Printing Baht

[Brewster67]

I don't pretend to be an economics expert, I know a bit that i picked up on the hoof but by no means an expert.

 

I was wondering, depending on how hard the thai economy gets hit, do you think it may be possible for the thai government to make the decision to dabble with 'quantitative easing'?

 

If they do decide to do some, I can see the baht taking a bit of a hit, which would be very beneficial to people who bring in money from abroad as the exchange rate would improve.

 

If this economic disruption drags on for months, I can't see how they could avoid it, if only to stop huge public dissent against the government.

 

All the major economies are having to do it.

[Lacessit]

Looking at what Thais get as a pension ( 500 baht/month at 60 ), I don't think there's any danger of the government going overboard on the money printing front.

A strong baht means tanks, aircraft and submarines are less expensive. You can join the dots from there.

[Brewster67]

2 minutes ago, Lacessit said:

Looking at what Thais get as a pension ( 500 baht/month at 60 ), I don't think there's any danger of the government going overboard on the money printing front.

A strong baht means tanks, aircraft and submarines are less expensive. You can join the dots from there.

But surely the Baht is going to be weakened anyway by the mere fact that Thailand has now closed her borders to foreigners and suspended tourism. that in itself is going to make demand for the Baht fall off a cliff and demand for a currency is what gives it its strength, or at least it is the main factor.

[Susco]

9 minutes ago, Brewster67 said:

But surely the Baht is going to be weakened anyway by the mere fact that Thailand has now closed her borders to foreigners and suspended tourism. that in itself is going to make demand for the Baht fall off a cliff and demand for a currency is what gives it its strength, or at least it is the main factor.

You do understand that demand for virtually every other currency in the world falls at the same time?

[Brewster67]

7 minutes ago, Susco said:

You do understand that demand for virtually every other currency in the world falls at the same time?

Not countries who rely on tourism for 12% of their GDP, and the USD by the way is absolutely flying.

 

For example, i can't see why demand for the AUD or the EURO or the GBP would fall at the same rate as the THB. Usually a country looks for an excuse to devalue its currency to keep its exports healthy.

 

An economy doesn't grow because of the domestic part of its economic system,. it only grows because of the money it brings in from outside in the form of exports and tourism.

 

Like I said, I am no economics expert.

 

I was watching the Keiser report the other day and Max Keiser (and he knows economics) suggested that this could see virtually the whole world hit the print button.

Edited March 29, 2020 by Brewster67

[Lacessit]

15 minutes ago, Brewster67 said:

But surely the Baht is going to be weakened anyway by the mere fact that Thailand has now closed her borders to foreigners and suspended tourism. that in itself is going to make demand for the Baht fall off a cliff and demand for a currency is what gives it its strength, or at least it is the main factor.

The baht is strong because it cannot be exchanged outside the borders of Thailand, so it is immune to forex speculation. Every other country in the world is in the same boat as far as border closure and tourism are concerned.

[tonray]

16 minutes ago, Brewster67 said:

But surely the Baht is going to be weakened anyway by the mere fact that Thailand has now closed her borders to foreigners and suspended tourism. that in itself is going to make demand for the Baht fall off a cliff and demand for a currency is what gives it its strength, or at least it is the main factor.

The Baht weakening is relative...when the US Dollar is being forced down by 0% rates and quantitative easing again....the big fish determines the relative strength of the pair. the only reason there hass been any strengthening of the Dollar is as the safety trade...same for the Japanese Yen...when things go completely off the rails...Dollars and Yen are the only things people want to own. I don't expect much change from where we are no respective to Baht/Dollar....only when the US changes it's posture in any economic stabilization will there likely be any real movement. 

 

 

[sammieuk1]

Don't forget everything is 100% under control the PM said so but may need some tactical adjustment coincidentally also 100%  ????

[johnray]

They will print it and keep it.

[Youlike]

48 minutes ago, Brewster67 said:

But surely the Baht is going to be weakened anyway by the mere fact that Thailand has now closed her borders to foreigners and suspended tourism. that in itself is going to make demand for the Baht fall off a cliff and demand for a currency is what gives it its strength, or at least it is the main factor.

So far the baht isn't going off a cliff.....

