Will the Mighty Baht Topple?

if all the projections of doom and gloom are correct and tourism is heavily impacted for at least say 6 months although we have no way of knowing how much the global economy will go into free fall or the reality of lock downs and subsequent extensions.

so assuming that no one will be able to take vacations either through fear or monetary concerns

 

will the baht topple from its mighty perch

are we expecting that the chinese will come back in their droves and if so will they then be practically the only group here or will they also be affected 

of course if the baht loses its ground all those billions in debt to the chinese for high speed rail lines will suddenly become a lot more expensive

how does the baht retain such high ground?

 

I hope for the free fall, and it will come sooner than later

Not a chance, why do you think the government is taking a more cautious approach on payments for the out of work people.

28 minutes ago, andy72 said:

how does the baht retain such high ground?

200+ billion USD foreign currency reserve

https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

????

If the rest of the world was doing great then I would expect the Baht to weaken.

 

However, the rest of the world is doing just as badly as Thailand (if not worse) so I don't expect it to weaken against other major currencies (USD, GBP, EUR etc.).

All bets are off for currencies around the globe. With the economic consequences of this worldwide shutdown, along with the near infinite stimulus spending by governments, and the coming shifts in the political and social landscapes, I think trying to predict any of this at the moment is akin to flipping coins.

Nope!

Seems to be teetering a bit, AUD has moved up from high 18's to mid-20. Got to 20.9 yesterday.

If the tourist industry is 18% of GDP, that leaves a big hole with everything shut down. I don't know if that includes medical and dental tourism, which is also non-existent.

About 70% of GDP is exports, so a lower baht would be a benefit. That's if the Junta can wean itself off military toys. They want the baht as strong as possible.

I got my money over from UK in 2005 Sept @ 75 to £, so if my frozen pensions come into Thailand at that rate now,  Thailand would benefit from me. ????

1 hour ago, johng said:

200+ billion USD foreign currency reserve

https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

The foreign currency reserves of the Bank of Thailand do not have an ongoing impact on the value of the Thai baht.  Acquiring reserve dollars would tend to depress the baht, other factors being equal, while buying baht with the dollars would increase the value of the baht.  But the pile of dollars sitting on the books of the BoT is basically inert with respect to the current value of the baht.

 

The baht has dropped against the dollar because of the reduction of exports and tourism which tend to drive up the value of the baht as well as the global flight of capital to the dollar as a safe haven.  Reserves only affect the value of the national currency when they are being increased or decreased, neither of which is probably happening now.

I have seen this thread on and off over the last 14 Years, all the baht has done against the English pound is double, I can only speak about the English pound as i am  English, Thailand has warehouses full of cash, 

5 hours ago, cmarshall said:

200+ billion USD foreign currency reserve

https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

@cmarshall

The foreign currency reserves of the Bank of Thailand do not have an ongoing impact on the value of the Thai baht.  Acquiring reserve dollars would tend to depress the baht, other factors being equal, while buying baht with the dollars would increase the value of the baht.  But the pile of dollars sitting on the books of the BoT is basically inert with respect to the current value of the baht.

 

The baht has dropped against the dollar because of the reduction of exports and tourism which tend to drive up the value of the baht as well as the global flight of capital to the dollar as a safe haven.  Reserves only affect the value of the national currency when they are being increased or decreased, neither of which is probably happening now.

I would have to agree with that because China is number 1 in reserves yet the Yuan fell a few points
& Russian Ruble aint worth <deleted> its at 92 to sterling wen I was there in 2010 and sterling was only 50 rub
The ruble sank about 4 years ago 
So the reserve looks like it has no immediate impact on value just the <deleted> in the leaders heads

 

 

Yeah I checked the chart of countries reserves
It puts Thailand at number 13 and you have to wonder at some of the countries and no wonder they are in a mess when the banks holding the cash instead of spending it on services, the people.

Thailand has no excuse to be hoarding so much reserve 
Even the USA is at 20 
There's a few countries at the top where you can say yeah I understand that  1-6 then S.Korea at 8 living standards are all pretty good, 

So if this reserve doesnt really count, & someone is holding a lot of Baht as a safe bet then all those who have it start to unload it 
Will that sink it?

Coz I reckon China must be holding a ship load or two
and at some point when all those rail lines are signed and the debt is say 'X' billion
you dump the Baht and that 'X' is suddenly a bigger bill 
no matter what currency the debt is agreed in 
if the baht takes a tumble all its debts will increase by exchange rate 

Edited April 16, 20206 yr by andy72

Wishful thinking for most of us. Export will continue to decline the remaining of this year. Tourism only a few more visitors from China, forget the rest of the world. Local tourism will up marginally, only thanks to package deals, that will surface very soon.

