Baht’s current slide is a grim reminder of its crash 25 years ago

[webfact]

The severe fallout from the pandemic and the sudden collapse of the tourism industry — which accounts for about 20 percent of Thailand’s gross domestic product (GDP) — has weakened the baht, pushing it to a five-year low. (Photo by Kiratikorn Naksompop Blauw)

 

By Thai PBS World’s Business Desk

 

On July 1, at some point during the day, the baht fell to 35.66 to the dollar, its weakest in five years. It closed at 35.63 at the end of the trading session on the first day of this month, according to Kasikorn Research Center.

 

The many swings of the baht

 

Since the 1997 Asian financial crisis, the baht has gone through four key cycles. To follow the bailout conditions set by the International Monetary Fund, Thailand, languishing in one of the worst economic crises in its history, on July 2, 1997, abandoned its fixed exchange rate policy of pegging the baht at 25 to a US dollar, as the central bank’s reserves were drained defending the currency against speculators. Once the Bank of Thailand (BOT) opted for the floating rate, the currency experienced a free fall. The baht plunged to a historic low of 56.50 per dollar on January 12, 1998.

 

This, however, enabled an export recovery and tourist influx, which in turn swung the baht’s fortunes around. Later the baht became very strong, and was even dubbed “super baht”, as a booming tourism industry brought in about 40 million tourists annually before the COVID pandemic struck the country in early 2020. In the middle of 2019, the baht had strengthened to 27-28 against the dollar.

 

Full story: https://www.thaipbsworld.com/bahts-current-slide-is-a-grim-reminder-of-its-crash-25-years-ago/

 

-- © Copyright Thai PBS 2022-07-06

 

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[Henryford]

Is the baht sliding or the dollar rising? It seems fine against most other currencies.

[jacko45k]

I might have said 'good' a year or so ago, but in the midst of a weak Sterling I have upped my baht holding!

[jacko45k]

Just now, Henryford said:

Is the baht sliding or the dollar rising? It seems fine against most other currencies.

It's dollar strength in the main......

[ThailandRyan]

1 minute ago, jacko45k said:

It's dollar strength in the main......

Ergo why my transfer today gave me 100k thb more than my last large transfer in January. Only wish it had been 40 baht to the $1. Maybe in a few months, then I will transfer more.

[Berkshire]

23 minutes ago, webfact said:

This, however, enabled an export recovery and tourist influx, which in turn swung the baht’s fortunes around.

Yes, a weak baht helps both the export and tourism industries.  So that's a good thing!  Everything goes in cycles.  Let it go to 40 against the USD and it will work itself back.....promise!

[StayinThailand2much]

1 hour ago, Henryford said:

Is the baht sliding or the dollar rising? It seems fine against most other currencies.

It's mostly the dollar, of course. The € will probably soon reach parity with the $, and the £ is not that far from it either. And compared to the ¥, the baht seems still quite stable. For U.S. (and Hong Kong) tourists, a holiday in Thailand will look cheap, but not so for many others.

[aussiexpat]

There's no baht slide,as stated above it's just the strength of the US$. Here is the baht vs A$ over the last year, no slide there

 

[starky]

17 minutes ago, aussiexpat said:

There's no baht slide,as stated above it's just the strength of the US$. Here is the baht vs A$ over the last year, no slide there

 

Yeah but the aud is a junk currency ????????????

The higher US interest rates go, relative to Australian interest rates, the more demand there is for US dollars, and the less demand for Australian dollars and the value of our currency falls.

The Aussie dollar is also negatively affected by poor market sentiment, or pessimism about the global economy. And this is being made worse by the prospect of rising global interest rates.

[zzzzz]

now ur $ gets you  35.99 baht!!
Great for tourism>>

[KhunBENQ]

3 hours ago, Henryford said:

Is the baht sliding or the dollar rising?

Dollar rising. Saw a headline "Euro on 20 year low against the Dollar, near parity".

Having Euro pension I feel no euphoria about a Baht slide.

Was happy to catch 37.29 for my last transfer. Now dropped below 37 again.

[david555]

2 minutes ago, KhunBENQ said:

Dollar rising. Saw a headline "Euro on 20 year low against the Dollar, near parity".

Having Euro pension I feel no euphoria about a Baht slide.

Was happy to catch 37.29 for my last transfer. Now dropped below 37 again.

But but ........! you got already many indexations based on rising expenses in Home country i suspect???? ,while prices in Thailand long time stayed not to high ......unless lately it started here too 

See those poor Brits with frozen pensions , glad to be Belgian ..... no freezing pensions 

[KhunLA]

If you trade currencies, here's a trend that hard to ignore.  A winning play most months ????????

