Thailand, Taiwan Risk Entering U.S. Watchlist for Currency Manipulation, UBS Says

[webfact]

Thailand, Taiwan Risk Entering U.S. Watchlist for Currency Manipulation, UBS Says

Ruth Carson Abhishek Vishnoi

 

Photographer: Brent Lewin/Bloomberg

 

(Bloomberg) -- Thailand and Taiwan may be added to the U.S. watchlist for currency manipulation after meeting all of the criteria set out by the Treasury Department, according to UBS Group AG. 

A country is included in the monitoring list if it fulfills two of three benchmarks: a trade surplus with the U.S. of at least $20 billion; a current-account surplus of at least 2% of gross domestic product; and persistent, one-sided intervention in the currency equivalent to 2% of GDP in six months of a year.

 

Taiwan, which dropped off the U.S. monitoring list in 2017, and Thailand now fulfill all three criteria, UBS’s analysis shows. Neither were included in the U.S. Treasury’s January findings.

Full story: https://www.bloombergquint.com/markets/ubs-says-thailand-taiwan-risk-entering-u-s-fx-monitoring-list

 

-- © BloombergQuint 2020-07-23

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[bangkokfrog]

Not surprising, but there is an understandable need to give those who control things time to move enough money overseas on favorable terms to be able to do a runner if (when?) the s**t hits the fan. 

[tonray]

Great...let's strengthen the baht against the dollar even further than it is. This all has to do with trade surplus which leads to current account surplus...if the US wants to change that...they have to start bidding on contracts like the Japanese and Europeans do....BTS/MRT expansion...all exclude US firms because...that's right...the US doesn't even bid on them.

[brianp0803]

I think the facts they stated implies that the baht should be even stronger. I believe they’re accusing Thailand of manipulating the baht to make it weaker. 

[ChakaKhan]

More bang for your baht baby....

[hotchilli]

4 hours ago, webfact said:

and Thailand now fulfill all three criteria,

Oppp's 

[pegman]

How about America butt out and stop blaming others for their failings which are many. 

[ThailandRyan]

3 minutes ago, pegman said:

How about America butt out and stop blaming others for their failings which are many. 

Do you know what currency manipulation is and how it affects everything worldwide?  Might be a worldwide issue that they have been called out on since the UN does not do jack to ensure equality in financial circles and even the IMF does not look into.

[Kerryd]

It's amazed me through the last few months how Thailand's currency seems to have remained steady despite the huge losses in the tourism and hospitality industries, as well as the losses in manufacturing and agricultural sectors from reduced exports (due to reduced demands from overseas).

In fact, go back to the (last) coup. It seems the Baht hasn't changed a whole lot no matter what is going on. If anything, it gets stronger and the only real explanation is that the gov't is manipulating it.

Reduced imports and increased exports to create trade surpluses. Buying/selling currencies to create shortages (on the money markets) which can lead to greater demand and therefore increased value. Selling bonds at favourable interest rates to foreign investors. Increasing/decreasing the Prime Rate of the (Central Bank/Federal Reserve/whatever) which can affect the monetary flow and make a currency more (or less) attractive to investors.

There are a number of ways gov'ts can manipulate their currencies to strengthen/weaken them. Yes, some countries, like Japan, will intentionally weaken their currencies to prevent it from becoming too strong which would affect both imports (by increasing them as they become cheaper) and exports (by decreasing them as they become more expensive). A strong currency can lead to inflation and trade deficits instead of surpluses, especially if it strengthens quickly for some reason.

There was talk a couple years ago that the Thai Baht's strength was having an adverse effect on exports (tourism as well as Thailand became a more expensive destination). However the gov't didn't seem to want to do anything about it and the baht doesn't seem to have lost much, if any, value for a few years now. Which makes a lot of expats very unhappy of course.

Keep in mind with this report though, that the Americans want everything to be in their favour. Trade agreements, exchange rates, treaties. They are getting desperate as their trade deficits soar. That is why they scrapped the NAFTA (North American Free Trade Agreement) and made a new one up (which no doubt heavily favours the US) and are already trying to modify it.

The US trade deficit (in total) was over 620 billion US for 2018. It grows every year as they continue to import more than they export. 

Taiwan and Thailand rank 10 and 11 respectively on the list of top 15 largest trade deficits with the US (this year) meaning they export more to the US than they import from them. Canada and Mexico are (naturally) the USA's top two trade partners. Mexico's trade deficit is #2 and Canada's is #14.
You can be sure that if the US had trade surpluses with Thailand and Taiwan, the whole "currency manipulation) issue probably wouldn't even be a briefing note on the back page of an obscure Treasury report.

Of course, even combined, Taiwan and Thailand are a fraction of the deficit compared to China who are #1 on the list.
The US has been complaining for years about how the Chinese have been deliberately manipulating the value of the yuan to favour China (duh !). 

Mexico is #2 which will no doubt change with the new CUSMA (Canada, US, Mexico Agreement) or "USMCA" or whatever abbreviation they end up going with. I just read two of the "key" achievements (from an American perspective) of that treaty and they were both about how Canadian trade in certain areas would be curtailed and American trade expanded.

 

All things considered (well, a couple of things maybe), the Thai baht should have dropped a fair bit over the last few years and should be in an almost free fall right now. Losing upwards of 16-20% of your GDP should have a negative effect on the value of your currency.

Sheesh, in Canada oil is a small part of the overall economy but every time it drops in value, the dollar drops as well and it is nowhere near as important to the overall GDP as tourism/hospitality is to the Thai GDP. Even a small drop in tourism/hospitality numbers should be reflected in the value of the currency but that doesn't seem to be the case for quite awhile now (for some strange reason).

