Thai Baht Volatility

[Naam]

Dr. Naam, I took the time to read some of shochus' posts and he(she) is indeed a bit of a clown and quite an odd buggar. I think replying to him(her) is a waste of time, so I have stopped doing so. My apologies to the board for going off topic!

basically you are right Vic. but if somebody gets personal and posts stupid lies (like "decent hotel room") one has to react.

[ray23]

Well since the baht started it's it' appreciation I have asked friends in the states if they were noticing anything different, a slowing of avialable jobs, costs going up and to date nothing.

[bkkandrew]

Dr. Naam, I took the time to read some of shochus' posts and he(she) is indeed a bit of a clown and quite an odd buggar. I think replying to him(her) is a waste of time, so I have stopped doing so. My apologies to the board for going off topic!

basically you are right Vic. but if somebody gets personal and posts stupid lies (like "decent hotel room") one has to react.

Goodness - your up early this morning! Whats up - couldn't afford room service?

[Naam]

Dr. Naam, I took the time to read some of shochus' posts and he(she) is indeed a bit of a clown and quite an odd buggar. I think replying to him(her) is a waste of time, so I have stopped doing so. My apologies to the board for going off topic!

basically you are right Vic. but if somebody gets personal and posts stupid lies (like "decent hotel room") one has to react.

Goodness - your up early this morning! Whats up - couldn't afford room service?

i am up EVERY day at 04.00hrs, a routine of more than 30 years. my friends think i am crazy. i guess they are right.

[bingobongo]

Edited June 22, 2007 by bingobongo

[shochu]

Dr. Naam,

You said that you went and asked the hotel for a fan because the hotel air con was not working so well - your own words.

I believe you are renting and yes - I can easily access ALL your info if i choose to !

Vic,

Rather than answering intelligently, you bring yourself to the level of an angry child - how befitting!

And, your knowledge of economics is mindboggling. And only a simpleton would bring the discussion down to the level you have.

Cheers and do try to have a nice one - both of you since your days/life seem to be ...

[calibanjr.]

The U.S. is not actually "printing money as fast as they can" as you put it, because as I am sure you know that this would lead to high levels of inflation and inflation has been and currently is relatively low in the U.S.

This is a beautifull masterpiece of the "CNBC thinking". "How on earth could you think that the money supply is increasing ? Check the inflation, it's still low !". By the way, it's also a nice example of syllogism...

Remember ? All the men are mortal. Socrate is a man. Therefore, Socrate is mortal.

The money supply under amphetamines is a fact.

(Last december) Australia, the M3 money supply is 13% higher from a year ago, British M4 is 13% higher, the Euro zone's M3 is 9.3% higher, a 16-year high, Korea's M3 is 10.3% higher, China's M2 is 16.9% higher, India's M3 is 20.5% higher, Russia's M2 is 45% higher !

Of course, in the US you would have some trouble to find the datas. The FED stopped the publication of M3 1 year ago.

How convenient... However, M3 is estimated at +10 % y-o-y in the US.

Oil, commodities, Real Estate (except in US)... Everything is going up. But, until the end, you would prefer to stick to the famous "Core CPI", a Consumer Price Index in which all the items that go up have been removed... And the remaining have been massaged with the "Hedonic Model".

It's pathetic. You should turn off CNBC. And find hard datas.

hey cclub, layoff that facts, figures, "fuzzy numbers"(W. in the 2000 debates) stuff! You're gonna mess up our alternate reality where we can finance the greatest debacle in history, cut taxes (to the top 2%) keep the war-profiteers and oil companies grooving along, etc. and we'll just cruise along at the drive-thru? M3, we don't need those numbers! We don't need the list of the Cheney/Bush energy task force in 2001, all that just muddies the waters.

[cclub75]

hey cclub, layoff that facts, figures, "fuzzy numbers"(W. in the 2000 debates) stuff! You're gonna mess up our alternate reality where we can finance the greatest debacle in history, cut taxes (to the top 2%) keep the war-profiteers and oil companies grooving along, etc. and we'll just cruise along at the drive-thru? M3, we don't need those numbers!

You're going to love that one :

"Empirical evidence shows that - since the first half of the nineteenth century, and in a number of countries - fluctuations in trend money growth have almost always led to fluctuations in trend inflation. In light of the evidence coming from the last two centuries of data, totally ignoring trend movements in money growth would therefore entail - in my view - excessive and unreasonable risks. The practice of the SNB and ECB of closely monitoring monetary trends in order to identify long-term risks to price stability is therefore validated by the monetary history of the last 200 years."