THB down 5% at most, I think. We can go back to dream now.

11 hours ago, andy72 said:

@cmarshall

The foreign currency reserves of the Bank of Thailand do not have an ongoing impact on the value of the Thai baht.  Acquiring reserve dollars would tend to depress the baht, other factors being equal, while buying baht with the dollars would increase the value of the baht.  But the pile of dollars sitting on the books of the BoT is basically inert with respect to the current value of the baht.

 

The baht has dropped against the dollar because of the reduction of exports and tourism which tend to drive up the value of the baht as well as the global flight of capital to the dollar as a safe haven.  Reserves only affect the value of the national currency when they are being increased or decreased, neither of which is probably happening now.

I would have to agree with that because China is number 1 in reserves yet the Yuan fell a few points
& Russian Ruble aint worth <deleted> its at 92 to sterling wen I was there in 2010 and sterling was only 50 rub
The ruble sank about 4 years ago 
So the reserve looks like it has no immediate impact on value just the <deleted> in the leaders heads

 

 

Yeah I checked the chart of countries reserves
It puts Thailand at number 13 and you have to wonder at some of the countries and no wonder they are in a mess when the banks holding the cash instead of spending it on services, the people.

Thailand has no excuse to be hoarding so much reserve 
Even the USA is at 20 
There's a few countries at the top where you can say yeah I understand that  1-6 then S.Korea at 8 living standards are all pretty good, 

So if this reserve doesnt really count, & someone is holding a lot of Baht as a safe bet then all those who have it start to unload it 
Will that sink it?

Coz I reckon China must be holding a ship load or two
and at some point when all those rail lines are signed and the debt is say 'X' billion
you dump the Baht and that 'X' is suddenly a bigger bill 
no matter what currency the debt is agreed in 
if the baht takes a tumble all its debts will increase by exchange rate 

There are restrictions on how much THB can be held so I don't think they would have shiploads. 

As usual it's Friday so the dollar has weakened 

Will the Baht Topple?

Need more than a virus to make a difference.

Always trying to think what would effect it?

If Thailand came under attack and half the country was nuked it would still keep on strengthening.

Topple against what?

 

In the short term, Thailand's economy will receive a big hit from the loss of tourism, which will weaken the Baht. But western economies are also being screwed like Thailand's so why should their currencies rise substantially against the Baht, at least in the medium term?

 

In the medium to long term, tourists will return to Thailand and its familiar economic strengths will help to keep the Baht strong. Meanwhile, the likes of the US, UK and EU will have to start paying off the vast amounts of money they're thrown at their firms and workers, something Thailand has done on a much smaller scale. That will mean higher taxes and, probably, lower economic growth as there will be less spare cash in the economy to spend. In that case I can see the Baht becoming stronger against the main western currencies in two or three years than it was last year.

 

A gloomy outlook, I know, but that's my take on matters at the moment.

21 hours ago, johng said:

200+ billion USD foreign currency reserve

https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

But anyway …..:

 

Thailand said it will explore domestic and foreign funding options for planned borrowing of 1 trillion baht ($30.6 billion) to finance a major economic stimulus program.

https://www.bloomberg.com/news/articles/2020-04-10/thailand-mulls-local-foreign-borrowing-for-30-6-billion-debt

yes - it is doomed at current levels and when falls it will be like stock exchanges with the covid lockdowns and crash badly. 

No. I predict Thailand will "restart" its economy far sooner than most other countries with far higher cases of the coronavirus.

 

We will have to see if China going back to work as we speak will have any effect on the value of the RMB though.

 

- Matteo

Edited April 17, 20206 yr by DeeMoney

     I put a lot down to crooked UK financial bodies manipulating the pound to keep it low,

     

Brexit was the main reason for the drop, but now they know we're out, but the pound not come up again, then the PM gets Covid, down it goes again, then as soon as its said that restrictions are to continue longer, its down again.

     Yet Thailand can have a coup, and a rather dodgy election, but the Baht never moved.

Going by Thai logic, when the bars, restaurants, and ladies of the night open for business again:

 

Baht will be propped up, so will remain in the current range.

Drinks will go up.

Food will go up.

Ladies of the night will be charging more, or doing short short time to be able to pay their debts and buy their gold back.

Property...boom crash crash opera.

MB Taxi's will be hell, as they charge extortionist prices to try and pay their debts off. 

