Baht keeps strength despite coronavirus outbreak, economic decline

[saengd]

2 minutes ago, CGW said:

Yes, which is more than a few days isn't it, it was quite a while after the 4th before the airport fully reopened due to repairs that were needed and re-certification, I was caught up in it! Yes the odd flight left so in typical Thainess they could tell the world that the airport was "open" again!

It seems pointless to bicker over whether 8 days is a few days or not, perhaps if you have a point to make regarding THB or economics we can address that?

[CGW]

2 minutes ago, saengd said:

It seems pointless to bicker over whether 8 days is a few days or not, perhaps if you have a point to make regarding THB or economics we can address that?

Excuse me! you were the one who considered it pertinent to point out that my "facts" were incorrect! 

[saengd]

5 minutes ago, CGW said:

Excuse me! you were the one who considered it pertinent to point out that my "facts" were incorrect! 

My sincere apologies, 8 days is indeed "weeks". Now, can we perhaps move on.

[rvaviator]

10 hours ago, saengd said:

It's all here in the thread, you just have to read it, especially posts 39,43,45 and 46.

Just want to say thank you for posting your thoughts and understanding of the Thai economy - Very much appreciated.

[CGW]

49 minutes ago, saengd said:

My sincere apologies, 8 days is indeed "weeks". Now, can we perhaps move on.

If we want to be "factual" and come out with the right result, (who said that?) we need to decide exactly what are facts and what are not! 

You don't own Pedantic-ism, have a nice day!

[Grumpy John]

D@m baht!  Why can't it be a nice little 3rd world currency and lay down and die???  It is inconveniencing me a great deal.  And of course now there are a lot of people worried about the money supply because of the corona virus pandemic.......gold is shooting up in value!  ????

[saengd]

Between the continued background noise about the number of days in weeks and poster nauseus, who seems fixated on laughing emoticons, I think I can safely back out of the thread at this point and leave you in their capable hands to field any questions about the value of THB and the Thai economy, good luck with that! Byee.

Edited February 25, 2020 by saengd

[KhaoYai]

People can try to educate us lesser mortals on the workings of the economy as much as they like - I take it with a pinch of salt! I prefer to live in the real world and rely on my experiences. Those of us who live in the real world have seen the pre-cursors to currency deflation before. In the UK when there is political or economic turmoil the pound sinks - I think the same goes for most countries yet Thailand's currency strengthens.

 

Prayutt and Co's claims about the economy and the figures put out regarding exports etc. would appear at odds with the economy, as seen and felt by the average Thai on the street. Do the 'experts' actually believe the figures put out by the Thai government? A government that is of course, well known for its forthright truthfulness right? ????

 

Its clear to me that some form of manipulation is going on that is making the baht artificially strong- the question is how much longer can they keep it up. The current and future effects of the Coronavirus may prove a test for the manipulators - who knows?

[Chivas]

33 minutes ago, KhaoYai said:

 

 

Its clear to me that some form of manipulation is going on that is making the baht artificially strong- the question is how much longer can they keep it up.

lol theres no manipulation per se. With current foreign currency reserves of $225 Billion the Thais can buy their own currency on international markets frankly indefinately should they wish to. The Baht/Dollar ratio is simply where it is based on reserves but as we've seen this last month starting to weaken

[Assurancetourix]

12 hours ago, saengd said:

in January (up 3.35%), the previous record in July was USD 24 bill. but still a very respectable numbe

 

This only thanks to strong sales of gold;
if we remove these gold sales, the January positive becomes negative.

I do not understand why to sell large quantities of gold which is THE reference metal in case of dizziness;
it is a short-sighted view of the future;
it allows to close the mouth of those who predict a very next recession;
but it is already there and will be even more important in a few weeks or months when there is no more gold to sell.

[JimGant]

3 hours ago, saengd said:

Between the continued background noise about the number of days in weeks and poster nauseus, who seems fixated on laughing emoticons, I think I can safely back out of the thread at this point and leave you in their capable hands to field any questions about the value of THB and the Thai economy, good luck with that! Byee.

Please, before you go, can you verify this bit of information in your avatar block:

Quote

Gender:Female

I really thought I had gathered from your posts that you were a guy.....? Are you, ummm, maybe different...is there something we should know? Thank you Sir, er, Ma'am.

