How the US rate hike impacts the baht and Thailand’s economy

[webfact]

 

By Thai PBS World’s Business Desk

 

The US is the world’s largest economy and the US dollar is widely used worldwide, as a result, the actions and decisions of the US Federal Reserve (Fed) have a profound impact on the baht and other currencies.  

 

Thailand has a relatively small, open economy that is heavily dependent on the export of goods and services. So, any changes in the world’s largest economy create ripples in Thailand as well.

 

The Fed has aggressively increased its benchmark rate this year to fight rapidly rising inflation. It effected a 0.75 percentage point interest hike in July as inflation soared to a 40-year high in June, hitting 9.1 percent.

 

With the latest data suggesting strong new jobs growth in July, markets are predicting another hike by 0.75 percentage point when the Fed meets in September, the third straight hike of that magnitude.

 

Full story: https://www.thaipbsworld.com/how-the-us-rate-hike-impacts-the-baht-and-thailands-economy/

 

-- © Copyright Thai PBS 2022-08-11

 

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[IAMHERE]

So far, since the last rate increase, the baht has risen in value against the FED.  Was 36 to the $ ; now not so much.  Less than two weeks and it costs me $25 buck more for my 30,220 transaction to get bahts out of the USA account.

 

[ThailandRyan]

52 minutes ago, IAMHERE said:

So far, since the last rate increase, the baht has risen in value against the FED.  Was 36 to the $ ; now not so much.  Less than two weeks and it costs me $25 buck more for my 30,220 transaction to get bahts out of the USA account.

 

35.32 Baht per $1.00 as of this morning.  One has to wonder why it has dropped.  I was talking to a friend and he believes it is the tourists arriving and exchanging currency which is building the countries reserves back up and thus allowing the baht to strengthen.  Makes no sense to me, never has.  Inflation in the US is being outpaced by the unemployment rate dropping and the fears of a recession shrinking.  The fed will raise the basis points again by another .75 in the next month.  Stocks are slowly strengthening in certain sectors. 

[G Rex]

The Baht seems to be strengthening against many currencies in the last few weeks.

It is stronger against the Pacific Peso (Aussie dollar) - even though the PP is strengthening (slightly) against the USD.

I never try to predict , or understand! I just transfer money if I need it.

[thailand49]

No one really knows the answer but thing we can speculate which is what I do?  The baht should be weaker not stronger the last week whether anyone wants to believe it or not they will allow it until they don't like it because it doesn't benefit certain people?  It is tough trying to time it with the Baht that might be impossible?????

[thailand49]

3 hours ago, IAMHERE said:

So far, since the last rate increase, the baht has risen in value against the FED.  Was 36 to the $ ; now not so much.  Less than two weeks and it costs me $25 buck more for my 30,220 transaction to get bahts out of the USA account.

 

What do you mean by " 30,220 " Transaction????

[chilly07]

Never understood the link between interest rates inflation and fx?

Interest rates been kept v low to promote consumerism.

Interest rates raised to curtail consumerism and inflation. 

You would think that raising interest rates would encourage fx rates to rise but no it indicates panic and rates fall thus fuelling inflation.

Seems to me that bankers and economists just like change for its own sake allowing profits on small margins!

 

[John Drake]

From 36.73 on July 26 to 35.34 today.

[placnx]

3 hours ago, ThailandRyan said:

35.32 Baht per $1.00 as of this morning.  One has to wonder why it has dropped.  I was talking to a friend and he believes it is the tourists arriving and exchanging currency which is building the countries reserves back up and thus allowing the baht to strengthen.  Makes no sense to me, never has.  Inflation in the US is being outpaced by the unemployment rate dropping and the fears of a recession shrinking.  The fed will raise the basis points again by another .75 in the next month.  Stocks are slowly strengthening in certain sectors. 

In the past week there has been speculation that the next increase will be 0.5% instead of 0.75%. This is causing dollar weakness. It's unlikely that a few tourists could have an effect on the exchange rate. Anyway the next Fed rate rise will not be until Sept 21st, so a lot can happen before then.

