Strengthening baht, shortage of migrant workers worry exporters as markets look up

[CGW]

8 minutes ago, Sheryl said:

What you see in Pattaya is a far cry from what is the case in most of the country.

I accept that, the tourist areas are the worst affected, the majority of the country is doing well enough, but the majority of the locals left long ago and are now stuck in places like Pattata, Samui, Phucket, CM ect, there is no point them going home. 35 million tourists generated a lot of income for low payed workers!

[TheFreqFlyer]

3 hours ago, robblok said:

That is easier said then done, besides they could be accused by the US of currency manipulation if they do so. 

So? Vietnam and Laos have pegged their currencies to the USD, while Thailand appears to be maintaining a loosely floating peg. It's been operating in the 29.5 to 32.5 range for a long time now. That suggests it's being fixed to me.

 

Whereas the Euro has recently shot up to 36.5-37 from it's low of 32.5 this time last year. Basically, if you're dealing with Euros, Pounds or even to a lesser extent Australian dollars, things are a little better now than they were 6-12 months ago. It's those dabbling in USD that will suffer, because the Baht remains stubbornly strong against that currency. 

[khunPer]

2 hours ago, CGW said:

2 hours ago, Sheryl said:

Depending on what age group you use to represent working age, it's about 600-800,000

Your spinning government figures, whats the reality? you don't lose 35 million tourists and not have high unemployment, sure if you are the government and don't want to pay out any money you can fudge the numbers, have you seen the food lines that form in Pattaya when free food is being handed out, it's all well and good having a job, but a lot will not be earning anything like minimum wage.

32 million tourists, target was 40 million for 2020, 8 millions has already been here.

 

Numerous workers in the tourist industri were migrants that has gone home, many others have – as @Sheryl said, found other ways of making an income. Tourism totally counts for between 10 percent and 20 percent of the GNP, so still a huge lot of economy, but 80+ percent is something else; including export of fax-machines...????

[CGW]

2 minutes ago, khunPer said:

32 million tourists, target was 40 million for 2020, 8 millions has already been here.

I stand corrected!

I must be alone in seeing misery and desperation, suicide rates are off scale, have to get me some of those rose tinted glasses you and Sheryl have. ???? 

It's going to get a lot worse before (if) it ever gets better.

[natway09]

20.2 Billion USD in one month is not exactly chump change in anybodys books & is similar to Australias exports in 2018. Thailand has again had a trade surplus of over 4 Billion which is great for the country.

First world countries are paying out billions a month in unemployment benefits along with s'supporting businesses that have been in business for 15 years but did not bother saving any for a rainy day.

That is why the Bht has not dropped & I doubt it will against these "nanny states" who are in a hell of a lot more trouble than Thailand.

There are thousands of Thai males upcountry just lazing around, not interested to work for 12,000 Bht  & just watching the rice grow (if they are lucky to have farmer parents who feed them).

That is why the factories need migrant labour (similar now to Malaysia in many ways)

 

 

[Sheryl]

1 hour ago, CGW said:

I stand corrected!

I must be alone in seeing misery and desperation, suicide rates are off scale, have to get me some of those rose tinted glasses you and Sheryl have. ???? 

It's going to get a lot worse before (if) it ever gets better.

 

You are in Pattaya and taking what you see there as typical of   the whole country. It is definitely not.

 

No need for rose colored glasses, just get out of Pattaya. And even while there do a better head count, the people you are seeing aren't in the hundreds of thousands, probably not even in the tens of thousands.

 

I was in Bangkok recently staying near Nana area, prime tourist spot. There were some homeless folk that looked like they were formerly getting income through tourists (as opposed to the usual Cambodian beggers) but in the whole area, I don't think I spotted more than 10. Plenty of closed hotels and bars (and open ones pretty empty) but the majority of people that would once have worked in them were not sitting destitute on the pavement. I don't think they are in Pattaya either, only the  subset of people who unlike most don't have family they feel they can turn to, and they are a minority of the total. I am not dismissing their problems, just questioning your sense of their scale.

