Thai Baht (THB) - Depreciation ahead ?

[Baron Samedi]

 

So from October 2021 to March 2022, the Thai Baht has been appreciating relative to the Euro/Dollar.

We went from 1 euro = 39.5THB to 1 euro =35.5THB (roughly)

Since March it has been going sideways with a clear bottom at 35.5 and a triple support at 36.

It looks to me like a market reversal and the THB might very well depreciate further down the road.

What are you thoughts on this ? Is Soros shorting?

 

Edited June 1, 2022 by Baron Samedi

[CharlieH]

MOVED to Banking forum

[Sparktrader]

I doubt Soros plays minor currencies. Interest rates are going up overseas. High inflation. Read the news.

[PeachCH]

Too many influential people, including banks, especially SCB, don't want that the Baht depreciate too much. 

[itsari]

The US dollar has been strengthening . Nothing to do with the Thai baht depreciating .

[Henryford]

I haven't noticed much baht depreciation, the Pound, Euro and Aussie dollar are all down over the past 3 months.

Edited June 1, 2022 by Henryford

[crazykopite]

When I arrived in Thailand in 2005 the Thai baht to the £ was 74 I felt like a millionaire today it’s 43 I feel like a pauper I’ve always believed that the baht is manipulated and nothing will change my mind 

[Thingamabob]

3 hours ago, PeachCH said:

Too many influential people, including banks, especially SCB, don't want that the Baht depreciate too much. 

Correct. The elite are in the business of forever buying property etc abroad. They keep the Baht at the highest rate possible to facilitate this, often defying the trend in international markets. Every so often they get badly caught out, eg 1997/8.

 

[AgMech Cowboy]

18 hours ago, Sparktrader said:

I doubt Soros plays minor currencies.

@SparktraderA shocking statement for anyone...  I think you've a complete lack of history. Soros had a great deal to do with the fall of the Thai currency in 1997 because he was playing around with a "minor" currency.  He's not the entire culprit, but he made a lot of money when he pulled the plug.

[AgMech Cowboy]

There was an article on AN a few week ago about Thailand's plan to depreciate the Baht to help their exports...

[itsari]

12 hours ago, crazykopite said:

When I arrived in Thailand in 2005 the Thai baht to the £ was 74 I felt like a millionaire today it’s 43 I feel like a pauper I’ve always believed that the baht is manipulated and nothing will change my mind 

Many currencies are manipulated .

Fact of life 

Nothing stays the same 

Pauper or a rich man has the same predicament.

 

[Chivas]

14 hours ago, crazykopite said:

When I arrived in Thailand in 2005 the Thai baht to the £ was 74 I felt like a millionaire today it’s 43 I feel like a pauper I’ve always believed that the baht is manipulated and nothing will change my mind 

Yet another that simply cannot grasp there are two currency pairings making up the bottom line number crunch

There is no "direct" exchange rate between Sterling/Baht

Only the USD as the worlds reserve currency has that privilege against every other fiat currency

 

Start of 2005

Sterling/Dollar was $1.87

Today its $1.25

Therein lays a huge part of your 74 back then and 43 today......

 

Edited June 2, 2022 by Chivas

[Sticky Rice Balls]

Dare I comment?....(looks around nervously)

[Sticky Rice Balls]

2 hours ago, itsari said:

Pauper or a rich man has the same predicament.

Even on Loy Kroh rd????....

[it is what it is]

15 hours ago, crazykopite said:

When I arrived in Thailand in 2005 the Thai baht to the £ was 74 I felt like a millionaire today it’s 43 I feel like a pauper I’ve always believed that the baht is manipulated and nothing will change my mind 

 

on the other hand, anyone with baht is pretty happy. swings and roundabouts.

[The Hammer2021]

With the baht going down and the  British  pound going  down - For British  pound holders  would it be a good idea to stock up on baht now or  buy  dollars on the assumption the dollar  will perform better against  the baht  and sterling

[Robin]

Who benefits?

if the Baht is high against the $ or other major currencies, imports ( luxury goods, Benz's, Submarines, ) are 'cheaper'  Thus the Elite will be better off.

If the Baht drops against $ then exports bring in more money ( baht)  The farmers and tourist workers are better off.

where do you think the Baht will be going?

[Time Traveller]

2 hours ago, Robin said:

Who benefits?

if the Baht is high against the $ or other major currencies, imports ( luxury goods, Benz's, Submarines, ) are 'cheaper'  Thus the Elite will be better off.