[Berkshire]

37 minutes ago, Brewster67 said:

Not countries who rely on tourism for 12% of their GDP, and the USD by the way is absolutely flying.

I wouldn't say the USD is "absolutely flying"....at least not relative to the THB.  The USD has remained strong because it's the de facto reserve currency.  But America is facing a major drop in GDP, not to mention near 0 interest rates, QE, and just massive spending/printing of money on its own.  The THB may remain strong in the short term due to fundamentals, but as this COVID lockdown remains in place, who knows?  Thailand is in the same boat as everyone else, so really hard to say.

[Brewster67]

5 minutes ago, Youlike said:

So far the baht isn't going off a cliff.....

Well on Friday it went from 37.42 to the GDP to 40.55 that is an 8.5% change in a single day and only being held off because of the weekend where most major trading is suspended... Wait till the forex markets reopen tomorrow., and that is against the GBP which is taking a battering from its own problems.

 

This change didn't happen against the USd because I think the USD is going to possibly take its own hit.

[saengd]

45 minutes ago, Lacessit said:

The baht is strong because it cannot be exchanged outside the borders of Thailand, so it is immune to forex speculation. Every other country in the world is in the same boat as far as border closure and tourism are concerned.

That's only partially correct, THB is not strong solely because it is not fully convertible, the Forex market still has to agree with the rate set by BOT rate each day. The fact that speculators cannot amass a position on THB is really just a bonus, it doesn't change the value of the currency.

 

The main reason THB is so strong is because of the current account surplus, a major component of which is the balance of trade surplus. 

 

But the OP asked about Thailand and QE which would be the central bank adding credit to the Thai banks. BOT has been active in the bond market for the past two weeks and because of the liquidity crisis did buy back USD 7 bill in bonds, mostly that was because of a shortage of domestic and international buyers, that said the Thai banks balance sheets do not yet appear to be under stress. 

Edited March 29, 2020 by saengd

[Brewster67]

The US economy is balancing on a knife edge and this could push it over the edge.

 

the Fed has become so reliant on printing money, they don't know what else to do... They always had the interest rate to play with, but that is now at 0.25% and they have nowhere left to go. So they are already printing 2 trillion of QE, but that is nowhere near enough and is already being pushed up to 2.5 trillion, but many experts say that it may have to print up to 5 trillion by August.

 

that is a massive 25% of GDP, and the economic experts say that QE above 3% of GDP is destabilizing in itself, so god knows what 25% will do, all it can do is really tamk the USD.

 

The government even before this were struggling with the economy, with the vast majority of their tax receipts going to debt servicing alone meaning they were having to keep borrowing to fund their spending. This is going to see their tax take not even cover the interest on all this money... then where do they go?.... Massive tax hikes is the only thing they can do or the economy crashes completely. Don't even rule out a raid on pension funds, Gordon brown did it to the UK pensioners in 2008.

 

Austerity is coming to the USA whether they like it or not... If the USD tanks it drags down the entire global economy and could see the US traverse into the same economy as a random African country.

Edited March 29, 2020 by Brewster67

[saengd]

57 minutes ago, Brewster67 said:

I was watching the Keiser report the other day and Max Keiser (and he knows economics) suggested that this could see virtually the whole world hit the print button.

This would be a great opportunity to have a global reset because most governments are over extended by conventional standards and most will suffer a hit to GDP.

[KhunBENQ]

Quite nice EUR/THB over the last 10 days (4.5% more).

Can't wait for tomorrows opening.

Pushing the button on Transferwise or wait?

 

Edited March 29, 2020 by KhunBENQ

[OneeyedJohn]

I must admit a weak ago when the pound dropped alarmingly ( after Trump & Boris made speeches ) all I thought was it is only going to get worse, but for reasons I will never understand the pound stands thus:-

 

GBP £ - Pound Sterling 1.00  =  THB ฿ - Thai Baht  40.53

[Brewster67]

2 hours ago, KhunBENQ said:

Quite nice EUR/THB over the last 10 days (4.5% more).

Can't wait for tomorrows opening.

Pushing the button on Transferwise or wait?

 

I would wait mate... track it for the coming days, and as soon as it starts to move the wrong way, then pull the trigger.