 

As for suicides I would hardly call them "off the scale"

 

"2,551 suicide cases, or 3.89 in every 100,000 of the population, were reported in the first six months of the COVID-19 pandemic, compared to 2,092 cases for the same period last year."

https://www.thaipbsworld.com/thailands-suicide-rate-surged-22-in-past-six-months-of-the-covid-19-pandemic/

That is an increase, yes, but not in line with what you seem to perceive. And that period included the 3 months of lockdown which were mentally stressful and also the peak of unemployment.

[CGW]

24 minutes ago, Sheryl said:

You are in Pattaya and taking what you see there as typical of   the whole country. It is definitely not.

i am not in Pattaya, I have visited recently, I am in the NE, I see what is happening up here, your view differs to what I am seeing and hearing.

[Cake Monster]

12 hours ago, webfact said:

The baht remains strong and can be an obstacle for exports, as it makes Thai products more expensive than products of competitors. The baht should stay at around Bt34 per dollar, down from the current Bt31 level,  or it must move along with regional currencies, she said. 

The Baht at 34 to the US Dollar will still do little to save Exports falling even more. The Baht alone as the savior on Exports would need to be about 40 to the US Dollar, or even more.

Yes, it will help a little if it were at 34, but the major issue that the Country fails to address, is the fact that many Goods and Products that originate in Thailand are just plain non competetive.

The high costs of production, and excessive profiteering have pushed up the price of all these products that are now at least 10 cheaper in neighbouring Countries.

When times were good, and people had  money, as they have had since 2007, huge profits could be made from them. Now, times have changed, and people do not have the amount of Money they once had, so Thailand needs to adapt to the Modern World, and quickly.

And the first thing they need to do is stop whinging about the fact that Buyers will not buy Thai due to the strong Baht, and deal with it.

[khunPer]

1 hour ago, CGW said:

I stand corrected!

I must be alone in seeing misery and desperation, suicide rates are off scale, have to get me some of those rose tinted glasses you and Sheryl have. ???? 

It's going to get a lot worse before (if) it ever gets better.

Thanks, and sure it's sad and bad for many – almost Worldwide – I however don't use tinted glasses, but just try to keep both feet on the ground, and catch up with facts, whenever I can.

[JimHuaHin]

Shortage of migrant workers; but 5+ million Thais unemployed?

[CGW]

50 minutes ago, khunPer said:

but just try to keep both feet on the ground, and catch up with facts, whenever I can.

Thats great! all those unemployed now have jobs according to the "facts" then, amazing Thailand, airline workers, airport staff, closed down hotels, taxi and Coach drivers, restaurant workers, shop staff, have all found gainful employment, sure those selling Thai souvenirs have also seen a surge in sales if you read the "facts" from government sources. Sure TAT will be taking on more staff, not laying them off ???? 

The deserted streets in tourist areas in Bangkok, Samui, Phuket, ect the shut down business's in these areas, all an illusion, I thought my feet were firmly planted when I witnessed this "fact"

Every worker that can no longer earn a living was funding a family back in the village, I live close to a few villages that were previously enjoying a remittance from family - no more, is this in the statistics?

The "official" Suicide rates are only up 22%, some seem to consider this an acceptable figure, I consider it "off the scale" due to many are not reported or counted as suicides! But those with rose tinted glasses, can defend all they like, I will stick with reality ......................

[Eddy Ozark]

Local businesses have suffered around 50 percent loss of volume and income. Many just hanging on by the skin of their teeth. What lays ahead worries me and others. 

[khunPer]

4 hours ago, CGW said:

Thats great! all those unemployed now have jobs according to the "facts" then, amazing Thailand, airline workers, airport staff, closed down hotels, taxi and Coach drivers, restaurant workers, shop staff, have all found gainful employment, sure those selling Thai souvenirs have also seen a surge in sales if you read the "facts" from government sources. Sure TAT will be taking on more staff, not laying them off ???? 

