manufacturing and the effect an overly strong baht has on your spending habits, none of which has much to do with the sudden increase of THB......the question is, which debate are you trying to have?

 

If your debate is about WHY THB is strong there's not much more to be said that hasn't been said many times already, trade surplus, Dollar weakness, floating peg...end of.

 

But if your chosen debate is about productivity losses then we have to remind that Thailand is more of an assembler than a manufacturer, it is a link in the chain rather than the entire chain. So because the China/US trade war erupted and badly hit the automotive industry, and because the move is now away from assembling multi-component gasoline based cars to the much less complex and less labor intensive electrically driven cars, yes, manufacturing is suffering and factory utilization and productivity are down......and?

 

As for your spending habits: core CPI is very nearly flat, that is part of the problem, if you're spending is getting hurt as a result of the Thai economy perhaps you are buying the wrong things!

 

So, given the title of this thread is the sudden appreciation of the Baht, which debate do you want to have, the thread subject, manufacturing decline or the effects of an overly strong Baht?

One certainly has everything to do with the other, we are talking about currency, or at least I was and the offset to a strong[er] baht and the impact it has on this economy.  Currency is not an island.  What you're saying is that manufacturing is assembly and just a link in the chain; that's a pretty big link since manufacturing makes up two-thirds of Thailand's GDP; and, by the way, all products are assembled in one manner or the other, that is a component of manufacturing, so exchanging one word for another doesn't change its definition or the process.  So whether it makes gasoline powered cars, electric cars, or any other type of car, you state yourself productivity is down, "and?"  And, why is productivity down?  Because the strength of the baht has had an adverse effect on export earnings because of an export contraction which has had an effect on private investment.  Thai business leaders have on several occasions attempted to compel the government to set policies to control the strength of the baht:

Thai business groups are becoming increasingly more strident in their calls to have the government take action in relation to the strong value of the baht against the dollar and regional currencies which is reported to be still having a devastating effect on Thai exports as the economy moves well into the second half of the year.  Thai Examiner, September 6, 2019

I'm merely pointing to the indicators of the marketplace, and last time I checked currency was and is the driver of that marketplace.  I didn't have a meeting with any group in Thailand so I can't speak for others, I therefore used myself as an example of how I have had to control my own cost due to a strong baht that effects my own imported currency and how that effects my buying decisions, it doesn't mean I am buying the wrong things as you suggest, it means I'm not buying as many things due to a contraction of my own surplus income.  But to set you straight, I mostly buy the right things.

 

The thread is about the sudden appreciation of the baht, that part you got right.  I was discussing the excuses used to justify that appreciation with useless jargon, [you yourself seem to have a penchant for jargonistic theories and Wall Street doublespeak], and the reality of how a strong baht effects the overall economy.  I used the word excuses six times, so thank you for focusing on exactly what I intended to convey in my post, in that excuses in this case do not address the reality or the impact the strong baht has on the three interconnected markets: The Financial Market, Product Market, and Labor Market.  The article just provides another; yes, excuse - there, I said it.

I realize its probably more convenient for you to focus on one side of the equation to make your point, but when I examine an issue, I try to understand all of its sides to avoid having a bias to only one side of the issue.  It was a nice try on your part to dismantle my post by trying to prove I was off topic, but again, I was very much on topic by pointing out the effects of a strong baht and how excuses [yes, I said it again] don't match up to reality.

[dcnx]

23 hours ago, kevin612 said:

Thai experts

No such thing.

[Rimmer]

A post containing a link to a source behind a paywall has been removed

[ParkerN]

2 hours ago, Ketyo said:

erm, the appreciation of the Baht has been happening for years...   thin trading is not really the root cause of the Baht's appreciation. If he thinks that his response will be to do nothing. And the Baht will continue to rise. Shouldn't he be fired for incompetence or lying?

It's a numbers thing. If they did that, they would have to fire just about all of the government, every Minister and a goodly proporation of the working Somchais in TL.

 

Incompetence and mendacity are ubiquitous in Thailand, no point in setting a precedent which will only come back to bite them. better to just be anonymous ants on the anthill and a part of the borg. Safer too.

Edited January 1, 2020 by ParkerN

[Cake Monster]

On 12/31/2019 at 3:36 PM, 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 am no Expert, but your Pension, and that of all the other pensioners in Thailand would have absolutely nothing to do with anything.

