State of economy worse than initially estimated: BOT

[Xonax]

19 hours ago, tribalfusion001 said:

Wow worse then expected, who would have thought that!

 

meanwhile the Benz dealers have reported higher sales than usual.

[Deli]

18 hours ago, Trillian said:

Inflation is falling, not soaring, it's a major issue for the bank, April CPI was -3%:

https://think.ing.com/articles/thailand-steepest-price-fall-since-financial-crisis-reflects-huge-demand-drop/

 

The ever weakening USD is a concern when it comes to Baht strength, people have been dumping the Dollar which is causing it to weaken. The main reasons for that fall are the riots, and the high level of borrowings, as a result THB looks like a very sound and stable currency since government debt is below 42% of GDP. 

 

 

Sure the debt is low, as they don't spend a single THB on social welfare to feed and house their people in need, like developed countries do.

[Brunolem]

52 minutes ago, spidermike007 said:

 

 

 

Very depressing photos...it shows how dangerous it is to rely almost 100% on one source of income, in this case tourism.

[Trillian]

2 minutes ago, Deli said:

Sure the debt is low, as they don't spend a single THB on social welfare to feed and house their people in need, like developed countries do.

Thailand doesn't spend as much as some Western countries on social security programs but they do have them, pensions, health care, unemployment etc. and the spending on those programs is not small, they are major components of every budget. Many see that relatively low level of spending as a positive. Many people also believe it's not governments job to house, feed and support the population, look at the financial and productivity problems it causes in some Western countries.

 

But anyway, those things are not debt. The government debt that's being referred to is the annual budget deficit which is then turned into debt, goverment overspend plus borrowing each year, that's quite low.

[Brunolem]

12 minutes ago, Deli said:

Sure the debt is low, as they don't spend a single THB on social welfare to feed and house their people in need, like developed countries do.

They don't spend enough on social welfare, while developed/socialist countries spend way too much.

 

A country is not supposed to go into debt, or to print fake money, in order to pay for out of control social expenses.

[hugolars]

20 hours ago, AlfHuy said:

No.

Interest rate now at all time low at 0.5%

What interest rate is this? Mortgage rate has changed? Not still at 8%?

[Scouse123]

1 hour ago, Deli said:

Sure the debt is low, as they don't spend a single THB on social welfare to feed and house their people in need, like developed countries do.

 

And they never will.

 

[Trillian]

34 minutes ago, hugolars said:

What interest rate is this? Mortgage rate has changed? Not still at 8%?

0.5% is the base rate set by the MPC at BOT. Individual banks use that as the base to determine the rates of interest they will pay customers on savings and how much they will charge to lend for loans, including mortgages. As the base rate moves so do most of the other rates for new loans, not for existing ones, unless a variable rate loan is in effect. 

[paulikens]

the baht will shoot up now with this news. unmovable  

[brianthainess]

must have been using TAT's calculator.

Edited June 4, 2020 by brianthainess

[Magenta408]

This has nothing to do with "worse than expected - it was as we had expected it". What gives?? Before the lockdown there were no tourists flows, very little cashflow and jobs were stagnant and  were being lost left and right. Our memories are nut dulled. The country's economy was in the pits well before year's end last. Well before Covid-18.  The one thing burning bright was bagasse.

[barney42bb]

Yet still this incredulous valuation of The Baht to Foreign Exchange continues.

 

The £ gained on all past few days...But not on The Baht to any parity.

 

The Chinese yen always falsely low as The Baht is falsely high.

[Andycoops]

22 hours ago, Cake Monster said:

Maybe its because of the FDI coming into the Country from the Mother land to the North.

I think Thailand sees the start of a massive investment program into the Country from China, and want to a court that idea.

Any investment by Chinese Companies into Thailand in order to skirt  around Tariffs imposed by the US will soon be pinged, and a whole world of hurt will hit the Country

And as Thai failed businesses, real estate etc is becoming cheaper the Chinese are poised to exploit the situation.

[Trillian]

39 minutes ago, barney42bb said:

Yet still this incredulous valuation of The Baht to Foreign Exchange continues.

 

The £ gained on all past few days...But not on The Baht to any parity.

 

The Chinese yen always falsely low as The Baht is falsely high.

China merged its currency with Japan,  when did that happen, I must have missed it?

[Brunolem]

17 minutes ago, Andycoops said:

And as Thai failed businesses, real estate etc is becoming cheaper the Chinese are poised to exploit the situation.

Any foreigner, and not only Chinese, is free to exploit the situation... if there is anything to exploit. 

 

Many areas of Thailand, notably the tourist hot spots, are overbuilt, and one should better think twice before buying. 

 

If it's for private use, fine, but if it's for rental or flipping, better stay away. 

[mberbae]

 Highly doubtful there are foreign investors now pouring money into

Thailand with this Economy. Tourists will also look elsewhere to

spend their precious money since the inflated Thai baht is a No Welcome

sign. With COVID 19 causing massive unemployment, most travelers will likely

stay close to home this next year. Making Thailand attractive again seems to be

the last thing on the Government's mind.

[Trillian]

2 minutes ago, mberbae said:

 Highly doubtful there are foreign investors now pouring money into

Thailand with this Economy. Tourists will also look elsewhere to

spend their precious money since the inflated Thai baht is a No Welcome

sign. With COVID 19 causing massive unemployment, most travelers will likely

stay close to home this next year. Making Thailand attractive again seems to be

the last thing on the Government's mind.