[saengd]

1 hour ago, KhaoYai said:

People can try to educate us lesser mortals on the workings of the economy as much as they like - I take it with a pinch of salt! I prefer to live in the real world and rely on my experiences. Those of us who live in the real world have seen the pre-cursors to currency deflation before. In the UK when there is political or economic turmoil the pound sinks - I think the same goes for most countries yet Thailand's currency strengthens.

 

Prayutt and Co's claims about the economy and the figures put out regarding exports etc. would appear at odds with the economy, as seen and felt by the average Thai on the street. Do the 'experts' actually believe the figures put out by the Thai government? A government that is of course, well known for its forthright truthfulness right? ????

 

Its clear to me that some form of manipulation is going on that is making the baht artificially strong- the question is how much longer can they keep it up. The current and future effects of the Coronavirus may prove a test for the manipulators - who knows?

Let me just add this.....the similarities between the UK and Thai economies and currencies might be summarized by saying they both use paper money and have workers, everything else about them is totally and completely different. As a consequence they both behave in a very different way, for different reasons.

[KhaoYai]

56 minutes ago, saengd said:

Let me just add this

Thought you'd butted out?

 

Don't focus on the UK - I use that only because I'm English and therefore have experience of the UK economy. I did also say 'most other countries' and I refered to political end economic turmoil - much the same as my comment yesterday that you for some reason didn't answer.

 

So I'll try again - I may have no knowledge of the workings of a country's economy but I am aware of occurrences that normally affect its currency. Again, check out what has happened to other countries where a coup has taken place.  The baht should have been toilet paper in 2014 but it wasn't.  You can go on stating that Thailand is very different as long as you like - it may be different in some ways. However, to the best of my knowledge, one of the key factors in a currency's strength is confidence. How much confidence (in reality) do you think there was in Thailand following the coup?

Edited February 25, 2020 by KhaoYai

[saengd]

5 minutes ago, KhaoYai said:

Thought you'd butted out?

Well, when I hear somebody say they think the Baht should behave the same way the Pound does when there's economic and political turmoil, sometimes it's just too tempting! 

[KhaoYai]

8 minutes ago, saengd said:

Well, when I hear somebody say they think the Baht should behave the same way the Pound does when there's economic and political turmoil, sometimes it's just too tempting! 

Do you simply skim read? I didn't say that and as I'm sure a person with your expertise will know - most currencies deflate in times of trouble - except it seems, in Thailand.

 

Or perhaps you can enlighten us mere mortals as to why Thailand, that shining example of stability, industrial power and democracy should be so different to all the other countries that experience problems which are followed by a deflation of their currency?

Edited February 25, 2020 by KhaoYai

[saengd]

Just now, KhaoYai said:

Do you simply skim read? I didn't say that and as I'm sure a person with your expertise will know - most currencies deflate in times of trouble - except it seems, in Thailand.

You can't generalize, USD and CHF for example gets stronger in times of trouble because they are reserve currencies. THB gets stronger when there's global problems and the BOT interest rate is higher than most other central bank rates, because it attracts hot money. You probably think that THB should weaken if there's a coup or political unrest but it doesn't work that way, there's been 20 coups in Thailand and everyone expects them and knows the course they follow and that they don't impact on exports. 

[WalkingOrders]

First 32, next 33 to USD. That's my call. The economic fallout is just getting started. The only question is how bad will it get. Chinese shipping downturn? Calculate that. Thai tourist downturn? Calculate that.

 

I pay attention. Markets are weak, and voices are starting to sound like a load of "happy face" talk. Nervousness is in the air. The baht is not a safe haven. It simply is a strong currency when things are safe. It's no longer safe.

Edited February 25, 2020 by WalkingOrders
Add word

[saengd]

3 minutes ago, WalkingOrders said:

First 32, next 33 to USD. That's my call. The economic fallout is just getting started. The only question is how bad will it get. Chinese shipping downturn? Calculate that. Thai tourist downturn? Calculate that.

 

I pay attention. Markets are weak, and voices are starting to sound like a load "happy face" talk. Nervousness is in the air. The baht is not a safe haven. It simply is a strong currency when things are safe. It's no longer safe.

What happens over the next twelve months is not really relevant, that's kinda like looking at intraday exchange rates, not meaningful. The question is what will happen when the flu event is finally over, you didn't think it was going to last forever did you!