The deserted streets in tourist areas in Bangkok, Samui, Phuket, ect the shut down business's in these areas, all an illusion, I thought my feet were firmly planted when I witnessed this "fact"

Every worker that can no longer earn a living was funding a family back in the village, I live close to a few villages that were previously enjoying a remittance from family - no more, is this in the statistics?

The "official" Suicide rates are only up 22%, some seem to consider this an acceptable figure, I consider it "off the scale" due to many are not reported or counted as suicides! But those with rose tinted glasses, can defend all they like, I will stick with reality ......................

Thanks for your reply and opinion, but did you read the previous posts, where the talk was about unemployment rate, and the actual percentages?

[Mike k]

14 hours ago, Deli said:

Millions of Thai people out of work => missing the labor of migrant workers... Tells a lot

Shows how lazy they are 

[Stargeezr]

I wonder just who are the people in Thailand that are keeping the baht value so high?

  I believe that there are countries that may devalue their currency a bit, but others who

keep their currency high as well. I guess the very rich and the higher elite are the ones who

travel abroad and buy abroad, so like the high rate of the baht. What percentage of the whole

population are they?

Geezer

[onebir]

15 hours ago, dimitriv said:

I am also curious how Thailand can be a gold exporter. Do they have an unlimited supply of it they can sell again and again? 

No, but it seems the public hold a lot of their savings in gold. I haven't been able to find an estimate. Eventually they could run out, or a point where only the wealthiest people still hold gold could be reached. That would be very extreme and probably destabilizing.

 

1 hour ago, Stargrazer9889 said:

I wonder just who are the people in Thailand that are keeping the baht value so high?

I think private sales of gold, by people strapped for cash, could be a big part of the problem. That gold is then exported (the OP mentions this) increasing demand for, and supporting, the baht*. That could continue until private holdings of gold get close to being exhausted, or something happens allowing people to save by buying gold again (an improvement in the economy &/ a drop in the gold price I guess).

 

The gold price supporting the baht during a recession is what economists call a "pro-cyclical" effect. I'm curious to know whether it occurred in previous downturns. If so that might provide a metric for the size of Thai private gold savings, and how long these might continue to support the baht.

 

*As an aside, I'm not sure the BoT plan to allow sales of gold for USD will help; ultimately private gold sellers will need baht to fund their expenses... So even if gold merchants' proceeds from gold exports are in USD, they'll need baht to pay the private sellers. If I've missed something, please let me know...

[Selatan]

14 hours ago, Eibot said:

Can someone explain to me (in simple words) to an idiot like myself why the Baht is doing so damn well?

Thailand has a persistent low inflation problem. Thailand's consumers couldn't boost their spending because: 
1) high household debt levels
2) low birth rate
3) fast ageing society

[CrunchWrapSupreme]

6 hours ago, Stargrazer9889 said:

travel abroad and buy abroad, so like the high rate of the baht. What percentage of the whole

population are they?

I’ve often wondered that myself. For instance, when about a year ago I saw the latest ad campaign for a certain blue colored Thai bank, its handsome spokesperson, and their new app. This guy was bouncing between places like the Eiffel Tower, Big Ben, and New York City, waving his phone around showing the app and different world currencies.

 

I was like, just how many Thai people actually do that? The situation of most Thais I know, through those I’ve met, my colleagues, the family I married into, and the stories on Thai visa are: They earn at most 10-14k a month. They have strict visa requirements against them all over the world. To get past these, they must prove high incomes from established employment at big companies. Or in other words, a reason for coming back to Thailand, and not staying to work abroad illegally. I’ve heard about supposedly “hi-so” young ladies being denied at Korea, as they figured they were seeking to enter the red light industry. I heard of other supposedly well-to-do govt workers, driving luxury cars, who’ve spoke of “holidaying in Europe” while this actually meant Turkey, as this was one of the few European countries with relaxed visa requirements for them.