[placnx]

2 hours ago, thailand49 said:

What do you mean by " 30,220 " Transaction????

He means a 30K baht withdrawal from an ATM with a 220 baht fee.

[IAMHERE]

3 hours ago, thailand49 said:

What do you mean by " 30,220 " Transaction????

The Gold (Kungsri?) bank lets me take out a maximum of 30,000 baht and adds 220 baht for their charge. That is the total; 30,220 that is taken from my home account.  

[thailand49]

42 minutes ago, IAMHERE said:

The Gold (Kungsri?) bank lets me take out a maximum of 30,000 baht and adds 220 baht for their charge. That is the total; 30,220 that is taken from my home account.  

Let me get this right? 

You don't have a bank account with Kungsri but like to use your foreign ATM card because they dispense 30,000 at one time. 

[shortstop2]

10 hours ago, ThailandRyan said:

35.32 Baht per $1.00 as of this morning.  One has to wonder why  

The baht has been strengthening recently because insiders knew that the BOT was going to raise interest rates 25 basis points yesterday.   Of course strong tourism also creates demand for baht.  There is also speculation that in September the Fed won't raise interest rates another 75 basis points.    Personally I think the Fed will continue with aggressive rate hikes as the reason July inflation moderated in the US was because of fuel prices while everything else was on the rise.

[Red Forever]

19 hours ago, thailand49 said:

What do you mean by " 30,220 " Transaction????

Looks like he's taking 30k from atm with 220bt charge

[IAMHERE]

17 hours ago, thailand49 said:

Let me get this right? 

You don't have a bank account with Kungsri but like to use your foreign ATM card because they dispense 30,000 at one time. 

Four or so more years ago I researched which Thai banks would allow the most at the ATM. Kungsri was one of the four that would allow 30,000 baht. I had a Kungsri close (also close to a Green Bank ,Kasi) that I had an account with) . So since then I ATM the Kungsri and go insert into my K-bank, then take out as I need or even go online and pay bills.

[jacko45k]

On 8/11/2022 at 9:48 AM, ThailandRyan said:

35.32 Baht per $1.00 as of this morning.  One has to wonder why it has dropped.  I was talking to a friend and he believes it is the tourists arriving and exchanging currency which is building the countries reserves back up and thus allowing the baht to strengthen.  Makes no sense to me, never has.  Inflation in the US is being outpaced by the unemployment rate dropping and the fears of a recession shrinking.  The fed will raise the basis points again by another .75 in the next month.  Stocks are slowly strengthening in certain sectors. 

I was told 2 reasons.. Thailand using foreign reserves to buy baht, and the USA moving cash into equities. (Positive USA inflation data may support that.)

[thailand49]

1 hour ago, IAMHERE said:

Four or so more years ago I researched which Thai banks would allow the most at the ATM. Kungsri was one of the four that would allow 30,000 baht. I had a Kungsri close (also close to a Green Bank ,Kasi) that I had an account with) . So since then I ATM the Kungsri and go insert into my K-bank, then take out as I need or even go online and pay bills.

The reason I ask first was to see if you had a Thai Bank account here? 

 

Prior to this method I did ATM for years but I planned the withdraws with Aeon ATM since they charge only 150, and a reasonable rate. Although I had a number of accounts with Bangkok Bank. 

 

Year and a half I started this method although I've used Wise for a number of years.  I started to transfer my pension money including my S. S. Once or twice a month into one of my BB accounts not only was I saving the charges here I didn't have to pay also on the other end top that off with the higher exchange rate for Wise I was getting a few thousand baht extra. 

 

Then I use my ATM card issue for that account to withdraw money and there isn't a 220 charge which seems you are being charged from these Thai banks which isn't the case with BB?

 

I usually take 15-20,000 at a time if I need more I just put in the card again and again. 

 

Maybe I'm wrong but it sounds like taking money out from your Thai accounts with their card you are getting charged?

[IAMHERE]

3 hours ago, thailand49 said:

The reason I ask first was to see if you had a Thai Bank account here? 

...

Maybe I'm wrong but it sounds like taking money out from your Thai accounts with their card you are getting charged?