In the overall scheme of things, your pensions do not amount to a  pimple on the Ass of an Elephant.

Where the real money comes from , is in the transferring of funds for Import / Export transactions, and the Exchange rates in which the products are purchased and paid for.

Just my thoughts

 

[saengd]

58 minutes ago, passon said:

One certainly has everything to do with the other, we are talking about currency, or at least I was and the offset to a strong[er] baht and the impact it has on this economy.  Currency is not an island.  What you're saying is that manufacturing is assembly and just a link in the chain; that's a pretty big link since manufacturing makes up two-thirds of Thailand's GDP; and, by the way, all products are assembled in one manner or the other, that is a component of manufacturing, so exchanging one word for another doesn't change its definition or the process.  So whether it makes gasoline powered cars, electric cars, or any other type of car, you state yourself productivity is down, "and?"  And, why is productivity down?  Because the strength of the baht has had an adverse effect on export earnings because of an export contraction which has had an effect on private investment.  Thai business leaders have on several occasions attempted to compel the government to set policies to control the strength of the baht:

Thai business groups are becoming increasingly more strident in their calls to have the government take action in relation to the strong value of the baht against the dollar and regional currencies which is reported to be still having a devastating effect on Thai exports as the economy moves well into the second half of the year.  Thai Examiner, September 6, 2019

I'm merely pointing to the indicators of the marketplace, and last time I checked currency was and is the driver of that marketplace.  I didn't have a meeting with any group in Thailand so I can't speak for others, I therefore used myself as an example of how I have had to control my own cost due to a strong baht that effects my own imported currency and how that effects my buying decisions, it doesn't mean I am buying the wrong things as you suggest, it means I'm not buying as many things due to a contraction of my own surplus income.  But to set you straight, I mostly buy the right things.

 

The thread is about the sudden appreciation of the baht, that part you got right.  I was discussing the excuses used to justify that appreciation with useless jargon, [you yourself seem to have a penchant for jargonistic theories and Wall Street doublespeak], and the reality of how a strong baht effects the overall economy.  I used the word excuses six times, so thank you for focusing on exactly what I intended to convey in my post, in that excuses in this case do not address the reality or the impact the strong baht has on the three interconnected markets: The Financial Market, Product Market, and Labor Market.  The article just provides another; yes, excuse - there, I said it.

I realize its probably more convenient for you to focus on one side of the equation to make your point, but when I examine an issue, I try to understand all of its sides to avoid having a bias to only one side of the issue.  It was a nice try on your part to dismantle my post by trying to prove I was off topic, but again, I was very much on topic by pointing out the effects of a strong baht and how excuses [yes, I said it again] don't match up to reality.

I'm very happy for us to open up the discussion to related aspects and I mean that sincerely because there's so little opportunity to have such debates on Thaivisa Forum. Most people prefer to simply parrot the idea that government manipulates the currency and not look any deeper. So I'm not going to say you are off topic but I think before we can widen the debate you really should address the original points that you challenged.

 

The topic is "the reason for Baht appreciation" and I've tried to focus on that. I've accounted for the reasons why but you've said that's all Wall Street jargon and doublespeak, I think you need to be clear about what things those are and why, fair enough?

 

 

 

 

.

[bowerboy]

11 hours ago, saengd said:

Thailand's household debt is around 80% of GDP, that means the population owes in debt almost 80% of what the country makes as a whole per year. But that number is not unusually high when it comes to household borrowings/debt, in the UK for example the number is over 92% of GDP and GDP in the UK is far higher than in Thailand....in the US it is 106%!

 

Having that level of debt of not a problem as long as it can be serviced and households can repay it to the banks. A better number to watch if you're nervous about the debt is the rate of Non-Performing Loans (NPL's), this is debt that customers have defaulted on and cannot repay, in Thailand currently that percentage is about 3% which is considered normal.

 

Factually correct but does not in any way reflect the reality of the situation.

 

Thailand has the 15th highest household debt in the world. They are in the same company as UK, USA, Australia, Switzerland and many other  of the worlds richest first world countries none of whom rely on low end manufacturing to provide jobs (especially where said employment base isn’t under enormous threat due partly to the high baht).