 

So again, just who are all these globe trotting, hi-so Thais, enjoying their high valued baht? Perhaps it’s some sort of illusion to do just that, prop up the currency’s value? Or I’ve just got too many “friends in low places”, which is where I’d much rather be anyway.

[mikebell]

Can Governments devalue their currency, say by 2%?

[dimitriv]

1 hour ago, CrunchWrapSupreme said:

Or I’ve just got too many “friends in low places”

 

That.

 

The Thai people I know usually make between 40k and 50k a month.

 

But the ones I know are also in debt, mortgage for a condo, a loan for a new car etc. Not much money left for travelling.

 

But Bangkok surprises me often. Saw a new restaurant in our soi, really too expensive for what they offer. In my mind I gave them a couple of months before they would close. But when I walk by I see that they have a lot of clients, every evening again. Most people in Bangkok are poor. But some of them are rich, a small percentage. But in a city with 8 million people it is still a big group.  

 

 

[Misab]

A Strengthening of the baht might well be because it is manipulated but the question is by who?

I don’t think Thailand is behind because that would be stupid to harm their own export but it could be international hedge fonds there see an advantage in a high baht. It is well known that American hedge funds destroyed the economies of poorer countries by manipulating their national currencies. So, what can Thailand do about high baht? Maybe the only way is negative interest rates.

[ThailandRyan]

On 10/7/2020 at 9:21 AM, robblok said:

Tell me how in your own words the government would bring the baht down ?

 

Its not as if a government can do much to influence it. The interest is low already can't do much with that.

 

The market will have to correct this by itself. As long as imports go down more then exports the the baht will stay strong. 

 

Maybe the move of trading gold in U$ dollars would help if it is done. Otherwise there is not much the government can do. Just need the market handle it by exports going down because of the Baht then less demand for Baht and a lower price. 

If they would start putting money into the hands of those who need it it might have an effective change in the direction of the Baht.  However, this government has spent just a small amount on its people and relied on the big companies to help prop things up.  Time to take the bull by the horns and do the right thing even if it means the rich loose some millions of baht as the baht shrinks.

[robblok]

1 minute ago, ThailandRyan said:

If they would start putting money into the hands of those who need it it might have an effective change in the direction of the Baht.  However, this government has spent just a small amount on its people and relied on the big companies to help prop things up.  Time to take the bull by the horns and do the right thing even if it means the rich loose some millions of baht as the baht shrinks.

Could you explain to me how putting money in the hands of who need it change the baht ? you do know how a currency exchange works. It has not much to do with putting money in the hands of people.

 

It has all to do with the demand for the currency. (imports - exports - interest rate)

 

I love to see your explanation 

[ThailandRyan]

9 minutes ago, robblok said:

Could you explain to me how putting money in the hands of who need it change the baht ? you do know how a currency exchange works. It has not much to do with putting money in the hands of people.

 

It has all to do with the demand for the currency. (imports - exports - interest rate)

 

I love to see your explanation 

So lets look at it this way.  By purchasing foreign reserves in exchange for Thai Baht, the Central Bank helps keep the baht at its current rate and fairly strong.  By increasing the foreign reserves the Central Bank  ensures the stability of the THB and ensures it can be characterized as a safe haven currency.  However, if they would use the reserves, and not use other money from loans, to assist the economy and the people by giving handouts instead of relying on loans from those foreign countries, the THB would loose steam and start to sink a little.  By leaving the reserves as they are and not using them in a time of need they are ensuring the strength of the baht remains and that there is little volitivity.

[robblok]

6 minutes ago, ThailandRyan said:

So lets look at it this way.  By purchasing foreign reserves in exchange for Thai Baht, the Central Bank helps keep the baht at its current rate and fairly strong.  By increasing the foreign reserves the Central Bank  ensures the stability of the THB and ensures it can be characterized as a safe haven currency.  However, if they would use the reserves, and not use other money from loans, to assist the economy and the people by giving handouts instead of relying on loans from those foreign countries, the THB would loose steam and start to sink a little.  By leaving the reserves as they are and not using them in a time of need they are ensuring the strength of the baht remains and that there is little volitivity.

