Thai Baht heads to near 37 Baht/US$, as BoT defends its use of $19 billion in defending the currency

[bkk6060]

It was briedfly over 37 about an hour ago now at 36.97 to USD.

Inflation, higher interest rates, markets tanking big time could reach 40 at some point.

 

Just checked again over 37 now.

Edited September 16, 2022 by bkk6060

[Onerak]

5 hours ago, JimmyJ said:

Where would you invest the cc borrowed money and get 6%?

Pre 2008 crash, there were many banks offering 5-6% interests. 

[Gecko123]

Below article does a good job of explaining BOT's thinking on interest rates and currency valuation. They seem to be doing a juggling act between: (1) making sure capital outflows (due to low interest rates compared to US) don't start cascading; (2) keeping interest rates low to keep the economy's recovery on course, and (3) the need to raise interest rates in order to tackle inflation.

 

The reason why the baht is depreciating is almost entirely due to the growing interest rate differential between Thailand and the US. The US is aggressively raising rates while Thailand is totally dragging its feet. Obviously, tackling inflation is not the highest priority and I worry that the BOT may not be paying sufficient attention to this problem which is really hitting the lower classes hard. On the other hand it should be pointed out that the weakening baht provides a big boost to Thailand's important tourism sector.

 

https://www.cnbc.com/2022/09/12/thailand-says-it-can-slow-rate-hikes-one-economist-says-its-a-gamble.html

Edited September 16, 2022 by Gecko123

[Onerak]

5 hours ago, tomazbodner said:

I'm waiting for USD to drop to 25 THB like before 1997...

Before 1997, THB was not floating. It was pegged to dollar.

[superal]

1 hour ago, Dogmatix said:

Quite a confusing article. It is to be expected that international reserves are down. Thailand has been running a current account deficit since COVID and the BoT is hiking rates at a much slower rate than the Fed. In addition to the current account deficit there have been significant portfolio outflows putting further pressure on the capital account and international reserves. Probably the BoT has been intervening in the market to slow the rate of the baht's decline but that is part of their job to keep conditions as stable as possible. I don't see anything unusual here with the caveat that the BoT, I think reports only spot international reserves without netting off futures and forward positions, a standard they got from the Bank of England. This means that gains or losses in the futures and forwards markets are not reflected n the reported numbers. In 1997 I came from a meeting at the BoT where they told us reserves were still at around $30bn but it was suddenly revealed a few days later that netting off losses in the futures and forwards markets, the reserves were actually close to zero and the melt down commenced. 

 

We are not close to the 1997 situation at this point. 

I have read that the USA dollar bubble could be about to burst and their interest rates will rise again next week . The closely aligned Thai Baht has most of its foreign reserves in US dollar currency paper money . Commodities may have proved a safer option . 

[Onerak]

6 hours ago, mania said:

In the form of more tourists whose dollar goes further

Thailand does not need more sex tourists or tourists in search of poverty stricken local girls for marriage in exchange for a marriage visa. No country on the earth has prospered with this model. 

[Walker88]

2 hours ago, vandeventer said:

One would think with all the USA debt you would need a wheelbarrow full of dollars for 1 baht?

https://www.pgpf.org/national-debt-clock?gclid=Cj0KCQjwvZCZBhCiARIsAPXbajuHQMZ31TaecsGe3a7FljCFTjwqmjBRZucsAe_15UkOZx8itTKiHaYaAtdNEALw_wcB

You are probably not an economist or trader, as you do not understand what makes a currency strong or not strong.

 

First, most everyone has oodles of debt. The entire world is awash in debt, now approaching $300,000,000,000,000. Some countries hide it better, account for it differently, etc. Ten years ago one could have looked at the finances of Japan, their debt service ratio, etc., and thought the yen should be a bazillion yen to the dollar and euro. Many factors, however, are at play.

 

The draw for the US, especially now that sanity has at least returned to the White House, is that the US has both rule of law and massive liquid markets. Almost any amount of wealth can enter and exit US equity, fixed income, property, etc. markets, be safe while there, and exit just as easily without restriction or interference. That makes the dollar an attractive entity in which to hold wealth. The US also is a global manufacturing and military power. Toss in the fact that oil and many commodities are still quoted in and paid for in dollars is another part of its strength.