 

What about informal lending? That business is not inconsiderable in size in Thailand. The real loan figure may be much higher as may non performing loans.

 

What is the classification of a non performing loan in Thailand’s compared to other countries? Are u sure you are comparing apples to apples?

 

Nice try but you will need to do a bit better than just quote numbers from google without any meaningful context.

[bowerboy]

@saengd using your favored method of googling to appear knowledgeable on a subject you can very easily see that the informal loan market is though to be 40% of the total credit in Thailand. Does that show up in Household debt figures?

 

Formal non performing loans have increased for 14 consecutive quarters (again using your google knowledge methodology). That trend is not good. 3% NPL and growing every quarter and not factoring in informal loans.

[Traubert]

8 minutes ago, bowerboy said:

@saengd using your favored method of googling to appear knowledgeable on a subject you can very easily see that the informal loan market is though to be 40% of the total credit in Thailand. Does that show up in Household debt figures?

 

Formal non performing loans have increased for 14 consecutive quarters (again using your google knowledge methodology). That trend is not good. 3% NPL and growing every quarter and not factoring in informal loans.

Are you trying to say there's no shadow economy in all those first world countries you named? What level is that thought to run at?

 

I can tell you that the black economy is huge in the UK.

Edited January 1, 2020 by Traubert
spelling

[saengd]

5 minutes ago, bowerboy said:

@saengd using your favored method of googling to appear knowledgeable on a subject you can very easily see that the informal loan market is though to be 40% of the total credit in Thailand. Does that show up in Household debt figures?

 

Formal non performing loans have increased for 14 consecutive quarters (again using your google knowledge methodology). That trend is not good. 3% NPL and growing every quarter and not factoring in informal loans.

If you want to post here just to try and attack or insult me you're wasting your time and I'm not interested. If you've got an argument or a point to make, make it and prove it and keep it civil or don't post.

 

This is what I see about Thailands NPL's: https://www.ceicdata.com/en/indicator/thailand/non-performing-loans-ratio

[bowerboy]

I live in the Eastern Economic Corridor and if you have not been here recently then you have no idea how truly precarious the situation is right now.

 

The roadworks are absolutely everywhere and on a massive scale. New housing estates and shopfronts are popping up absolutely everywhere. New Homepros, Thai Watsadu’s and other home wares stores are being built at an alarming rate. Renting a half decent “western style” house here will cost you close to the same as Brisbane or Melbourne  with current exchange rates.

 

ALL of this is being done with the hope of a booming economic zone and foreign investment poring in from overseas. But if the Thai Baht stays this high then who will come? Really, who will come? What will happen to all these houses and businesses? 

 

Gone are the days of hiring staff here for 25k Baht. Everyone wants 45k and up now and with current exchange rates that is no longer cheap (especially with the astonishingly low productivity and dearth of required skills required to drive this master plan).

 

Until you have come down and had a good look at the EEC you have no basis to comment on Thailand’s outlook. This is like 1997 here on the EEC but many commentators on here are maybe not seeing it.

 

Based on what I see here day in day out I can tell you we are heading for something bad. I don’t now what form it will take but this is a massive bubble here in the EEC. It is undeniable.

[Baerboxer]

On 12/31/2019 at 5:01 PM, 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.

 

Indeed - all hypothetical. Bit like imagining a rogue unelected government that can't enforce the use of Taxi meters or the rule requiring taxi drivers to take every fare being able to manipulate the international foreign currency markets!

 

 

[Traubert]

8 minutes ago, bowerboy said:

I live in the Eastern Economic Corridor and if you have not been here recently then you have no idea how truly precarious the situation is right now.

 

The roadworks are absolutely everywhere and on a massive scale. New housing estates and shopfronts are popping up absolutely everywhere. New Homepros, Thai Watsadu’s and other home wares stores are being built at an alarming rate. Renting a half decent “western style” house here will cost you close to the same as Brisbane or Melbourne  with current exchange rates.

 

ALL of this is being done with the hope of a booming economic zone and foreign investment poring in from overseas. But if the Thai Baht stays this high then who will come? Really, who will come? What will happen to all these houses and businesses? 

 

 

The Chinese.