They are NOT purchasing foreign reserves at all. These come from imports exports and tourism. They are NOT intentionally keeping the baht strong. They have actually tried to lower the price of the Baht a few times with interest cuts. So what your saying makes no sense.

[ThailandRyan]

13 minutes ago, robblok said:

They are NOT purchasing foreign reserves at all. These come from imports exports and tourism. They are NOT intentionally keeping the baht strong. They have actually tried to lower the price of the Baht a few times with interest cuts. So what your saying makes no sense.

Read this article.  I understand what your trying to say, but they have and are purchasing foreign reserves, it does not just come from imports and exports.

 

"By purchasing foreign reserves in exchange for Thai baht, the central bank in practice helps keep the baht cheap and less volatile. Increasing foreign reserves and the stability of the baht could further reinforce its character as a safe haven currency."

 

That is just an excerpt from this article

https://www.thailand-business-news.com/banking/75598-thailands-soaring-baht-reaches-six-year-high.html

 

[robblok]

18 minutes ago, ThailandRyan said:

Read this article.  I understand what your trying to say, but they have and are purchasing foreign reserves, it does not just come from imports and exports.

 

"By purchasing foreign reserves in exchange for Thai baht, the central bank in practice helps keep the baht cheap and less volatile. Increasing foreign reserves and the stability of the baht could further reinforce its character as a safe haven currency."

 

That is just an excerpt from this article

https://www.thailand-business-news.com/banking/75598-thailands-soaring-baht-reaches-six-year-high.html

 

Ryan,

 

you probably don't know what your talking about. Just read what you posted.

 

They are BUYING foreign currency to keep the Baht cheap. So they are trying to keep the Baht down according to your own post. When a country is buying foreign currency for imports it lowers the value of their currency. Exports increase the value of your currency (as they are paid in that currency)

 

So what they are doing here is keeping the baht low.

[ThailandRyan]

14 minutes ago, robblok said:

Ryan,

 

you probably don't know what your talking about. Just read what you posted.

 

They are BUYING foreign currency to keep the Baht cheap. So they are trying to keep the Baht down according to your own post. When a country is buying foreign currency for imports it lowers the value of their currency. Exports increase the value of your currency (as they are paid in that currency)

 

So what they are doing here is keeping the baht low.

What I am saying, instead of using the reserve as a reserve, use it to offset the current needs and the baht should shrink not rise, they are unfortunately not keeping the baht low.  If they were doing as you say, then the baht would be totally out of control and even higher then it is now.  That is called market manipulation.

 

https://www.economicshelp.org/blog/853/currency/foreign-currency-reserves/

Edited October 8, 2020 by ThailandRyan

[robblok]

12 minutes ago, ThailandRyan said:

What I am saying, instead of using the reserve as a reserve, use it to offset the current needs and the baht should shrink not rise, they are unfortunately not keeping the baht low.  If they were doing as you say, then the baht would be totally out of control and even higher then it is now.  That is called market manipulation.

 

https://www.economicshelp.org/blog/853/currency/foreign-currency-reserves/

Ryan, your quote was misleading. I thought that was what they were doing but when you read the whole article you see they say they COULD be doing that. You omitted that and I did not go into the main atricle.

 

Anyway if you read they did quite a few things already. But what you say is true its currency manipulation and would get them in trouble.

[dimitriv]

1 hour ago, robblok said:

Could you explain to me how putting money in the hands of who need it change the baht ? you do know how a currency exchange works. It has not much to do with putting money in the hands of people.

 

It has all to do with the demand for the currency. (imports - exports - interest rate)

 

I love to see your explanation 

 

More money in the hands of people -> more imports -> lower baht.

 

They could also lower import tax so the demand for foreign products will increase.