 

Let's say USD goes to 33 or even 34, so? Let's say tourism gets cut in half, so? Exports rose last month, let's say they fall for the next six months, I'm guessing most every country is going to be in that same boat, the difference is that Thailand has no meaningful external government debt and it has a years worth of GDP stashed away for a rainy day in FCR and gold.

 

 

 

[WalkingOrders]

And another thing: My monthly direct deposit exchange rates to USD:

 

Oct 2.     30.5

Nov 1.     30.02

Nov 29.   30.06

Jan 2.     29.95

Jan 7.     30.00

Jan 31.    30.97

Rate right now: 31.657 Oanda interbank.

The baht is losing steam.

[onebir]

On 2/20/2020 at 1:12 PM, saengd said:

But when it comes time to sell the gold it would logically be sold for THB once again and that will cause the value of THB to rise further.

This is what the article is describing (profit taking sales of gold bought between 2012-19, at lower prices).

[WalkingOrders]

10 minutes ago, saengd said:

What happens over the next twelve months is not really relevant, that's kinda like looking at intraday exchange rates, not meaningful. The question is what will happen when the flu event is finally over, you didn't think it was going to last forever did you!

 

Let's say USD goes to 33 or even 34, so? Let's say tourism gets cut in half, so? Exports rose last month, let's say they fall for the next six months, I'm guessing most every country is going to be in that same boat, the difference is that Thailand has no meaningful external government debt and it has a years worth of GDP stashed away for a rainy day in FCR and gold.

 

 

 

I do not know when the virus ends. I do not know if this event acts as a catalyst to a Chinese potential slowing already warned of. Election fears in USA etc. I agree my forecast is shortsighted, to about as you say, a year out, that's why  I stop at 32. USD, EUR, GBP, may gain against Asian currencies in general. Again, you are correct , hard to see beyond a year. But 12 mo is relevant for 12'months.

Edited February 25, 2020 by WalkingOrders
Clarity

[WalkingOrders]

On 2/20/2020 at 10:49 AM, saengd said:

Ummm, not quite correct I'm afraid!

 

The current account surplus is a result of the trade surplus, that means exports are higher than imports. But this has nothing to do with 1997 since that was caused by offshore borrowings in USD and a BOT where the foreign currency reserves were all tied up in long dated instruments hence they were unable to defend the currency.

 

BOT operates a managed float which means THB is soft pegged to USD, cross currency flows are therefore dictated by the USD/THB pair. And Thailand is indeed a safe haven currency at present and has been for quite some time, that's part of the reason why capital inflows or FDI hot money has been so strong. The recent two cuts in the lending rate was an attempt to cool those flows, which has worked to a large degree, but that has no impact on the trade surplus, which is why the currency remains strong.

 

 

I disagree . A safe currency yes during relative good times. A good place when times are good. But not a safe haven if things go south. Some unknowns have been injected. Don't see baht tanking, but weakness ...down to USD 33, I can see. I think the numbers have changed rapidly.

[saengd]

1 minute ago, WalkingOrders said:

I disagree . A safe currency yes during relative good times. A good place when times are good. But not a safe haven if things go south. Some unknowns have been injected. Don't see baht tanking, but weakness ...down to USD 33, I can see. I think the numbers have changed rapidly.

Yes, during good times. And when the Thai Central Bank rate was at 1.75%, higher than many other countries, the Baht was home to lots of hot money, global funds chasing yield.

 

 

[WalkingOrders]

On 2/20/2020 at 11:10 AM, saengd said:

Tough question, one possible answer might be that it is, not that tourist numbers has that much of an impact on the value of THB.

 

Anecdotally: I had to go to the hospital in Chiang Mai yesterday, I ended up going to three of them because I was looking to get a test done that is not routine. Have to say I was actually very impressed at the protocols they had in place, Suan Doc Mahraj has a person at the door taking peoples temperature and handing out masks plus entry and exit routes are strictly controlled. At McCormick the process was similar, everyone was wearing masks and there was a nurse restricting access on the main door. Bangkok Hospital was less controlled and I could walk right in but the nurses are much cuter :). Seriously, masks and hand gel every where, large signs warning visitors, not a bad effort  really.

Cheng Wattana immigration providing handgel and virus screen before entering waiting area, a sticker for re-entry.

