Thai baht Ozzie dollar

[Olmate]

[rwill]

the better exchange rates lately might have something to do with the USA considering labeling Thailand as a currency manipulator.

 

Multiple U.S. trade partners risk 'manipulator' label in Yellen's first currency report (yahoo.com)

[theonetrueaussie]

It's looking WAY better especially considering a year ago it went under 19thb, I can definitely deal with 24-25thb as well as the super cheap rental prices for covid ????

[Stevemercer]

Thailand is facing a real liquidity crisis (too much government debt and not enough short term foreign money flowing in to cover interest payments) causing the Baht to drift downwards as investors loose interest.

 

However, Thailand can't afford to let the Baht drift much lower (about 10% would be the limit) or it would precipitate a real crisis through skyrocketing interest rates.

 

I think the government is crossing its fingers and hoping the economy will pick up enough to head off the crisis. The country really needs those tourism dollars to come flooding in by the last quarter. 

[Brierley]

4 minutes ago, Stevemercer said:

Thailand is facing a real liquidity crisis (too much government debt and not enough short term foreign money flowing in to cover interest payments) causing the Baht to drift downwards as investors loose interest.

 

However, Thailand can't afford to let the Baht drift much lower (about 10% would be the limit) or it would precipitate a real crisis through skyrocketing interest rates.

 

I think the government is crossing its fingers and hoping the economy will pick up enough to head off the crisis. The country really needs those tourism dollars to come flooding in by the last quarter. 

I don't understand what you're trying to say. Government debt is covered by bond issuances from either BOT or the MoF. The PDMO shows debt levels are still under 55% of GDP, that's seriously low. https://www.pdmo.go.th/en

[Stevemercer]

Yes, debt levels are still manageable assuming good governance and a return to positive growth. However, the debt is increasingly in foreign currencies. After the 1997 crisis the MoF worked hard to convert all debt into Thai dollars to avoid any repeat, but that has been relaxed over the last few years because of the high Baht and more recent Covid crisis.

 

The government is running a deficit budget and will be pushing the legislated limit for loans shortly. Presumably the legislative limit will be raised by the government. The government is facing a one trillion baht deficit this FY and is about 250 billion short of covering this.

 

Hopefully the economy will start to grow out of deficit this year and the baht will plateau reducing foreign currency exposure. 

 

The take home message is that the government can't afford to let the baht fall much further. But exports are still weak. If the government doesn't take positive action the market may push the baht down making the government debt worse and worse.

 

[Brierley]

4 minutes ago, Stevemercer said:

Yes, debt levels are still manageable assuming good governance and a return to positive growth. However, the debt is increasingly in foreign currencies. After the 1997 crisis the MoF worked hard to convert all debt into Thai dollars to avoid any repeat, but that has been relaxed over the last few years because of the high Baht and more recent Covid crisis.

 

The government is running a deficit budget and will be pushing the legislated limit for loans shortly. Presumably the legislative limit will be raised by the government. The government is facing a one trillion baht deficit this FY and is about 250 billion short of covering this.

 

Hopefully the economy will start to grow out of deficit this year and the baht will plateau reducing foreign currency exposure. 

 

The take home message is that the government can't afford to let the baht fall much further. But exports are still weak. If the government doesn't take positive action the market may push the baht down making the government debt worse and worse.

 

Foreign currency loans are super low, less than 1.7% of GDP or about THB 14 billion (see the PDMO link). And with over USD 250 bill. in foreign currency reserves, liquidity is never likely to be an issue IMHO. 

[Leaver]

5 hours ago, Stevemercer said:

The country really needs those tourism dollars to come flooding in by the last quarter. 

 

That's simply not going to happen.

 

Last quarter of 2022 is a possibility, if they get serious with a vaccination program.  

[Brierley]

The budget year runs through September, last quarter wont help.

[Chivas]

On 4/16/2021 at 12:53 PM, Brierley said:

And with over USD 250 bill. in foreign currency reserves, liquidity is never likely to be an issue IMHO. 

In a nutshell.......you can even remove the word "likely" as well

[Brierley]

Just now, Chivas said:

In a nutshell.......you can even remove the word "likely" as well

The poster who first raised this subject sent me a link to an article in the paper whose name shall not be mentioned, I'm very grateful that he did because it made interesting reading. The article is one of five by a freelance writer who holds a Phd and used to be the CEO of Thanachart Life Insurance. I have to say he is one of the best economic observers and commentators I've come across in Thailand, in many years. He makes a compelling case that a liquidity crisis is a very real possibility. I recommend you read CHARTCHAI PARASUK and reconsider your views, I have certainly reconsidered mine. He has just released article 3 of 5 on the Thai economy.

[CharlieH]

Reported Off topic post removed.