I did have SSA & Retirement sent direct to Bangkok Bank. Two transactions that was charged $5 bucks each; then .0025 baht per baht to move the money to my Regional Bangkok Bank account here in Pattaya. Then free movement(online or ATM) of monies once it got to the 'main' home account. So I was charged $10 bucks and about .0025 times #0,000bt (225baht), no reimbursement. Now I do use an ATM Debit card that reimburses me the 220*3(660bt) at the end of the month. I average 3 ATM/Debit card withdrawals a month, that I then place mostly into the Bangkok Bank or Kasikorn accounts and use their ATM network as needed.

Edited August 12, 2022 by IAMHERE
spelling

[thailand49]

38 minutes ago, IAMHERE said:

I did have SSA & Retirement sent direct to Bangkok Bank. Two transactions that was charged $5 bucks each; then .0025 baht per baht to move the money to my Regional Bangkok Bank account here in Pattaya. Then free movement(online or ATM) of monies once it got to the 'main' home account. So I was charged $10 bucks and about .0025 times #0,000bt (225baht), no reimbursement. Now I do use an ATM Debit card that reimburses me the 220*3(660bt) at the end of the month. I average 3 ATM/Debit card withdrawals a month, that I then place mostly into the Bangkok Bank or Kasikorn accounts and use their ATM network as needed.

You are doing pretty much what my brother here was doing a year ago I finally convince him to switch his 

S. S.  Deposit into the BB in New York, back to his credit union since then using Wise he is getting close to 10,000 baht extra a month. 

Nevertheless I ask if I can help if you are happy with what you are doing best to you.  Take care. 

[StayinThailand2much]

On 8/11/2022 at 9:48 AM, ThailandRyan said:

35.32 Baht per $1.00 as of this morning.  One has to wonder why it has dropped.  I was talking to a friend and he believes it is the tourists arriving and exchanging currency which is building the countries reserves back up and thus allowing the baht to strengthen. 

The US$ has been a bit weaker recently. It's not so much about the baht, as, compared to other currencies (€, £, A$...) the dollar has lost value, too.

Edited August 12, 2022 by StayinThailand2much

[placnx]

On 8/12/2022 at 10:26 AM, IAMHERE said:

Four or so more years ago I researched which Thai banks would allow the most at the ATM. Kungsri was one of the four that would allow 30,000 baht. I had a Kungsri close (also close to a Green Bank ,Kasi) that I had an account with) . So since then I ATM the Kungsri and go insert into my K-bank, then take out as I need or even go online and pay bills.

The other thing to check is what rate is baht converted to foreign currency. Does that bank ATM give the option for conversion by them or sending the charge in baht to be converted abroad? It is probably better, maybe much better, to have conversion done abroad. If the ATM does not offer the option of conversion here or there, where does the conversion happen, and at what rate? If you can't get an answer from the bank you prefer, try TMBThanachart (formerly Thai Military Bank) to see the rate you get on conversion abroad, then try an ATM (on same day if possible) at another bank where the conversion option is not presented when making an ATM withdrawal.

[connda]

On 8/11/2022 at 1:55 PM, placnx said:

He means a 30K baht withdrawal from an ATM with a 220 baht fee.

Which is a good reason to use Wise (TransferWise).  My last 30K+ transfer cost 9 bucks and change.  The transfer took 10 seconds.

[Venom]

Indeed the baht is losing its value faster than the US dollars estimated 9.1% annually! ???? 

[DrPhibes]

22 hours ago, Venom said:

Indeed the baht is losing its value faster than the US dollars estimated 9.1% annually! ???? 

Losing value?  Thai baht is about 1.5 baht stronger that it was 2 weeks ago.

[fusion58]

5 hours ago, DrPhibes said:

Losing value?  Thai baht is about 1.5 baht stronger that it was 2 weeks ago.

And about 3 baht stronger than it was a month ago.

[Venom]

13 hours ago, DrPhibes said:

Losing value?  Thai baht is about 1.5 baht stronger that it was 2 weeks ago.

Two weeks? Let's go back 6 months.