Impact of protests on THB vs Dollar & Sterling

[sammieuk1]

How can anyone explain the mysterious in this unexpectedly mysterious land of the rising baht Brian Cox has been working on this conundrum and after 5 years all that he or anyone could come up with is I don't know  ???? 

[Barnabe]

16 minutes ago, sammieuk1 said:

How can anyone explain the mysterious in this unexpectedly mysterious land of the rising baht Brian Cox has been working on this conundrum and after 5 years all that he or anyone could come up with is I don't know  ???? 

Actually that's quite easy to explain.

 

A solid fiscal discipline, especially when compared to the western countries, very low debt, favourable balance of trade and the occasional budget surplus. Throw in a bit of cooking the books (just enough so they don't get caught), "illegal" currency controls and a flow of hot money from China, and it's done.

 

Of course, with covid now most of that is out of the window, so who knows what's going to happen going forward.

 

Edited October 19, 2020 by Barnabe

[Andy from Kent]

7 hours ago, Curt1591 said:

Is everyone losing faith in currencies? Gold seems to be doing well. 

 

Gold will likely settle down when the world isn't in such a state of upheaval.

 

[Satcommlee]

Nothing touches it, not the protests, past protests, massacres, the flooding in Bangkok and a high profile death -nothing devalued the Baht.

[onebir]

11 minutes ago, Barnabe said:

solid fiscal discipline, especially when compared to the western countries, very low debt, favourable balance of trade

Bear in mind the 'trade balance'* is being boosted by gold exports, due to savings of gold being sold off & exported. This has to end sometime (eg when financially stressed people run out of gold savings &/ cease to be financially stressed.)

 

*'trade balance' because net trade in gold is arguably largely financial & a form of capital flow.

[ExpatOilWorker]

Thailand had a $18 billion trade surplus the first 8 months of the year, feeding an ever stronger baht.

August alone had a $4 billion trade surplus.

 

 

[ThailandRyan]

2 minutes ago, ExpatOilWorker said:

Thailand had a $18 billion trade surplus the first 8 months of the year, feeding an ever stronger baht.

August alone had a $4 billion trade surplus.

 

 

So is that a drop of 14 billion or an increase to be added.  Confused.

[Berkshire]

7 hours ago, Barnabe said:

Going to throw my prediction into the ring too!

 

THB - expect it to lose up to 10%, not much more since Thailand is in a pretty strong fiscal position compared to western countries even in the current situation 

 

GBP - weakness while COVID and brexit effects are felt, possible big gains medium term (the brexit gamble) but not going back to pre 2008 levels against USD and EUR though

 

EUR - a house of cards, I predict weakness but then again have been predicting that for a couple of years now and the cards are still up... long term prospects are not good but can still survive propped up by German money or possible EU fiscal / federal integration 

USD - short and medium term gains against major currencies because of all of the above; long term prospects very hard to determine, money printing like crazy but still the Deleted reserve currency 

The big unknown here is RMB, although my hunch is that long term it will make some substantial gains. 

Pretty good.  I'd add that the USD may strengthen if Biden wins the election.  A President Biden should lead to more stability and confidence in the markets, policies that will improve the economy and lower the debt, and engagement internationally with both trade and diplomacy.  The stock market may take a hit if he raises taxes on corporations, but that's really not relevant to currency exchange.  

[Banana7]

26 minutes ago, ExpatOilWorker said:

Thailand had a $18 billion trade surplus the first 8 months of the year, feeding an ever stronger baht.

August alone had a $4 billion trade surplus.

 

 

This is exactly the issue. Until imports are larger than exports, THB will remain strong. Trade balance must turn negative to make THB lose strength.

 

Also, the Thai banks have been issuing perpetual bonds in USD, (bond with no repayment date), well over a USD billion this year, to increase their tier one capital, which is eroding due to depositor withdrawals and non-performing loans. More bonds may be issued because of NPLs and the Bank of Thailand debt moratorium scheme ending.  These USD bonds will make the THB stronger. see more here:

 

 

The Bank of Thailand can manipulate the exchange rate and weaken THB, but some countries may see that as interference to get a trade advantage.