Wasn't Thailand on another "naughty" list a couple years ago over how it was regulating (or not) international banking transactions ? I seem to recall they were on some sh*tlist (IMF ? World Bank ? UN ?) as they were letting banks get away with certain practises that could be used to launder money internationally or something like that.
I think the last article I read on that was how Thailand had made some changes in their banking regs so that they could get off that list, but I think there were still a couple items that needed to be rectified.

And just by coincidence, it's time for me to go to the bank ! Just did the laundry yesterday and didn't find any money so I guess I'll have to get it the old fashioned way.
(No, not "that" way !)

 

[DaftToPutRealName]

45 minutes ago, pegman said:

How about America butt out and stop blaming others for their failings which are many. 

America's fault that THB is manipulated? How so?

[blackcab]

Off topic posts have been removed.

[PolarAttack]

I have noticed the CDN dollar has strengthened the last few days. 
Coincidence?  I think not. 

[Mr Meeseeks]

US Dollar is the World's biggest ponzi and it is about to collapse. The money printers are in overdrive printing what is effectively worthless.

 

https://brrr.money/

[yellowboat]

Given that Thai Baht and the NTD are so similar in value, always wondered why the two countries did not link their currencies.  Then I stopped drinking so much.  

 

When it comes to Taiwan, I feel the US does a poor job sell its products there.   Thailand, on the other hand, tariffs are awful and should be held accountable by the US and other countries.  Also cha cha's cozy relationship with China is drawing scorn around the world.   

[Kwaynoom]

The currency markets are as old as the hills. Whatever happens today has happened before and will happen again.

 

[chilly07]

Thailands rigid control of foreign investment and import tax is all designed to increase profits for the rich elite and the baht is manipulated to increase their purchasing power and standing in the outside world. Surplus labour during a recession is easily absorbed by workers returning home and living of the land. Also Thai banks are mainly risk free. 'Western' economies don't have such luxuries hence the stable baht

[JimGant]

2 hours ago, Kerryd said:

If anything, it gets stronger and the only real explanation is that the gov't is manipulating it.

No, the real explanation is that the fundamentals are solid.

Quote

A country is included in the monitoring list if it fulfills two of three benchmarks: a trade surplus with the U.S. of at least $20 billion

And per the above about fundamentals, Thailand is trying to get the baht down, which would help erase the trade surplus. Again, fundamentals, not gov't manipulation, is keeping the baht high.

 

That the US depicts Thailand as a currency manipulator, when the facts speak otherwise, just confirms the Trump administration is totally out to lunch.

 

[brianp0803]

What does meeting the statistical criteria for being a currency manipulator have to do with President Trump? Sorry I forgot everything wrong with the world is Trumps fault.
I thought Trump was actually being credited with establishing better relationships with Thailand than they have had in the past (But I’m sure someone will come up with a negative Trump spin for that)

[Susco]

3 hours ago, Kerryd said:

It's amazed me through the last few months how Thailand's currency seems to have remained steady despite the huge losses in the tourism and hospitality industries, as well as the losses in manufacturing and agricultural sectors from reduced exports (due to reduced demands from overseas).

 

Why did that amaze you?

 

I don't think it's all rose scent and moonshine in any other country in the world, so Baht may get weaker, but that is compensated with all other currencies in the world moving in the same direction

[ThailandRyan]

1 hour ago, brianp0803 said:

What does meeting the statistical criteria for being a currency manipulator have to do with President Trump? Sorry I forgot everything wrong with the world is Trumps fault.
I thought Trump was actually being credited with establishing better relationships with Thailand than they have had in the past (But I’m sure someone will come up with a negative Trump spin for that)

It has nothing to do with Trump.  Read up on currency manipulation and the three things that lead to being placed on a watch list. Its not just the US that looks at these things.

[Redline]

8 hours ago, pegman said:

How about America butt out and stop blaming others for their failings which are many. 

The USA has done nothing about it ????

[Scot123]

I remember when Thailand was taken off the watch list and the baht soared like a rocket. I know nothing I just witnessed what I saw and anyone can follow the time line. There is so much hot money in thailand now from China and criminals laundering their washing in Thailand.  Let's see what eyes can see....

[Acrylic]

10 hours ago, DaftToPutRealName said:

America's fault that THB is manipulated? How so?

How about if America also manipulate dollar to make it weaker so American product will become more competitive instead of keep blaming others ?! But I doubt America will do that. America is an importer country after all rather than exporter country like China, Thailand, and Taiwan. So, America can only crying wolf. 

[lonewolf99]

UBS - the Swiss bank used by the Nazis calling out unfair trading....?

 

 

[torturedsole]

20 minutes ago, lonewolf99 said:

UBS - the Swiss bank used by the Nazis calling out unfair trading....?

Most of us have moved on.  

[pegman]

17 hours ago, ThailandRyan said:

Do you know what currency manipulation is and how it affects everything worldwide?  Might be a worldwide issue that they have been called out on since the UN does not do jack to ensure equality in financial circles and even the IMF does not look into.

Just maybe it is the Yanks that are  suppressing their own dollar. Your dear leader has stated he wants that done.

 

https://www.foxbusiness.com/economy/trump-weaker-us-dollar

[torturedsole]

3 minutes ago, pegman said:

Just maybe it is the Yanks that are  suppressing their own dollar. Your dear leader has stated he wants that done.

Forget about the rights and wrongs.  The US is obviously a major correspondent in global funds movements.  

 

If you don't abide by their rules then the sideline it is and it isn't pretty.  

[pegman]

18 hours ago, torturedsole said:

Forget about the rights and wrongs.  The US is obviously a major correspondent in global funds movements.  

 

If you don't abide by their rules then the sideline it is and it isn't pretty.  

That is true but it ends to change.