If the Baht drops against $ then exports bring in more money ( baht)  The farmers and tourist workers are better off.

where do you think the Baht will be going?

That is just too funny......maybe poor people have no understanding of the rich because I've never ever heard of a rich person concerned with the exchange rate in order to buy luxury goods or Mercedes Benzs! .  Anyone that did would not be defined at rich. 

 

To show you how stupid that theory is, in Thailand luxury goods and cars such as Mercedes Benz's have tax of 400%.  So that any exchange rate movement of 5% or 10% would only change the cost price to the consumer of 1% or 2%.     In fact, I've often heard the opposite from rich people in that they prefer a weaker exchange rate because if you own factories then your cost of production becomes much more competitive v. other manufacturers in China.  

 

There is a reason that the Thai baht appears "strong" is because it has a natural tendency to appreciate due to trade surplus. However, the reason now that it is depreciating is due to high oil prices as Thailand now imports over 90% of it's energy needs. 

 

 

 

[VinnieK]

I've never seen any depreciation to speak of, in 15 years.

Is the baht over-valued?

Very much so.

[Sparktrader]

Baht hard to predict. Always been overvalued imo

[wordchild]

Some context; throughout most of the 80,s and 90,s the GBP/THB rate traded mostly in a range from 40 to 50. Then within 3 months, at the end of 97 the rate went from 43  to somewhere in the 80 plus area. I have heard that some people managed to even get over 90 for their exchange, but that did not last long.

This all happened as a result of the Asian Financial Crisis , which effectively started in Thailand, caused principally  by over enthusiastic property developers , in Bangkok (and elsewhere in Asia) , using cheap dollar borrowings to fund their  developments. The music stopped , the loans fell due, and many developers and the linked families went bust. Much as happened in the West the banks were all in serious trouble as a result.

I was based here through this period and I  remember well the fears that Bangkok Bank was about to go under.

What happened was the Thai Govt, at the time, led admirably (my opinion) by Chuan Leekpai, working with the  Bank of Thailand allowed the Baht to find its own level and (after a very short period) stopped supporting it. They also effectively forced a massive recapitalization of the economy and the banking system. They were helped in this by a significant inflow of foreign capital which was attracted by the lowly valued Baht and the general view that the Thai economy offered long term investment opportunities.

In my opinion what we have seen over the last 20 odd years is a normalization of the Thai Baht against the US dollar as the economy has improved and benefited from increased foreign investment and a significant trade surplus with the rest of the world. Which makes for a reasonably constant demand for Baht. (as Time Traveller mentions above)

For a good part of the last 20 years  the UK has (in contrast)  had a negative trade surplus with the rest of the world for goods and, particularly since Brexit, it has enjoyed a declining balance of services exports. Also , since Brexit , it is seen as a fundamentally less attractive place for foreign investors. Operation Fear was on the money with that one!

So all things being equal the world needs to buy TB every year and doesn't need to buy GBP. and so____! 

  

Edited June 3, 2022 by wordchild

[Baron Samedi]

On 6/1/2022 at 11:50 PM, itsari said:

The US dollar has been strengthening . Nothing to do with the Thai baht depreciating .

If the dollar appreciates relative to the baht then the baht depreciates relative to the dollar.

[itsari]

3 minutes ago, Baron Samedi said:

If the dollar appreciates relative to the baht then the baht depreciates relative to the dollar.

The dollar has appreciated against many currencies not just the baht . Therefore your statement that the baht is depreciating  is not correct in my opinion.

Thank you for your reply

[salavan]

On 6/2/2022 at 6:53 AM, Henryford said:

I haven't noticed much baht depreciation, the Pound, Euro and Aussie dollar are all down over the past 3 months.

And the pound down down over the last 15 years 

[Baron Samedi]

34 minutes ago, itsari said:

The dollar has appreciated against many currencies not just the baht . Therefore your statement that the baht is depreciating  is not correct in my opinion.

Thank you for your reply

Following your logic I could say that the THB has depreciated against many currencies not just the USD and therefore your statement that the USD has appreciated against the THB is not correct. That line of reasoning would dumb.

 

If A appreciates relative to B then the logical link between A and B makes it so that B depreciates relative to A simultaneously.

[itsari]

3 minutes ago, Baron Samedi said:

Following your logic I could say that the THB has depreciated against many currencies not just the USD and therefore your statement that the USD has appreciated against the THB is not correct. That line of reasoning would dumb.