 

 

Edited October 19, 2020 by Banana7

[rumak]

13 minutes ago, Berkshire said:

.  I'd add that the USD may strengthen if Biden wins the election.  A President Biden should lead to more stability and confidence in the markets, policies that will improve the economy and lower the debt

I have been hearing some people predicting the crash of the USD for 30 years now , much like the "end of the world"  camp.    I have no idea who or why.... but would not bet against the dollar. ( yes, i see you have said strengthen)

I would , however, bet that no way the debt will ever be lowered.  Its one of those unexplainable forces of nature .  More debt  hahahah   mai pen rai   click click click     no worries

Edited October 19, 2020 by rumak

[Jaxxper]

I remember a few years ago when protesters blocked key areas in Bkk and did a sit in at the main airport; from memory I don't think the Baht even twitched downwards. Don't see it happening any time soon either.

[Bangkok Barry]

Nothing that happens in Thailand has or will affect the Baht. Not since Thailand began the Asian Crash in 1997 anyway. It is tied to the $US. What happens to that will affect the Baht. Thailand has so little influence on anything, anything at all, in world affairs that the protests are of zero importance to anyone outside of the country.

[brianp0803]

My prediction is the dollar will strengthen against the baht, but the stock market will crash within the next month. 
 

The protest will have very little effect on the Baht value unless they get the results they want.

[ozfarang]

Interesting article re: the Thai economy and the direction of the THB

 

BUSINESS NEWS

OCTOBER 19, 20205:51 PMUPDATED 2 HOURS AGO

Investors cut Thailand loose as protests cloud recovery

By Orathai Sriring

2 MIN READ

BANGKOK (Reuters) - Investors dumped Thai stocks on Monday and analysts warned of a possible selloff in the currency, as worries mount that escalating confrontation between the authorities and anti-government protesters could drag Asia’s worst performing market even lower.

Thailand's benchmark equity index .SETI fell 2% to a six-month low in the first trade since police turned water cannons on protesters in central Bangkok late on Friday in the most violent clashes yet over months of demonstrations.

The selloff was the steepest in four months as big turnouts at daily protests since a ban on gatherings was announced last week added to a sense of hardening resolve on both sides.

“Recent political developments from demonstration turn outs to the declaration of a state of emergency for Bangkok are unsettling investors’ nerves,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

“Such an atmosphere prompts investors to reduce risk as conditions become more ‘business not as usual’.”

The baht THB= fell 0.1% to 31.24 per dollar on a day when the U.S. currency weakened against most other currencies. [.SO]

Prakash Sakpal, senior Asia economist at ING, said the so-far resilient currency could also succumb to escalating political risk.

“The equity market sell-off today seems to be the beginning of that trend,” he said.

Protesters seek the removal of Prime Minister Prayuth Chan-ocha, a former junta leader, and reforms to reduce the powers of the Deleted. Prayuth has said he will not quit and the Royal Palace has made no comment on the protests.

Thailand has already suffered a record $9.3 billion in equity outflows so far this year as the COVID-19 pandemic wrecks the travel-exposed economy and protests threaten to delay its recovery.

“Domestic tourism may be completely dead if protests are prolonged, as they are spreading all over,” said Chairat Triratanajaraspon, president of the Tourism Council of Thailand.

For a graphic on Foreign investments in Thailand:

 

https://uk.reuters.com/article/thailand-protests-markets/investors-cut-thailand-loose-as-protests-cloud-recovery-idUKL4N2HA2DX

 

 

[karunasup]

Key factor, is the demand for baht from foreign short term investors, who believe the baht will maintain its value compared to other ASEAN currencies.....With cheap money in G7 countries and China, a small % is expected to flow to Thailand, enough to keep demand for bhat high

[geworthomd]

15 hours ago, Don Chance said:

Expect deflation world wide. USA dollar could collapse next year. Buy Chinese yuan.

What a crock.  The US dollar could chew up the yuan for breakfast.  It is the world trading currency and the oil price standard.  China is taunting for war with: 1) Hong Kong 2) Philippines 3) America 4) Bruni  5) Vietnam  6) Japan 7) India.  Do really think the yuan is the best bet?  I think the Spratly Islands and India and Japan and the USA are going to push them back in their places.  Xi is a war monger.  I would not bet on the yan any more than I would bet on the lotto.  I respect your opinion.  In my opinion, the US dollar is so strong around the world.  It doesn't matter if it is ten or fifteen percent here and there.  It is the largest economy in the world.  It has the largest import in the world.  It is more than self sufficient in oil.  There is just no reason for the US dollar to collapse...hogwash.