[Kaopad999]

it's where it should be,  and that's being overlay generous !

[KhunLA]

46 minutes ago, Kaopad999 said:

it's where it should be,  and that's being overlay generous !

Back to 40 would be nice, as that's where it was when I arrived 2020.

 

I'm not greedy, and don't need the Apr/May 2001's high of ฿45/46 to $1

 

Can't see that happening, as last 15 yr, TH has kept it between ฿30-35 / $1

 

 

[vandeventer]

4 hours ago, Berkshire said:

Yes, a weak baht helps both the export and tourism industries.  So that's a good thing!  Everything goes in cycles.  Let it go to 40 against the USD and it will work itself back.....promise!

Hard to understand, weaker Thai baht ,prices going up everywhere and the price of Gold falling down. You would think the USD would be taking a nose dive with all the debt they have.

[Walker88]

The move so far has been steady, but gradual. No sign of panic yet.

 

Many trends end in a panic, blow-off top. I don't know how much dollar borrowing Thai corporates have. I don't think it's quite like 1996 when everyone got complacent with the old semi-fix of 25 baht per dollar and borrowed assuming that would forever hold.

 

Major cross rates also impact peripheral rates, so if the euro breaks dollar parity, that could show up in a sharp baht move.

 

The weakest currency at the moment seems to be the Aussie, though cable could get hit badly if BoJo gets ousted.

 

Interesting times. There's going to come a point to unload the $ in bulk, but not yet. I think if polls start to make a redo of 45 look likely, there will be an outright collapse in the dollar.

[madmitch]

Typically Thai insular view, not looking at what's going on in the rest of the world.

[Lingba]

doesnt sound grim to me

[KhunLA]

8 minutes ago, Lingba said:

doesnt sound grim to me

or even close to the 53 mark 

[AnotherFarang8]

This time is different. If baht crashes, many others will crash harder, the almighty dollar the hardest, because that is where unsustainable debt is. Don’t mind the recent few weeks of rates, they are meaningless noise in the grand scheme.

[KhunLA]

If the baht does get near or beyond 40, I think that would be a sure sign, Thailand has lost control of it economy.  Maybe they've dwindled away that huge USD reserve already. 

 

As I was quite surprised they borrowed more than a few billion baht from Japan couple months back.

https://www.bangkokpost.com/thailand/general/2304786/govt-accepts-japan-loan-of-b13-2bn

Maybe some trade concession forth coming for Japan's auto industry, so they can complete in TH against the now dominant Chinese EV influx.

 

Banks already moved to protect themselves, JIC, as no longer required to insure account deposits above 1 mill.

[talahtnut]

The $ is experiencing a dead cat bounce, its value

continues to fall quicker than a tarts drawers along

with a heap of other currencies.

Stock up on Russian Rubles

 

 

[RichardColeman]

So, if bIden loses the house and senate as predicted later this year and becomes a lame duck president, would it be better for our  american friends to send it now rather than risk the $ crashing later.

 

Just a shame as Brit to see my currency low against the dollar AND the baht !

 

 

[Sparktrader]

5 hours ago, Henryford said:

Is the baht sliding or the dollar rising? It seems fine against most other currencies.

Usd is a safe currency. Plus higher % rates attracts money.

 

Good time to hold usd.

 

 

[Tony125]

As of Wensday  July 6th 3 PM  ( Thai time ) the baht is 36.04  to  $1  USD

[Sparktrader]

1 minute ago, RichardColeman said:

So, if bIden loses the house and senate as predicted later this year and becomes a lame duck president, would it be better for our  american friends to send it now rather than risk the $ crashing later.

 

Just a shame as Brit to see my currency low against the dollar AND the baht !

 

 

Us economy be stronger, good for shares. Biden is a negative for shares.

 

 

[Sparktrader]

3 hours ago, starky said:

Yeah but the aud is a junk currency ????????????

The higher US interest rates go, relative to Australian interest rates, the more demand there is for US dollars, and the less demand for Australian dollars and the value of our currency falls.

The Aussie dollar is also negatively affected by poor market sentiment, or pessimism about the global economy. And this is being made worse by the prospect of rising global interest rates.

Aud commodity driven

Iron ore copper down

[Xonax]

The Thai Baht is NOT weak!  It is just the US Dollar that is becoming stronger against all other currencies. The reason is, that USA is expected to be able to control the rising inflation better, than most other countries.

[nauseus]

2 hours ago, KhunLA said:

If you trade currencies, here's a trend that hard to ignore.  A winning play most months ????????

Very useful I'm sure?