[Brewster67]

1 hour ago, OneeyedJohn said:

I must admit a weak ago when the pound dropped alarmingly ( after Trump & Boris made speeches ) all I thought was it is only going to get worse, but for reasons I will never understand the pound stands thus:-

 

GBP £ - Pound Sterling 1.00  =  THB ฿ - Thai Baht  40.53

The pound bounced back once Thailand closed its borders to all foreigners. Massive drop in demand for the THB.

 

Edited March 29, 2020 by Brewster67

[saengd]

18 minutes ago, Brewster67 said:

The pound bounced back once Thailand closed its borders to all foreigners. Massive drop in demand for the THB.

 

I don't mean to be nit picky but the Pound didn't move, USD fell.

 

EDIT: sorry I'm wrong, I read your post incorrectly, my error.

Edited March 29, 2020 by saengd

[SiSePuede419]

My wife said the government might pay 5000B a month to people who are affected by Coronavirus.

 

Now, what will they do with so much money? ????

[john69]

On 3/29/2020 at 9:55 AM, Brewster67 said:

The US economy is balancing on a knife edge and this could push it over the edge.

 

the Fed has become so reliant on printing money, they don't know what else to do... They always had the interest rate to play with, but that is now at 0.25% and they have nowhere left to go. So they are already printing 2 trillion of QE, but that is nowhere near enough and is already being pushed up to 2.5 trillion, but many experts say that it may have to print up to 5 trillion by August.

 

that is a massive 25% of GDP, and the economic experts say that QE above 3% of GDP is destabilizing in itself, so god knows what 25% will do, all it can do is really tamk the USD.

 

The government even before this were struggling with the economy, with the vast majority of their tax receipts going to debt servicing alone meaning they were having to keep borrowing to fund their spending. This is going to see their tax take not even cover the interest on all this money... then where do they go?.... Massive tax hikes is the only thing they can do or the economy crashes completely. Don't even rule out a raid on pension funds, Gordon brown did it to the UK pensioners in 2008.

 

Austerity is coming to the USA whether they like it or not... If the USD tanks it drags down the entire global economy and could see the US traverse into the same economy as a random African country.

Nail on the head. Something has to give, and when it does, it won't be pretty.

[Isaan sailor]

No one can predict USD future values.  But I will say, and have noticed the Baht drops on USD almost every morning, and then rises by 11a.m. and keeps rising through the day.  Very strange.

[RocketDog]

On 3/29/2020 at 9:55 AM, Brewster67 said:

The US economy is balancing on a knife edge and this could push it over the edge.

 

the Fed has become so reliant on printing money, they don't know what else to do... They always had the interest rate to play with, but that is now at 0.25% and they have nowhere left to go. So they are already printing 2 trillion of QE, but that is nowhere near enough and is already being pushed up to 2.5 trillion, but many experts say that it may have to print up to 5 trillion by August.

 

that is a massive 25% of GDP, and the economic experts say that QE above 3% of GDP is destabilizing in itself, so god knows what 25% will do, all it can do is really tamk the USD.

 

The government even before this were struggling with the economy, with the vast majority of their tax receipts going to debt servicing alone meaning they were having to keep borrowing to fund their spending. This is going to see their tax take not even cover the interest on all this money... then where do they go?.... Massive tax hikes is the only thing they can do or the economy crashes completely. Don't even rule out a raid on pension funds, Gordon brown did it to the UK pensioners in 2008.

 

Austerity is coming to the USA whether they like it or not... If the USD tanks it drags down the entire global economy and could see the US traverse into the same economy as a random African country.

Not to mention the USA corporate debt, mostly being junk bonds. 

The USA had been able to find buyers for its bonds even after years of increasing debt but corporations likely won't. Until the world can find a safer haven, like metals, the dollar will remain strong. America can print because it's had only marginal repercussions. Those days are waning. 

 

If America is forced into austerity then China will quickly follow as exports dwindle and then the rest will crumble. In the meantime I look for a wave of countries depreciating their currency to boost imports. 

 

Virus aside, the world is swimming in unredermable debt and a major re-ordering is inevitable. Like many of the policies the world has followed such as environmental, our financial system is unsustainable. 