Who said that today? Trichet, president of the ECB !

http://www.ecb.int/press/key/date/2007/html/sp070622.en.html

A polite way to tell this very simple equation : excess of money supply = inflation.

ECB akwnoledges it. But the FED doesn't seem to care.

We're going to have fun...

[Naam]

Dr. Naam,

You said that you went and asked the hotel for a fan because the hotel air con was not working so well - your own words.

I believe you are renting and yes - I can easily access ALL your info if i choose to !

nobody cares what you "believe" Shochu. you are either a bloody liar or somebody who has hallucinations. if the latter applies... are you smoking or injecting the stuff?

[BalthazarBeefheart]

Dr. Naam,

You said that you went and asked the hotel for a fan because the hotel air con was not working so well - your own words.

I believe you are renting and yes - I can easily access ALL your info if i choose to !

nobody cares what you "believe" Shochu. you are either a bloody liar or somebody who has hallucinations. if the latter applies... are you smoking or injecting the stuff?

I was hoping to read about Thai baht volatility but alas this seems to have gone somewhat astray.

[Naam]

[quote name='BalthazarBeefheart' date='2007-06-23

I was hoping to read about Thai baht volatility but alas this seems to have gone somewhat astray.

since several weeks volatility has ceased to exist. that's why people get bored, poke their noses and invent stories. as simple as that.

[chiang mai]

Dr. Naam,

You said that you went and asked the hotel for a fan because the hotel air con was not working so well - your own words.

I believe you are renting and yes - I can easily access ALL your info if i choose to !

nobody cares what you "believe" Shochu. you are either a bloody liar or somebody who has hallucinations. if the latter applies... are you smoking or injecting the stuff?

I was hoping to read about Thai baht volatility but alas this seems to have gone somewhat astray.

I have an idea, let's start a new thread where we can discuss the volatility of the Thai Baht. If we sneak off and do it quietly perhaps the other kids won't notice. When they do notice and want to join in we can all say no, you can't, because you can't concentrate and you're too easily distracted by name calling! It's all amazing behavior, really.

Edited June 25, 2007 by chiang mai

[cmsally]

While all you guys have been arguing , I have been sitting praying for pound to hit 80 so I can buy a bigger condo.

So far no good, but if it does, don't anyone take credit for my hard work!

There we go back to Thai Baht again!

[Irene]

[

I was hoping to read about Thai baht volatility but alas this seems to have gone somewhat astray.

I have an idea, let's start a new thread where we can discuss the volatility of the Thai Baht. If we sneak off and do it quietly perhaps the other kids won't notice. When they do notice and want to join in we can all say no, you can't, because you can't concentrate and you're too easily distracted by name calling! It's all amazing behavior, really.

chieng mai,

Well said! I was hoping to learn something on other thinkings, I am now truly lost. Still this thaivisa forum is still bearable and still the best I have experienced. You just go and try the Nation forum, you will be so amazed of how strange people can be.

Cheers!

[chiang mai]

While all you guys have been arguing , I have been sitting praying for pound to hit 80 so I can buy a bigger condo.

So far no good, but if it does, don't anyone take credit for my hard work!

There we go back to Thai Baht again!

Your efforts in trying to make the Pound hit 80 have not gone unnoticed and I for one commend your efforts. Please keep up the good work.

[chiang mai]

Meanwhile, back at the ranch.... there was another interesting interview that was printed in The Nation today about this subject - I am of course referring to the strength and future of the Baht and not the bun fight between our two senior members, just in case folks have lost track. In it the article discussed the massive reserves of foreign currency that Thailand has accumulated and continues to accumulate as a result of the stronger Baht and its need to buy dollars in an attempt to keep the currency from getting stronger and hurting exporters further. Apparently a whopping 65% of Thai GDP is accounted for by exports thus a far stronger Baht would seem to be unlikely. Or is that too simplistic of a view?

[aznyron]

I was also mystified by her statements and the intended message. On the surface, she indicated the trend of strong baht could be reversed i.e. weakening of the baht, because the imbalance of the Asians supporting the US deficit is likely to be reversed.

I cannot see the scenario of US imports being far less than her exports. The second mystery was "the massive outflows from the US market". Did she mean the US would, for a change, be in a situation of balance of trade surplus which is somewhat unbelievable? Or, did she mean that there would be a big outflow of the US investments that would strengthen the baht further? Then her message was not the weakening of the baht but further strengthening of the baht which is harmful to our export economy. So her speech could mean either of the two extreme messages of good news (baht weakening) or bad news (baht strengthening).