 

So, either way it will be like the Baht gets even stronger for Foreigners.

50 minutes ago, Guderian said:

In the short term, Thailand's economy will receive a big hit from the loss of tourism, which will weaken the Baht. But western economies are also being screwed like Thailand's so why should their currencies rise substantially against the Baht, at least in the medium term?

In the short term most definite well it should Tourism is say 11% hard GDP with another 9% being soft GDP meaning its worth say 20% of LoS's GDP
Plus all that foreign currency coming in that they keep hold of.
So if global tourism takes a hit LoS takes a rather large hit. this travel thing is not going to go away any time soon LoS can lift travel restrictions but thats going to have to include the COVID papers insurance etc and what Insurance firm at this current time or any time in the future is going to insure you with C-19 cover , just not going to happen.
Thailand always down plays the importance of tourism
Will the Chinese return thats up to China not the people and I dont think they are going to be that keen on letting tour groups out to roam at present

 

12 minutes ago, grumpy 4680 said:

   I put a lot down to crooked UK financial bodies manipulating the pound to keep it low,

     

Brexit was the main reason for the drop, but now they know we're out, but the pound not come up again, then the PM gets Covid, down it goes again, then as soon as its said that restrictions are to continue longer, its down again.

Sterling has been shown to be easily manipulated Soros took it for a billion
it appears that 1.25/6 is its static point 
pre Brexit it was always 1.63 ish

Thailand may have large reserves but just like sterling its probably a currency that can and will be manipulated 
Of course we have all been moaning over the last few years at its rate those from the UK have a double hit with a failing sterling rate to add on.
Newtons law off gravity what goes up must come down

especially in a market where value is manipulated to make large sums of money through speculation

 

Its more a question of when rather than If 

20 hours ago, cmarshall said:

The foreign currency reserves of the Bank of Thailand do not have an ongoing impact on the value of the Thai baht.  Acquiring reserve dollars would tend to depress the baht, other factors being equal, while buying baht with the dollars would increase the value of the baht.  But the pile of dollars sitting on the books of the BoT is basically inert with respect to the current value of the baht.

 

The baht has dropped against the dollar because of the reduction of exports and tourism which tend to drive up the value of the baht as well as the global flight of capital to the dollar as a safe haven.  Reserves only affect the value of the national currency when they are being increased or decreased, neither of which is probably happening now.

What Khun Marshall says is partly true; when people buy baht to invest in Thailand the baht gets stronger.  When they sell baht or sell Thai stocks or bonds, the baht gets weaker.  However, the level of reserves has a direct effect on the ratings of Thai securities. If Thai bonds, for example, have an AA rating they are considered a safer investment than the bonds of a country with sat B- bonds. So many investors might sell their B- bonds and buy Thai AA bonds, which would make the Thai baht stronger.

Cheers,

Retired Stock Broker 

20 hours ago, Thongkorn said:

I have seen this thread on and off over the last 14 Years, all the baht has done against the English pound is double, I can only speak about the English pound as i am  English, Thailand has warehouses full of cash, 

Is that where all those old one Pound note went?

5 hours ago, stament said:

There are restrictions on how much THB can be held so I don't think they would have shiploads. 

What might also be true is that foreign exchange dealers see massive Baht in the bank as a very poor way to use that money, therefore reducing the attractiveness of the baht and therefore it's value compared to other currencies.

23 hours ago, JonnyF said:

If the rest of the world was doing great then I would expect the Baht to weaken.

 

However, the rest of the world is doing just as badly as Thailand (if not worse) so I don't expect it to weaken against other major currencies (USD, GBP, EUR etc.).

Some people have absolutely no economic sense at all. Thankfully you know what your talking about. The baht would fall if Thailand was hard hit and other countries not. But everyone is hard hit so your analysis is correct.

 

So many foreigners have no clue and keep imagining the baht going down but it has not done so and wont. I would like it too as i get income in Euros but I am not holding my breath. 

In the last 10 days, the Baht has gained close to 2% on most western currencies.  Probably due to institutional currency traders.  When things look bad—risk off—they buy safe haven currencies—Japanese Yen, USD, Euro.  When things look better, or when world stocks begin to rise—it’s risk on—they buy emerging markets, like Thai Baht and others, to make profits.

I agree, Baht needs to come down.  But we’re in the hands of traders.... 

In my opinion THB will weaken when £,$ and Euro get stronger!.......I have exchanged@ 76!.... many years ago!.... until they run out of dollar reserves and sell gold, unlikely to topple!Oh how I get smiling again when it moves over 41????????!!