Foreign Direct Investment in Thailand increased by 73682.49 THB Million in March of 2020."

https://tradingeconomics.com/thailand/foreign-direct-investment

[hugolars]

3 hours ago, Trillian said:

0.5% is the base rate set by the MPC at BOT. Individual banks use that as the base to determine the rates of interest they will pay customers on savings and how much they will charge to lend for loans, including mortgages. As the base rate moves so do most of the other rates for new loans, not for existing ones, unless a variable rate loan is in effect. 

As I understand all mortgages are based on BOT MRR rate? Have MRR moved at all? Should not  the base rate reflect on consumers or do banks just use the lower MPC rates to increase their margins?
Comparing to Europe mortgages here are very expensive.

[Trillian]

5 minutes ago, hugolars said:

As I understand all mortgages are based on BOT MRR rate? Have MRR moved at all? Should not  the base rate reflect on consumers or do banks just use the lower MPC rates to increase their margins?
Comparing to Europe mortgages here are very expensive.

I really don't know much about mortgage lending rates in Thailand. I know that MLR and MRR are floating rates for top tier customers, those with good credit and wanting large loans, everyone else gets MLR +

 

Perhaps others can comment more knowledgably.

[bkk6060]

THB to USD= 40

Tourists would flock here.

But, it ain´t gonna happen.

[Skeptic7]

Hmmm...wonder why??? ????

Edited June 4, 2020 by Skeptic7

[Trillian]

12 minutes ago, Skeptic7 said:

Hmmm...wonder why??? ????

Because they don't need to do that, they know they can still get tourists at 30 to the USD, they even got record numbers of them at that rate. 

 

Let's say for example they dropped the rate to 40 per USD, that means they would easily earn that 12% of their GDP that is tourism. But the next 48% of GDP that is the rest of exports would suffer a 25% loss, they would be selling their exports at a 25% discount. 

[Number 6]

On 6/3/2020 at 4:45 PM, Trillian said:

Inflation is falling, not soaring, it's a major issue for the bank, April CPI was -3%:

https://think.ing.com/articles/thailand-steepest-price-fall-since-financial-crisis-reflects-huge-demand-drop/

 

The ever weakening USD is a concern when it comes to Baht strength, people have been dumping the Dollar which is causing it to weaken. The main reasons for that fall are the riots, and the high level of borrowings, as a result THB looks like a very sound and stable currency since government debt is below 42% of GDP. 

 

 

It's deflation - slack economy. There's a difference.

 

USD is not being dumped and certainly not because of the riots. That's just nonsense. BOT could hold gold or Euro (oops that's about to implode) or RMB or whatever. It need not be only dollars.

 

Edited June 4, 2020 by Number 6

[Trillian]

6 minutes ago, Number 6 said:

It's deflation - slack economy. There's a difference.

 

USD is not being dumped and certainly not because of the riots. That's just nonsense. 

Regardless of the cause, inflation has fallen.

 

Not dumped, post 16 argues it was/is being sold and statistically it was/is. If you think the Bloomberg opinion piece is nonsence that's your perogative, personally I think it's probably quite accurate.

Edited June 4, 2020 by Trillian

[kingdong]

7 minutes ago, Trillian said:

Because they don't need to do that, they know they can still get tourists at 30 to the USD, they even got record numbers of them at that rate. 

 

Let's say for example they dropped the rate to 40 per USD, that means they would easily earn that 12% of their GDP that is tourism. But the next 48% of GDP that is the rest of exports would suffer a 25% loss, they would be selling their exports at a 25% discount. 

Thailand is basically a third world country with first world aspirations and prices,they,'ve taken western tourists for granted over the last twenty years and in view of the forthcoming depression and tats attitude are going to get a rude awakening.

[Number 6]

12 minutes ago, Trillian said:

Let's say for example they dropped the rate to 40 per USD,

The currency floats on the open market. You cant just depreciate your currency lol. That's total manipulation.

 

Why would Thais want to lose 20% of their purchasing power?!

 

Edited June 4, 2020 by Number 6

[Trillian]

4 minutes ago, Number 6 said:

The currency floats on the open market. You cant just depreciate your currency lol. That's total manipulation.

 

Why would Thais want to lose 20% of their purchasing power?!

 

The Baht floats on a managed float basis, it is not free floating.

 

I gave a hypothetical case in order to make the point, (as evidenced by the wordds "for example") as to why the Thailand would not devalue their currency, I did not suggest they would or could do so.

Edited June 4, 2020 by Trillian

[kingdong]

41 minutes ago, bkk6060 said:

THB to USD= 40

Tourists would flock here.

But, it ain´t gonna happen.

What with an economy based on tourists (who won,t be coming) and exports no one will be able to afford,it just might happen.

[Number 6]

Depreciating the currency is simple. Just print money and give it all the banks and corporations to prop up their businesses. Bunch of wreckless parliamentary spending bills. Easy.

[Trillian]

4 minutes ago, Number 6 said:

Depreciating the currency is simple. Just print money and give it all the banks and corporations to prop up their businesses. Bunch of wreckless parliamentary spending bills. Easy.

You do understand that THB is not freely convertible and is not exportable? You should also understand that there is very little in Thailand by way of foreign competition, almost all business is home grown. And the term printing money means extending the credit lines on banks balance sheets, it doesn't actually mean printing notes or paper money. As a consequence of those things there's nothing in your simple solution that would actually result in a depreciated currency, only in greater lending by banks to the general population.