Either she deliberately refrained from being clear on the direction or the newspaper misinterpreted her speech on the "outflows". I love to read others' reactions.

I think it's pretty clear.

The "massive outflows" from US have nothing to do with a trade surplus... Just the coming collapse of USD !

Review some event of the past weeks : some countries in the middle east are un pegging their currency with USD... We have higher inflation in USA, than expected and officially measured. Plus the perspective of a recession, due to the real estate bubble burst. Plus the fact that USA is the land of debts. A perfect cocktail for a perfect storm.

As for the FED, they are in a dead end. Impossible to increase nor to decrease rates. There is, undoubtedly , a crisis of confidence toward the USD.

USD and therefore all assets in USD could suffer. Investors would be looking to find an exit, and putting their money in other currency. That could triger, as she said, a "disorderly unwinding of global financial imbalances".

Tarisa said that due to the size and nature of the thai economy, any massive outflows from US could totally destabilize THB, and sending its value to the moon.

http://www.bangkokpost.com/Business/12Jun2007_biz34.php

Tarisa warns of baht volatility on outflows

PARISTA YUTHAMANOP

The Thai economy could face a highly volatile baht that could result from massive outflows from the US market, according to Tarisa Watanagase, the Bank of Thailand's governor.

''The magnitude of the capital flows from the rest of the world to the US economy is not sustainable. It is a matter of time before the flows eventually reverse,'' she said.

''The threat of a disorderly unwinding of global financial imbalances remains imminent.''

Addressing a luncheon hosted by the British Chamber of Commerce, Dr Tarisa also said that small and shallow financial markets will make the economy particularly vulnerable to the rapid shift of fund flows.

''The issue here is not only when the correction will take place, but how fast and disruptive,'' she said.

''Such rapid movements of capital flows, if vastly out of line with the underlying economic fundamentals, can have a negative impact on the export or import sectors depending on the direction of exchange-rate movement.''

The central bank forecasts economic growth at 3.8-4.2% this year, mainly driven by exports. It expects accelerated government spending and public investment in mass transit to help support economic expansion this year.

Dr Tarisa said oil was also a major risk to the Thai economy due to its high and volatile prices.

The Monetary Policy Committee (MPC) has lowered its short-term benchmark interest rate since the beginning of the year to 3.5% from 5% to support economic growth as inflation subsided.

''Inflation currently is not a problem as such, even though the oil prices going forward are hard to predict. The inflation has come down from 6% in the second half of last year because we have dealt with it carefully,'' she said.

Dr Tarisa said the central bank was looking to abolish its 30% reserve requirement on short-term capital inflows, but was waiting for ''clarity''.

The measure now has virtually no effect on the market since the central bank allowed investors to fully hedge investments.

''The reserve requirement measure was aimed at providing the private sector time to the adjust to the baht appreciation. To this end, I think we are successful,'' she said.

Dr Tarisa said the central bank expected its relaxation to encourage more domestic investment in securities abroad to help reduce pressure of capital inflows.

''There is not much capital outflow at the moment. It will take time for investors and institutional investors to do their homework,'' she said.''The average dollar-denominated assets held by central banks all over the world is 66%. In our case, it is lower than that,'' Dr Tarisa said.

Where have you been for the last 4 years Cclub? You seemed to have missed the boat buddy, the U.S. dollar has already colapsed (as you put it), with the support of the U.S. government I might add. The recent survey of major central bankers around the world show that over 80% of them feel that the U.S. dollar will be the most secure and strongest currency over the next 25 years. As far inflation in the U.S. goes you are once again way off the mark, when oil is taken out of the equation there is actually something approaching disinflation in the states right now, and even with oil in the equation inflation is at record low levels while at the same time unemployment is at record lows as well. I am not sure where you are getting your disinformation from(perhaps just wishful thinking on your part?) but the U.S. economy is roaring ahead at record levles on all fronts, with the only exception being existing real estate inventories at eleveted levels in a few select markets like southern California, Vegas and Phoenix and condos in Dade county Florida. I just hope that you are putting your money where your mouth is and shorting the U.S. dollar currently, as a old saying goes "a fool and his money will soon be parted". One final thought to ponder, the U.S. economy is not only the largest economy in the world by a factor of nearly three (over #2 japan) , but it is also the most resilent economy as well (witness the aftermath of 9/11). If you want to bash the U.S.A. there are many ways to do it, but try to have at least some factual information next time you post!