 

If A appreciates relative to B then the logical link between A and B makes it so that B depreciates relative to A simultaneously.

I understand your statement, yet the fact remains in this instance the baht has devalued because of the us dollar strengthening.

There is a distinct difference .

Thanks for your reply and have a good night

[Chivas]

I swear to god and I'm being genuinely polite but how is it possible for so many to be totally ignorant of how exchange rates are calculated

 

80% of the entire posts on the thread are beyond comedy gold and thats being uber poilte at that

[wordchild]

What is true to say is that the Bank of Thailand, along with the Government, has from time to time acted to control money flows in and out of the Baht. (and therefor the level of the Baht)

They have done this , in the past, through regulation, eg limiting the amount of funds that Thai individuals and companies can invest overseas , this mechanism could be seen as supportive of the Baht. However , on the other side they have also acted when they feel the Baht is too strong eg limiting the amount of Thai Baht that foreign entities can hold outside the country. This restriction was to control a  build up of speculative long positions in the Baht. This was brought in a few years ago and was an attempt to prevent the Baht  from rising too fast at that time. They also imposed greater reporting requirements on foreign entities and individuals bringing funds into Thailand in order to buy Baht. 

So the Bank of Thailand does act in the currency markets  and try's to impact the direction of the Baht. However I would say that , when they have acted, it is usually about maintaining stability and to  dampen excessive movements of the Baht (against the USD) one way or the other. Its not about trying to keep the Baht at an artificially high level.

Indeed, from my experience they have tended to act most aggressively when they feel that the Baht is getting overvalued.

In the very recent past the Bank of Thailand has stepped back from excessive regulation of currency flows and has removed many restrictions and reporting requirements around the trading of the Baht. So one could argue that ,right now, the Baht is trading at a (reasonably) fair level determined by market forces not by regulation. 

 https://www.bot.or.th/English/PressandSpeeches/Press/2022/Pages/n2265.aspx

Here is a recent press release from the BOT which explains their approach.

 

Edited June 4, 2022 by wordchild

[Chivas]

5 hours ago, wordchild said:

What is true to say is that the Bank of Thailand, along with the Government, has from time to time acted to control money flows in and out of the Baht. (and therefor the level of the Baht)

They have done this , in the past, through regulation, eg limiting the amount of funds that Thai individuals and companies can invest overseas , this mechanism could be seen as supportive of the Baht. However , on the other side they have also acted when they feel the Baht is too strong eg limiting the amount of Thai Baht that foreign entities can hold outside the country. This restriction was to control a  build up of speculative long positions in the Baht. This was brought in a few years ago and was an attempt to prevent the Baht  from rising too fast at that time. They also imposed greater reporting requirements on foreign entities and individuals bringing funds into Thailand in order to buy Baht. 

So the Bank of Thailand does act in the currency markets  and try's to impact the direction of the Baht. However I would say that , when they have acted, it is usually about maintaining stability and to  dampen excessive movements of the Baht (against the USD) one way or the other. Its not about trying to keep the Baht at an artificially high level.

Indeed, from my experience they have tended to act most aggressively when they feel that the Baht is getting overvalued.

In the very recent past the Bank of Thailand has stepped back from excessive regulation of currency flows and has removed many restrictions and reporting requirements around the trading of the Baht. So one could argue that ,right now, the Baht is trading at a (reasonably) fair level determined by market forces not by regulation. 

 https://www.bot.or.th/English/PressandSpeeches/Press/2022/Pages/n2265.aspx

Here is a recent press release from the BOT which explains their approach.

 

Yes couldnt agree more Dollar/Baht (the only pairing that effects every one of us) at its current 34 to 34.50 is around fair value

 

Lets not forget Thailand has the 9th highest foreign currency reserves in the world....quite astonishing some might say but one of the reasons why those who claim its too strong are completely wrong

[wordchild]

To balance what i said above re the UK economy and the pound; The UK still has some phenomenal attributes as an economy eg its world class science and technology base, its culture arts and media influence, and highlighted more recently, its defence/intelligence capabilities. 

What needs to happen (in my opinion) is for the economic illiterates who led the country into the BREXIT car crash need to be cleared out, starting obviously with the current PM.

With new faces and goodwill on both sides it should be possible for the UK to start to reach rapprochement on some of the thornier issues that are slowly destroying the countries relationship with its largest trading partner (ie the EU).

Maybe that would be the time to buy pounds and sell THB!