[earlinclaifornia]

22 hours ago, Kinnock said:

With Brexit and record national debt due to an unwise COVID response - the GBP will fall significantly in my view.  Long term I believe the UK economy will recover, but we're looking at 5 years+.

 

I wouldn't write Trump off yet, but I don't think the election will have a huge impact whoever wins, as Trump's rhetoric has been fairly benign in the real world.

 

The Thai protest will weaken non-Chinese FDI, so again limited impact.

 

Gold is already high, so although a good way to ensure you don't lose everything in the event of a Zombie Apocalypse  it is unlikely to grow much more, and in the longer term will fall back to 2019 values.

 

So my view - get out of Stirling for a while.

 

I cannot agree that trumps has had little effect. When I arrived in January 2016 upon him entering the race the baht was 36 to the dollar declining to present 31.2 That is a loss of annual conversion for me of 122880.

[Kinnock]

3 hours ago, earlinclaifornia said:

I cannot agree that trumps has had little effect. When I arrived in January 2016 upon him entering the race the baht was 36 to the dollar declining to present 31.2 That is a loss of annual conversion for me of 122880.

That's minimal compared to UK - the Gold Standard in goverment actions impacting currency.  65 THB to 1 GBP when I arrived in Thailand .... now 40.

[johnmcc6]

On 10/19/2020 at 6:58 AM, Poet said:

It is more that there has been so much Chinese money swooshing around the world as there is a huge incentive for citizens to get their money out. Thailand was in a good position to benefit from that. The Chinese government were relatively relaxed about money exiting for investment here because it suited their regional aims. The comparatively small size of the Thai economy meant that factor alone propped up the Baht.

It is possible that China might shut off that tap in order to retain as much money as possible for its own post-Covid economic recovery, but I have a feeling they won't as destroying the Thai economy would send the wrong message to other potential puppet states.
 

 

My impression is that the markets have already factored in a Biden win, it won't make the dollar drop much.

 

Biden is toast.get used to it.

[polpott]

2 hours ago, johnmcc6 said:

Biden is toast.get used to it.

trump is burnt toast. Get used to it, he has.

[Skeptic7]

NOTHING seems to weaken the almighty, bulletproof THB. There's been much worse for much longer of every description in the past decade+ and Almighty Baht just keeps on gaining strength.

Edited October 20, 2020 by Skeptic7

[JensenZ]

On 10/19/2020 at 6:17 AM, Matzzon said:

As you say, this is Thailand. The baht should have fallen long time ago, but seems to just gain instead. Unbelievable!

I'm surprised the Thai baht is not gaining substantially against the major currencies. They're not printing money here (aka quantitative easing) as they are in the USA, Europe and Australia.

 

It could happen that the Treasury Department will have to devalue the baht in the near future.

 

Mass protesting has just started, so it will take some time to determine its effect on the baht. How the government is going to respond is still uncertain. 

[Thaiaddict01]

On 10/19/2020 at 8:20 AM, geworthomd said:

What a crock.  The US dollar could chew up the yuan for breakfast.  It is the world trading currency and the oil price standard.  China is taunting for war with: 1) Hong Kong 2) Philippines 3) America 4) Bruni  5) Vietnam  6) Japan 7) India.  Do really think the yuan is the best bet?  I think the Spratly Islands and India and Japan and the USA are going to push them back in their places.  Xi is a war monger.  I would not bet on the yan any more than I would bet on the lotto.  I respect your opinion.  In my opinion, the US dollar is so strong around the world.  It doesn't matter if it is ten or fifteen percent here and there.  It is the largest economy in the world.  It has the largest import in the world.  It is more than self sufficient in oil.  There is just no reason for the US dollar to collapse...hogwash.

Taunting war with PH, Vietnam that's over the SE China sea islands right? What's going on with Japan and Bruni?  Taiwan in any danger like Hong kong?

 

I have most of my assets in cash and in USD, USD should be ok in the next 10,15 years right? It should be ok with either the candidates after Nov 3rd?

[Leaver]

On 10/23/2020 at 2:56 PM, Thaiaddict01 said:

I have most of my assets in cash and in USD,

Where is it held?