I just want to ad some thing I heard the E U is coming up to a new constitution and if 1 country pulls out the E U get weak and it boost the USD and I was told the chances are good that the EU const. will fail because of the UK and Poland will not sign on now this is hearsay no proof but it worth looking in to As American living here in Thailand my butt is being kicked in on the transfer of USD to Thai baht any news the the thai baht will drop in value is music to my ears I would love to see it at 50 thai baht to 1 usd but I am just dreaming now

[chiang mai]

I give up - Mods: can we consign this thread to a bucket somewhere, please?

[lannarebirth]

Meanwhile, back at the ranch.... there was another interesting interview that was printed in The Nation today about this subject - I am of course referring to the strength and future of the Baht and not the bun fight between our two senior members, just in case folks have lost track. In it the article discussed the massive reserves of foreign currency that Thailand has accumulated and continues to accumulate as a result of the stronger Baht and its need to buy dollars in an attempt to keep the currency from getting stronger and hurting exporters further. Apparently a whopping 65% of Thai GDP is accounted for by exports thus a far stronger Baht would seem to be unlikely. Or is that too simplistic of a view?

It's not too simplistic a view, but it's important to remember that 85%-90% of all currency exchange transactions are traders speculating. Fundamentals rule in a general way, but traders seem to take the rates to extremes. Particularly the case in a fairly illiquid currency like the baht.

[VegasVic]

Meanwhile, back at the ranch.... there was another interesting interview that was printed in The Nation today about this subject - I am of course referring to the strength and future of the Baht and not the bun fight between our two senior members, just in case folks have lost track. In it the article discussed the massive reserves of foreign currency that Thailand has accumulated and continues to accumulate as a result of the stronger Baht and its need to buy dollars in an attempt to keep the currency from getting stronger and hurting exporters further. Apparently a whopping 65% of Thai GDP is accounted for by exports thus a far stronger Baht would seem to be unlikely. Or is that too simplistic of a view?

It's not too simplistic a view, but it's important to remember that 85%-90% of all currency exchange transactions are traders speculating. Fundamentals rule in a general way, but traders seem to take the rates to extremes. Particularly the case in a fairly illiquid currency like the baht.

I am not sure if your 85-90% number is right but you are cetainly correct that trader speculation is a huge part of not only the currency markets but the commodities as well, and a small country like Thailand is easily manipulated by large speculative traders and hedge funds. If speculative traders were taken out of the oil markets the price of crude would be in the mid 30's U.S.D. range and the price of gold would be in the upper 300 dollar range. There is soo much froth and excess in so many of the markets around the world that perhaps the doomsdayers are finally correct in saying that a worlwide recession-depression is coming, and the colapse of the chinese equity markets may very well be the tipping point that starts it all. To the retired american who was living in Thailand and concerned about the dollar decline, just remember that in time of world crisis everything seems to gravitate back to the U.S. dollar and this time will likely be no different, so hang on to those dollars!

[matt888]

i am going to be bringing £50,000 into thailand, my question is - should i do it now, or should i wait. i should have done it a few months ago when it was 73 baht / 1 GBP. But i didn't !

what would you do ?

[beammeup]

i am going to be bringing £50,000 into thailand, my question is - should i do it now, or should i wait. i should have done it a few months ago when it was 73 baht / 1 GBP. But i didn't !

what would you do ?

Do it now dude the BT just dropped to 69.bt/1.£ Mr T must have taken his Man city money out of Thailand.

[beammeup]

i am going to be bringing £50,000 into thailand, my question is - should i do it now, or should i wait. i should have done it a few months ago when it was 73 baht / 1 GBP. But i didn't !

what would you do ?

Do it now dude the BT just dropped to 69.bt/1.£ Mr T must have taken his Man city money out of Thailand.

[sonicdragon]

Vic, I think your point is quite noteworthy. It's something that is definitely on my radar. But how do you think a global recession would play out in the US ? Gravitating back is one thing, but if all the chickens come home to roost it could be quite another. One scenario is:

Trade deficit improves (but no one will care); fiscal position deteriorates rapidly; imported disinflation ceases; inflation spirals upwards. Net result: hard to say, but hard to imagine a rosy picture.

[matt888]

i am going to be bringing £50,000 into thailand, my question is - should i do it now, or should i wait. i should have done it a few months ago when it was 73 baht / 1 GBP. But i didn't !

what would you do ?

Do it now dude the BT just dropped to 69.bt/1.£ Mr T must have taken his Man city money out of Thailand.

beammeup, not sure where you got that info from but 1 GBP is currently worth 63.2629 baht.