[19DL86]

On March 29, 2563 BE at 9:47 AM, Brewster67 said:

Well on Friday it went from 37.42 to the GDP to 40.55 that is an 8.5% change in a single day and only being held off because of

Absolute rubbish where do you get these figures from.  Please support this pile of poop statement.  please try early Ocotber 2019 lows of 37Bt to the present figure of ex rate.  Jeeze

Edited March 30, 2020 by 19DL86

[Berkshire]

On 3/29/2020 at 9:55 AM, Brewster67 said:

The US economy is balancing on a knife edge and this could push it over the edge.

 

the Fed has become so reliant on printing money, they don't know what else to do... They always had the interest rate to play with, but that is now at 0.25% and they have nowhere left to go. So they are already printing 2 trillion of QE, but that is nowhere near enough and is already being pushed up to 2.5 trillion, but many experts say that it may have to print up to 5 trillion by August.

 

that is a massive 25% of GDP, and the economic experts say that QE above 3% of GDP is destabilizing in itself, so god knows what 25% will do, all it can do is really tamk the USD.

 

The government even before this were struggling with the economy, with the vast majority of their tax receipts going to debt servicing alone meaning they were having to keep borrowing to fund their spending. This is going to see their tax take not even cover the interest on all this money... then where do they go?.... Massive tax hikes is the only thing they can do or the economy crashes completely. Don't even rule out a raid on pension funds, Gordon brown did it to the UK pensioners in 2008.

 

Austerity is coming to the USA whether they like it or not... If the USD tanks it drags down the entire global economy and could see the US traverse into the same economy as a random African country.

This is what I don't get about the American people.  It seems most Americans just don't care about the national debt.  And our politicians that WE elect into office can see this.  There's ZERO incentive to be financially responsible.  And it's both parties.  Trump certainly doesn't care about the debt.  He's said so.  So if it's in the politician's best interest to spend us deeper and deeper into debt, they'll do it.  As soon as they leave office, it's no longer their problem.  Some day, and I don't know when, it will be time to pay the piper.  I hope I'm dead and buried by then because it ain't going to be pretty.

[Isaan sailor]

2 minutes ago, Berkshire said:

This is what I don't get about the American people.  It seems most Americans just don't care about the national debt.  And our politicians that WE elect into office can see this.  There's ZERO incentive to be financially responsible.  And it's both parties.  Trump certainly doesn't care about the debt.  He's said so.  So if it's in the politician's best interest to spend us deeper and deeper into debt, they'll do it.  As soon as they leave office, it's no longer their problem.  Some day, and I don't know when, it will be time to pay the piper.  I hope I'm dead and buried by then because it ain't going to be pretty.

Welcome to the Libertarian Party.

[Berkshire]

4 minutes ago, Isaan sailor said:

Welcome to the Libertarian Party.

I don't know.  Do you think a politician can get elected in America on an austerity platform?  Just won't happen.  On the Dem side you've got politicians promising free stuff.  On the Rep side, you've got politicians promising less taxes.  So that's it: more spending, less revenue.  Meanwhile, the debt just keeps going up and up.  Strangely, with trillions in debt, you'd think most Americans would be better off.  But they're really not.  You have to wonder where all this money is going because it ain't going to the vast majority of Americans.

[Cashboy]

On 3/30/2020 at 12:23 PM, RocketDog said:

Not to mention the USA corporate debt, mostly being junk bonds. 

The USA had been able to find buyers for its bonds even after years of increasing debt but corporations likely won't. Until the world can find a safer haven, like metals, the dollar will remain strong. America can print because it's had only marginal repercussions. Those days are waning. 

 

If America is forced into austerity then China will quickly follow as exports dwindle and then the rest will crumble. In the meantime I look for a wave of countries depreciating their currency to boost imports. 

 

Virus aside, the world is swimming in unredermable debt and a major re-ordering is inevitable. Like many of the policies the world has followed such as environmental, our financial system is unsustainable. 

True but provided all the Central Banks print together, then everything can continue for a while longer.

[RubbaJohnny]

Old saying you don't know wh's singing naked until the tide recedes.

Those holding Swiss Francs will blow the matter Horn

 

Thai fundamentals sinc 1998 little foreign currency exposure

Small spend on social welfare pensions

For big players Cheap labour  prawns and affordable cops, courts corruption will never go out of fashion.

Edited April 1, 2020 by RubbaJohnny