[WalkingOrders]

On 2/20/2020 at 5:34 PM, saengd said:

Sorry, forgot to add....I'm very much in the camp that says USD/THB will head towards 25 over the next decade, I just don't believe for one second it's going the other way. And since GBP/USD is based almost solely on USD/THB, I'm expecting low to mid 30's for the Pound over that same period.

Yeah, but that is kind of an all things the same projected future taking a weak dollar into account.. And yeah.. Sadly...Don't say 25 though it hurts me see it in print! But on the other hand.... It's frikking pandemonium out there and 5 years is an awful long time to call????

[saengd]

9 minutes ago, WalkingOrders said:

Yeah, but that is kind of an all things the same projected future taking a weak dollar into account.. And yeah.. Sadly...Don't say 25 though it hurts me see it in print! But on the other hand.... It's frikking pandemonium out there and 5 years is an awful long time to call????

It was at 25 for many years, prior to the crash in 1997.

[WalkingOrders]

On 2/21/2020 at 10:30 AM, saengd said:

Ahhhh, you can't use the word "if" or "unless" when you're making a bet, it's a binary thing, yes as is or no as is.

Do you still have the same courage of your convictions?

Every trader has the courage of convictions, and all of us lose some. Some more then some.

[onebir]

2 minutes ago, saengd said:

Let's say USD goes to 33 or even 34, so? Let's say tourism gets cut in half, so? Exports rose last month, let's say they fall for the next six months, I'm guessing most every country is going to be in that same boat, the difference is that Thailand has no meaningful external government debt and it has a years worth of GDP stashed away for a rainy day in FCR and gold.

But Thailand is more dependent on most countries - even in SE Asia I think - on tourism. Many people are avoiding unnecessary travel: even tourism to France - with its neglible case count - has taken a big hit*. I'd count on that continuing until this virus is contained/becomes routinely treatable. With Asian countries dominating the case count rankings, and the extreme rapidity with which this thing 'goes viral' I think Asia will be taboo for Europeans/Americans for some time - the image of ending up in a foreign ICU doesn't make for a relaxing holiday. On top of this, potential Chinese tourists will have taken the largest economic blow. Facilities newly built to cater for them are likely to face cash flow problems etc. Echo epidemics in tourist-source developed countries may lead to travel disruption &/ Thailand imposing travel restrictions. The electronics industry is also severely disrupted; the impact on Asia generally from that seems likely to be larger than for other regions, with potential for lagged effects on electronics FDI into Thailand.

 

FCR and gold reserves would allow Thai policy makers support the baht, but if the economic impact is severe enough, they won't want to, or will at most aim to maintain an orderly devaluation.

 

*https://www.forbes.com/sites/alexledsom/2020/02/25/tourism-in-france-set-to-plummet-by-30-40-due-to-coronavirus/#73464012a279

[WalkingOrders]

On 2/24/2020 at 8:17 PM, saengd said:

A few thoughts.

 

Asia is in the early stages of ascendancy, China in particular has huge amounts of room to grow, it's potential hasn't nearly begun to be tapped yet. Neighboring regional countries will share in that growth, an Asian equivalent of the EU is in the making but without the overhead, more likely an alliance of nations. China is already funding regional trade via currency swaps to escape USD dominance, they are also funding growth in those satellite countries

 

The US and the West are drowning in debt and social care programs from which there's no easy way out, the western system of democracy seems to be moving closer to civil war in some cases, democracy is strained and being tested, China and neighboring countries have no such problem. The US doesn't have much room to grow beyond its borders, neighbors to the North aren't interested and those to the South aren't exactly best friends.

 

Continued globalization might have changed much of that but there is no longer any will, it's become a dirty word. 

 

Thailand and THB - low debt, very low foreign debt, high foreign currency reserves, equal amounts of gold reserves, low social care overheads, available workforce, exports and tourism income, roots in agriculture and farming......so what if the economy takes a hit for a year, what's the impact, it will recover, despite this years downturn there's no compelling reason to believe anything is permanent or lasting, let alone terminal.

 

Developed countries in the West are the opposite of those things in too many cases, especially debt.

You may be sidestepping internal problems in China a bit. A discussion for another time and place.

[mick220675]

The Baht won't significantly devalue until exports drop. It dose not matter how bad things get for the average Thai.

 

Export of agricultural products and manufactured goods may be down and tourism may be struggling, but Thailand is exporting gold and gold is in demand.

 

Thailand has massive gold reserves, but who is benefiting from the export off gold?