[beammeup]

i am going to be bringing £50,000 into thailand, my question is - should i do it now, or should i wait. i should have done it a few months ago when it was 73 baht / 1 GBP. But i didn't !

what would you do ?

Do it now dude the BT just dropped to 69.bt/1.£ Mr T must have taken his Man city money out of Thailand.

beammeup, not sure where you got that info from but 1 GBP is currently worth 63.2629 baht.

http://newsvote.bbc.co.uk/1/shared/fds/hi/...ncy/default.stm

[VegasVic]

Vic, I think your point is quite noteworthy. It's something that is definitely on my radar. But how do you think a global recession would play out in the US ? Gravitating back is one thing, but if all the chickens come home to roost it could be quite another. One scenario is:

Trade deficit improves (but no one will care); fiscal position deteriorates rapidly; imported disinflation ceases; inflation spirals upwards. Net result: hard to say, but hard to imagine a rosy picture.

Extrapolating your scenario out you must realize that the U.S. consumer really holds the cards here in a preverse sort of way, I would liken the situation to a governor on a go cart motor. If a worldwide recession were to actually occur and a serious round of inflation hit the U.S. then the U.S. consumer would simply cut back on his or her purchases. This of course would continue a self stroking cycle of deeper recession all around the world especially in China, Japan and Europe, but this recession would also take the froth and speculation out of the oil markets and you could easily see oil at $25 a barrel or less due to a decrease in demand and speculators taking the other side of the bet. So there are factors that a worldwide recession would bring into play that would keep inflation in check to a degree. I find it almost sad though how some on this forum equate a strong currency to a strong economy, recently there was a poster here that replied to another poster who had speculated about the possibility that the baht could move to 50 vs. the U.S. dollar and in his reply this poster seemed almost patriotic in stating that "you will see the baht at 20baht to the dollar long before you see it at 50", with the underlying tone that he would be proud if the baht sees 20 vs. the dollar, this of course would be absolutly devestating to the Thai economy not only in the short run but in the long run as well. I noticed this same sentiment on another forum where a survey was done to see what TV members thought the Euro and the Pound would be vs. the U.S. dollar by the end of the year and this same almost patriotic pride in replies that the Euro would be at 160 or 165 and the pound would be 240 surfaced, it is obvious that these folks never studied even the most basic theories of economics. In January of this year a group of central EU bankers stated that a Euro above 130 vs. the dollar would be harmful to European economies and a Euro above the 135 level could eventually lead to recession yet despite public proclamations by these individuals in the know, widespread ignorance still exists that a strong currency is a good thing. The U.S. is enjoying full emlpoyment, record levels of nearly every market average, and low inflation, largely because the U.S. dollar is weak. If the U.S. dollar was to do an abrupt about face and the dollar-euro was at par and the dollar-pound was at 150 and so forth with other currencies around the world, then the consquences for the U.S. economy would be disasterous. Now back on topic, I think that the effects of the baht move from the low 40's to 35 vs. the U.S. dollar over the last year or so has only recently been showing up in economic statistics released by the Thai government, even though the folks "on the street" in Thailand could have told you six months ago that the situation was bad and getting worse. The good news for Thailand is that there seems to have been a leveling off (lets hope for the Thais this is the top) at 34.5 baht to the dollar and conversely the U.S. dollar has hit a bottoming trend and so when the chinese equity markets have their crash or major correction or whatever you would like to call it, then the TB will likely float back to a level that can make Thailand and its economy more competitive for both exports and tourisim. What this level will be for the baht in order for Thailand to be competitive can certainly be argued, but the 38-42 range looks to be the gravitation area since the 97 crisis. For those of you who might have missed the FED meeting today, the FED decided to keep rates the same and in so stating, they gave the impression that core inflation was in fact decreasing a bit, so my feeling that they might raise rates by 25 basis points at the FOMC mettings in Aug. or Sept. are now dashed! It appears that rates could remain static in the states for a while.

[highdiver]

Vic, I think your point is quite noteworthy. It's something that is definitely on my radar. But how do you think a global recession would play out in the US ? Gravitating back is one thing, but if all the chickens come home to roost it could be quite another. One scenario is:

Trade deficit improves (but no one will care); fiscal position deteriorates rapidly; imported disinflation ceases; inflation spirals upwards. Net result: hard to say, but hard to imagine a rosy picture.