[bowerboy]

10 minutes ago, Traubert said:

Are you trying to say there's no shadow economy in all those first world countries you named? What level is that thought to run at?

 

I can tell you that the black economy is huge in the UK.

 

Really? So there is an unregulated black market for loans that accounts for 40% of all UK credit? Please do tell me more.

[Traubert]

3 minutes ago, bowerboy said:

 

Really? So there is an unregulated black market for loans that accounts for 40% of all UK credit? Please do tell me more.

I didn't mention a percentage. You did and tried to use my post to ratify it. Nice try.

 

I said huge.

[bowerboy]

9 minutes ago, saengd said:

If you want to post here just to try and attack or insult me you're wasting your time and I'm not interested. If you've got an argument or a point to make, make it and prove it and keep it civil or don't post.

 

This is what I see about Thailands NPL's: https://www.ceicdata.com/en/indicator/thailand/non-performing-loans-ratio

 

I am not attacking you...I am attacking the false message that you seem to spend an inordinte amount of time promoting...you seem almost as if you are paid to do so, such is your vigor for the task.

[bowerboy]

Just now, Traubert said:

I didn't mention a percentage. You did and tried to use my post to ratify it. Nice try.

 

I said huge.

 

Clarify huge then.

[bowerboy]

Just now, bowerboy said:

 

Clarify huge then.

 

With at least a quote or some kind of reference.

[bowerboy]

6 minutes ago, Traubert said:

The Chinese.

 

When were you last in the EEC area and how much time do you spend here?

 

Chinese labour is in plentiful supply, is cheaper than Thai labour and skilled workers are available for various levels of work in the entire value chain. What would the Chinese need the EEC for? Really? What benefit would they gain from setting up manufacturing here? Especially if the trade deal with US is agreed (it will be).

[Traubert]

7 minutes ago, bowerboy said:

 

Clarify huge then.

Clarify how you arrive at 40% for unofficial loans. Is there a Loan Shark Society with an accountant collating the figures in Thailand?

 

I'm afraid 'thought to be' is no basis for a debate. I was once 'thought to be' Paul McCartney at Heathrow.

[saengd]

8 minutes ago, bowerboy said:

 

I am not attacking you...I am attacking the false message that you seem to spend an inordinte amount of time promoting...you seem almost as if you are paid to do so, such is your vigor for the task.

Which false message is that? NPL's? Please provide proof to support your argument otherwise it aint so.

 

And yes, I have spent a fair amount of time over this holiday responding to posts about the Thai economy in the hope that perhaps I might be able to convince a few people that there are other aspects to the currency strength argument apart from, the elites are manipulating THB for their own ends, it's my way of attempting to raise the forums IQ level!

 

[Traubert]

6 minutes ago, bowerboy said:

 

When were you last in the EEC area and how much time do you spend here?

 

Chinese labour is in plentiful supply, is cheaper than Thai labour and skilled workers are available for various levels of work in the entire value chain. What would the Chinese need the EEC for? Really? What benefit would they gain from setting up manufacturing here? Especially if the trade deal with US is agreed (it will be).

Sigh. Because the Chinese always have a Plan B, a Plan C, and a Plan D. 'A' trade deal is fine. What if the next nutter elected kicks of on a different tangent? The Chinese will be ready. They're always ready. Have you heard of the Belt and Road Initiative?

 

Thai wages might be more expensive but what if the workers are Chinese?

 

I'll be in the EEC area next month. I'm there regularly.

[bowerboy]

6 minutes ago, Traubert said:

Clarify how you arrive at 40% for unofficial loans. Is there a Loan Shark Society with an accountant collating the figures in Thailand?

 

I'm afraid 'thought to be' is no basis for a debate. I was once 'thought to be' Paul McCartney at Heathrow.

 

Google it like your mate SeangD does...it’s not rocket science

[saengd]

"What benefit would they gain from setting up manufacturing here? Especially if the trade deal with US is agreed (it will be)".

 

One reason might be that they are outside the line of sight and control of their home government, the same reason that so many Chinese have settled in Thailand and own successful businesses here. We have nothing but Chinese neighbours where we live, many of our friends are Chinese and we socialise with them regularly. These are Chinese who pay large amounts of money to Prem. International school each term for two or three of their young children and they resent the tight control their government has over their lives and their finances.