Baht keeps strength despite coronavirus outbreak, economic decline

[saengd]

12 minutes ago, morrobay said:

When yuan is exchanged for baht it decreases supply of baht. Then subsequently the baht appreciates against the Dollar. 

Why would that decrease the availability of Baht, THB is a restricted currency that cannot be exported in sizable amounts, consequently the supply cannot be decreased?

 

Even if what you wrote was correct there would still not be any impact on the USD/THB relationship, why would there, USD doesn't feature in the transaction?

 

Perhaps the part you're missing here is that THB tracks USD, not RMB.

Edited March 7, 2020 by saengd

[morrobay]

So the availability / supply of baht is independent of the Chinese hot money buying up financials. What happened to supply and demand. The Dollar depreciates with QE. This is supposed to be  two way street. Any way I'm going to see if I can get my brother , masters in economics,a retired CEO of a Euro fund in Luxembourg to look at this subject since I'm not really knowledgeable here .

 

[saengd]

7 minutes ago, morrobay said:

So the availability / supply of baht is independent of the Chinese hot money buying up financials. What happened to supply and demand. The Dollar depreciates with QE. This is supposed to be  two way street. Any way I'm going to see if I can get my brother , masters in economics,a retired CEO of a Euro fund in Luxembourg to look at this subject since I'm not really knowledgeable here .

 

I don't believe I have ever used the words supply and demand together in the context of Baht strength, only the word demand. When somebody wants to buy something in Thailand using a foreign currency there is a demand for THB. Regardless of which currency is used to purchase the Baht, that THB always remains inside the country although the supply of foreign currency reserves will have increased as a result.

 

When it comes to changing the value of THB the transaction must involve USD. USD is at the top of the forex tree and the value of all other currency pairs are derived from their relationship to USD, either directly or via a formula when that pair is further down the tree. That knock on effect ensures that the relative value of currencies is maintained. 

 

I'm not sure what you mean when you refer to the Chinese hot money buying up Thai financials, which financials are you referring to, presumably you mean BOT and government bonds? 

 

Do by all means ask whoever and do also report back with what you are told, that will be helpful to everyone.

[saengd]

Below is a link to the annual report on Thai bond sales dated 2018, pages 8 and 10 give details of foreign purchases of Thai bonds:

 

http://www.thaibma.or.th/Doc/annual/SummaryMarket2018.pdf

 

Important to note that non-resident bond holdings have increased but still remain at a level last seen in late 2015, the biggest growth rate being between 2013 and 2015. Note that in 2018, non-resident holders of BOT bonds was under 4% of total bond sales whilst non-resident holders of Thai government bonds was 17%. Although those figures are from 2018, the numbers seem to show that Chinese purchases of Thai financials, hot money and the like, are nowhere near the high levels that some might imagine.

[saengd]

"The conversation you requested could not be loaded".

Edited March 10, 2020 by saengd

[morrobay]

[saengd]

And?

[Ventenio]

china is done for 5-years.  tourism is done.  farangs are leaving.  it's OVER!!

 

Baht to Dollar:  50 to 1 in 2021.   75 to 1 will be the peak.  Then 100 million Chinese will be given citizenship and it will go back to 30.  

 

Gold to 5,000

 

but noodle soup will stay around 30 baht.   

 

i wonder what is happening in Cambodia now with all their Chinese workers?

 

vietnam.  not any more.  Maybe Laos....probably Burma.   

[saengd]

Another deluded Brit., day dreaming of yesteryear exchange rates. 

[Rimmer]

A post and a reply have been removed per the member request

[stament]

Seems to be weakening slightly 

[morrobay]

According to IMF real effective exchange rate calculations which take into account Thailands trade flows the currency is already well overvalued 

Now how is that so? Well one possibility is the purchase of Thai baht from foreign currency  dollar denominated reserves. Why would that be so? Well is it just a coincidence that the same elements who would benefit are also In position to control.

[stament]

Upto 33 to the USD today. Read a Bloomberg report that said IMG expected it to reach 34 by end of Q2.

 

 

[phkauf]

24 minutes ago, stament said:

Upto 33 to the USD today. Read a Bloomberg report that said IMG expected it to reach 34 by end of Q2.

 

 

It will be at 34 sooner than that. The economy in Thailand is in the crapper and the outlook for the rest of the year is bleak. Foreign investors are getting out selling their holdings and weakening the baht as they take money out of the country, tourism is nil so there is virtually no demand for baht from that segment of the economy (+/- 20% of GDP), exports are down for all sorts of reasons (China trade, Oil prices, worldwide economic slowdown, impact of drought on crops) all pushing the baht down. Let's not forget all that Chinese money that is no longer flowing in to buy condos and businesses. 

The carry trade is long over since rates are down and the cost to hedge currency wipes out any potential arbitrage. 

[stament]

7 minutes ago, phkauf said:

It will be at 34 sooner than that. The economy in Thailand is in the crapper and the outlook for the rest of the year is bleak. Foreign investors are getting out selling their holdings and weakening the baht as they take money out of the country, tourism is nil so there is virtually no demand for baht from that segment of the economy (+/- 20% of GDP), exports are down for all sorts of reasons (China trade, Oil prices, worldwide economic slowdown, impact of drought on crops) all pushing the baht down. Let's not forget all that Chinese money that is no longer flowing in to buy condos and businesses. 

The carry trade is long over since rates are down and the cost to hedge currency wipes out any potential arbitrage. 

Great

[Forza2002]

It will be 34 within 7 days... Today XE App showing $33.11, roll on $40.... ????