Extrapolating your scenario out you must realize that the U.S. consumer really holds the cards here in a preverse sort of way, I would liken the situation to a governor on a go cart motor. If a worldwide recession were to actually occur and a serious round of inflation hit the U.S. then the U.S. consumer would simply cut back on his or her purchases. This of course would continue a self stroking cycle of deeper recession all around the world especially in China, Japan and Europe, but this recession would also take the froth and speculation out of the oil markets and you could easily see oil at $25 a barrel or less due to a decrease in demand and speculators taking the other side of the bet. So there are factors that a worldwide recession would bring into play that would keep inflation in check to a degree. I find it almost sad though how some on this forum equate a strong currency to a strong economy, recently there was a poster here that replied to another poster who had speculated about the possibility that the baht could move to 50 vs. the U.S. dollar and in his reply this poster seemed almost patriotic in stating that "you will see the baht at 20baht to the dollar long before you see it at 50", with the underlying tone that he would be proud if the baht sees 20 vs. the dollar, this of course would be absolutly devestating to the Thai economy not only in the short run but in the long run as well. I noticed this same sentiment on another forum where a survey was done to see what TV members thought the Euro and the Pound would be vs. the U.S. dollar by the end of the year and this same almost patriotic pride in replies that the Euro would be at 160 or 165 and the pound would be 240 surfaced, it is obvious that these folks never studied even the most basic theories of economics. In January of this year a group of central EU bankers stated that a Euro above 130 vs. the dollar would be harmful to European economies and a Euro above the 135 level could eventually lead to recession yet despite public proclamations by these individuals in the know, widespread ignorance still exists that a strong currency is a good thing. The U.S. is enjoying full emlpoyment, record levels of nearly every market average, and low inflation, largely because the U.S. dollar is weak. If the U.S. dollar was to do an abrupt about face and the dollar-euro was at par and the dollar-pound was at 150 and so forth with other currencies around the world, then the consquences for the U.S. economy would be disasterous. Now back on topic, I think that the effects of the baht move from the low 40's to 35 vs. the U.S. dollar over the last year or so has only recently been showing up in economic statistics released by the Thai government, even though the folks "on the street" in Thailand could have told you six months ago that the situation was bad and getting worse. The good news for Thailand is that there seems to have been a leveling off (lets hope for the Thais this is the top) at 34.5 baht to the dollar and conversely the U.S. dollar has hit a bottoming trend and so when the chinese equity markets have their crash or major correction or whatever you would like to call it, then the TB will likely float back to a level that can make Thailand and its economy more competitive for both exports and tourisim. What this level will be for the baht in order for Thailand to be competitive can certainly be argued, but the 38-42 range looks to be the gravitation area since the 97 crisis. For those of you who might have missed the FED meeting today, the FED decided to keep rates the same and in so stating, they gave the impression that core inflation was in fact decreasing a bit, so my feeling that they might raise rates by 25 basis points at the FOMC mettings in Aug. or Sept. are now dashed! It appears that rates could remain static in the states for a while.

spot on...

[cclub75]

Beware... USD under 32, this morning, off shore... Even 31.60. It means we have broken the low point, recorded in march.

Meanwhile, Tarisa, governor of BOT, is happy. She thinks she has found THE solution to all her problems : The Chinese Solution, called "managed float exchange rate system" too, or more simply "manipulation" or even "cheating".

;-)

Managed float system keeps Baht stable

The baht has been stable for the past one or two months under the Bank of Thailand's managed float exchange rate system, according to BoT Governor Tarisa Watanagase.

The U.S. dollar has traded between Bt34.50 and Bt34.65 for the past month due to possible dollar buying by the central bank.

Despite trade- and equities-related inflows, the BoT was able to curb the baht's appreciation as trade volume is limited by controls on speculative inflows, while investment in local debt must be fully hedged via foreign exchange swaps.

- The Nation

Edited June 29, 2007 by cclub75

[sonicdragon]

Vic, it's an interesting debate. I certainly agree that it's wrong to say that a stong currency equates to a stong economy. I would say that a *stable* currency is more conducive to a strong economy. I agree with you about the US consumer, but I think you overestimate the impact of a low oil price on inflation in the US. Of course it will help, but another driver of inflation will be the increasing price of imports as the $ continues to fall against the yuan. And how will the US continue to service it's debts in a recessionary environment ? The national debt has trippled since the last deep recession. In the scenario we are talking about, the biggest buyers of US treasuries - foreign central banks, in particular the chinese and japanese - will not be in a position to continue doing so. This will lead to higher long rates, creating a bigger pinch on the US economy.