 

One more key point: the US banking system, despite the OBS derivative portfolios, is quite strong and stable, particularly because of what Obama forced on it back in 2009. He made banks recapitalize, sell bad assets, and markedly lower their leverage rations. The entire US banking system represents about 80% of US GDP, while in a country like Switzerland, with two major banks, the banking system is about 350% of Swiss GDP. That makes the entire Swiss economy vulnerable to the credit quality of the portfolios of the major banks. The entire EU banking system is about 200% of EU GDP, and the EU solution to 2008 was to have both sovereign debt and banks lean against each other to remain standing (Dragi printed money, gave it to banks with high leverage, told them to buy EU sovereign debt, thus both lowering EU nation borrowing costs and adding "profits" to EU banks.)

 

 

As for all that debt...$7 trillion of it, or upwards of 35%, came just in the 4 years of 45. That is a rate of profligacy never seen before under any POTUS. Fortunately Biden cut FY2021 deficit by $350 billion over 45's last year, and another $1.7 trillion in FY2022. The money printing the Fed did to stave off financial armageddon after 2008, combined with the wild spending and deficit spree of 45, is what finally let the inflation genie out of the bottle. Obama had to clean up the repub-created mess under Bush II, and Biden has to clear up the mess created by 45.

[Mavideol]

7 hours ago, Caldera said:

Bound to tank even further. I wouldn't be surprised if we'll see 40 baht again pretty soon.

looking forward that moment, hope your prediction is correct

[Charlie Halliday]

A weak baht is good for exports and tourism, Thailands 2 biggest contributors to GDP. With the world on the verge of recession an exchange rate of USD 40Baht would help enormously with both these sectors. 

[loong]

10 hours ago, ThailandRyan said:

They were propping up the Baht by exchanging USD for THB to assist in keeping the THB stifled, but it has not truly been working. One wonders where the USD to Thb would be if they had not played the shuffling game.....Lets see where the USD floats to as time goes on.

I have often wondered about this. If Thailand is buying the Baht to support the currency, where do they buy the Baht from? I find it hard to believe that there are billions of dollars worth of Baht floating around in the foreign exchange market.

[ThailandRyan]

8 minutes ago, loong said:

I have often wondered about this. If Thailand is buying the Baht to support the currency, where do they buy the Baht from? I find it hard to believe that there are billions of dollars worth of Baht floating around in the foreign exchange market.

The banks in the rest of the world have no direct association with the BOT, yet they have many baht on hand which they have taken in by exchanging into the various currencies of the world.  I wonder how much baht is in the Russian banking system...The BOT would be buying Baht as a speculatory instrument and would also be buying it from the local banks as well as banks on the international level

Edited September 16, 2022 by ThailandRyan

[mania]

13 hours ago, Onerak said:

Thailand does not need more sex tourists or tourists in search of poverty stricken local girls for marriage in exchange for a marriage visa. No country on the earth has prospered with this model. 

Get your mind out of the gutter ???? None said we were talking about the 2 week millionaires. We were talking real tourists & more importantly real exports

[RichardColeman]

No point in propping up the baht against the US $ at the moment. Sleepy Joe is spending money like crazy, making inflation go up and people put money in the US banks as the interests rates will rise to bring inflation down. Just wasting it, Dollar will be high for 18 months minimum with Joe and his hand in the cookie jar

[jacko45k]

22 hours ago, spidermike007 said:

Considering how well many economies around the world have bounced back after covid, Thailand gets a failing grade in that regard. The level of mismanagement is astounding. Get rid of the dinosaurs, and let us usher in some talent and capable leadership. It is desperately needed at this time, and the Thai people need to muster up some conviction and passion for change. 

I thought most place were 'in a bit of a mess' with high inflation, rising energy costs (and shortages) and in the case of the UK, strikes galore. A lot  of countries may well be improving post Covid but it has been like dragging a rag through treacle and coming from a deep low..

Is Thailand really doing so bad?.... Sterling/USD is the lowest it has been since  1985, when The Miners were striking and Live Aid was needed to feed the starving in Ethiopia.

Edited September 17, 2022 by jacko45k
typo

[hotchilli]

On 9/16/2022 at 8:12 AM, webfact said:

As Thai Baht heads towards level not seen since late September 2006 questions are being asked whether the Bank of Thailand (BoT)’s statement that the 1.35 trillion Baht disappearance of the international reserves was just ‘revaluation’ of asset or has the central bank been actively propping the currency to keep it artificially stronger than it should be.

Manipulation is the name of the game.

[ThailandRyan]

17 minutes ago, hotchilli said:

Manipulation is the name of the game.

Down this morning to 36.79

[spidermike007]

3 hours ago, jacko45k said:

I thought most place were 'in a bit of a mess' with high inflation, rising energy costs (and shortages) and in the case of the UK, strikes galore. A lot  of countries may well be improving post Covid but it has been like dragging a rag through treacle and coming from a deep low..

Is Thailand really doing so bad?.... Sterling/USD is the lowest it has been since  1985, when The Miners were striking and Live Aid was needed to feed the starving in Ethiopia.

Yes. New car sales are next to nothing right now, according to a few showrooms I have spoken with, who were open enough to admit that. Condo sales are way down, foreign investment is likely way down, especially after the disastrous tax decision the court handed down against Toyota. Unemployment is way up here, and many tourism related businesses are struggling, as well as local businesses too. New developments are way down too. A son of a good friend, who works for a huge company in the US, that invests in projects all over the world, just decided at major meeting to stop all investments in Asia, except for Japan. Suicides and homelessness are also way up here.

 

Many of us are insulated from the suffering. But, it is rampant, and the damage the goons have done to the people and the economy is unforgivable. 

[Mavideol]

3 hours ago, ThailandRyan said:

Down this morning to 36.79

my father once told me anything that goes up has to come down  555

[Neeranam]

5 hours ago, hotchilli said:

Manipulation is the name of the game.

Yep, nothing new. Look at Taksin when he was in charge of finance in Big jew's government!! 

[KhunLA]

8 minutes ago, Neeranam said:

This has nothing to do with Biden.

Obviously ... and stated in jest.  

 

I think it would be almost impossible for him to get re-elected.  Even the dems have had enough of him already, and it's not even 2 yrs yet.

[EricTh]

On 9/16/2022 at 9:21 AM, Onerak said:

Still waiting for the days when 40 BHT will be one USD as It was when I had to flee my nomadic living in Europe to Thailand. I have also witnessed the dark days when one US was mere 29 BHT. More importantly I am waiting for interest rate to go up so that I can borrow money from CC at 3-4% and earn in saving at 6% as I used to before the 2008 housing crash. 100K borrowed from CC at 3% used to net me 2,000 USD or 80,000 BHT at 40 BHT per USD with zero risk. 

What does CC mean?

[Mavideol]

2 hours ago, EricTh said:

What does CC mean?

could it be Credit Card  ????

[jacko45k]

18 hours ago, spidermike007 said:

Many of us are insulated from the suffering. But, it is rampant, and the damage the goons have done to the people and the economy is unforgivable. 

Well mismanagement is certainly apparent but we have big expensive places opening in Pattaya......spending on many projects, and a racket on the beach every weekend. I took a look at buying a PCX and all dealers want to sell above RRP... perhaps due to wanting customers needing financing being preferred. New cars on show every weekend in Big-CX. Just not seeing that Thailand is doing that badly. 

[Neeranam]

Was 25 when I came here in Oct 92, so anything above that is good. 

GBP was 37.

 

[metisdead]

Some posts with off topic trolling comments have been removed.

[Heng]

It's wonderful periods such as these that makes 'not selling your home/condo(s)' back home a prudent decision.  It's a nice safety net and 'poor man's' forex hedge in rental income.   

[mania]

31 minutes ago, Heng said:

It's wonderful periods such as these that makes 'not selling your home/condo(s)' back home a prudent decision.  It's a nice safety net and 'poor man's' forex hedge in rental income.   

Very True & in many ways useful as it most likely appreciated many times over what any Thai condo or home did.

Plus in an emergency it makes reintegrations that much easier as your not thrown into rental price shock

 

 

[Neeranam]

1 hour ago, mania said:

Very True & in many ways useful as it most likely appreciated many times over what any Thai condo or home did.

I sold my house/land for a good profit in Khon Kaen. 

[mania]

22 minutes ago, Neeranam said:

I sold my house/land for a good profit in Khon Kaen. 

Yes it is possible & we also sold our CM condo in 2016 for near double what we paid in 2004 but...It was still beans compared to what our home in the West even just appreciated in the 7 years we were gone.

 

Also we could if we wanted to buy that CM condo back or one in same building for less than we sold. The opposite is true here

 

But we did keep our house in the Thai countryside & are anxious to return now that the covid nonsense is dying down. We do love Thailand ????

Edited September 18, 2022 by mania

[spidermike007]

6 hours ago, jacko45k said:

Well mismanagement is certainly apparent but we have big expensive places opening in Pattaya......spending on many projects, and a racket on the beach every weekend. I took a look at buying a PCX and all dealers want to sell above RRP... perhaps due to wanting customers needing financing being preferred. New cars on show every weekend in Big-CX. Just not seeing that Thailand is doing that badly. 

New bikes are very popular here, due to most people not being able to afford a car.