Prawit stuns the cabinet demanding a ฿35 to the dollar rate and action from the Finance Minister

[Chelseafan]

58 minutes ago, John Drake said:

It's bizarre in its way. The one country Thailand has not targeted with a tourism campaign is the US. In the past seven or eight months, they've announced campaigns to bring the British, the Scandinavians, the Germans, South Americans, Malays, the Indians, the Chinese, and now the Russians (again). And as you say, the Russians are about to be penned up. They Chinese already have been penned up with no sign they'll be let loose any time soon. But that is who Thailand targets. One of the fastest ways to turn around that dollar/baht exchange rate would be to get American tourists buying baht with their dollars. But Thailand clearly doesn't want Americans to come here.

One of the fastest ways would be to depreciate the baht to help exporters. The world is about to go into recession IMHO and as the demand for consumer goods weakens, some export markets will struggle. We've already moved most of our shrimp sourcing from Thailand  to Vietnam where product is a lot cheaper for the same quality. 

[Bernietravelling]

Seems, Prawit wants to celebrate the 25th anniversary of the Baht Crisis by repeating it !
 

1997, when George Soros and the other banksters gambled against the Baht,

the politicians urged the Bank of Thailand to fight the depreciation against the Dollar,

in order to protect the Dollar-loans of Thai big shots, they took, when the Thai Baht was overvalued.

 

The final result of that was:

 

The Bank of Thailand exhausted its foreign reserves in meteoric speed

and the crash, which followed, was far worse.

 

 

 

 

[spidermike007]

4 hours ago, placeholder said:

Well, what would you call the U.S, Fed raising interest rates if not free market interference. The US was having no trouble selling Treasury notes at lower rates to finance its deficit but raised the rates to fight inflation. So it's not really just about free markets, is it?

I am no economist, but I do not think currency manipulation is the same thing as the Feds raising rates. Entirely different fundamentals at play. 

[OJAS]

4 hours ago, Bangkok Barry said:

Does he have any qualifications as an economist? Just asking.

He's a dab hand at using one of these, I believe: ???? 

[SheungWan]

If the government wants to hold the USDTHB line at 35, then they will need to put up interest rates in response to the Fed and certainly not slow-walk those increases. The more likely scenario is that the government will drag it's heels. And then it's a slide to 40.

[SheungWan]

40 minutes ago, Bernietravelling said:

Seems, Prawit wants to celebrate the 25th anniversary of the Baht Crisis by repeating it !
 

1997, when George Soros and the other banksters gambled against the Baht,

the politicians urged the Bank of Thailand to fight the depreciation against the Dollar,

in order to protect the Dollar-loans of Thai big shots, they took, when the Thai Baht was overvalued.

 

The final result of that was:

 

The Bank of Thailand exhausted its foreign reserves in meteoric speed

and the crash, which followed, was far worse.

 

 

 

 

Shorting is no more gambling than going long. Asian governments doing their King Canute routine are an inviting target. 

[OJAS]

2 hours ago, John Drake said:

It's bizarre in its way. The one country Thailand has not targeted with a tourism campaign is the US. In the past seven or eight months, they've announced campaigns to bring the British, the Scandinavians, the Germans, South Americans, Malays, the Indians, the Chinese, and now the Russians (again). And as you say, the Russians are about to be penned up. They Chinese already have been penned up with no sign they'll be let loose any time soon. But that is who Thailand targets. One of the fastest ways to turn around that dollar/baht exchange rate would be to get American tourists buying baht with their dollars. But Thailand clearly doesn't want Americans to come here.

Yes, they might come to regret this attitude after the upcoming tourist high season during which the beaches usually frequented by Europeans will in all probability be completely deserted because their home country currencies will have plummeted in value against the THB as a direct consequence of any manipulation of the THB:USD xrate instigated by Thailand.

 

[huangnon]

5 hours ago, AsianAtHeart said:

I've been told that what happened in 1997 was that a few elite among the Thai bankers had been corrupt (one of whom was recently in the news having been sentenced for his part), and had deprived the banks of most of their holdings in foreign currencies.  Not being backed by the gold standard, and having no ability to buy back their baht, when the IMF floated some baht, Thai banks were unable to purchase back their own currency--quickly devaluing it.  The baht went from 32 baht/dollar to about 57 baht/dollar overnight.  This had little to do with any particular foreign currency as a standard against the baht--the baht could have been redeemed in pounds, marks, or other currencies.  It had everything to do with corruption and improper preparation for market stability of the Thai currency.

 

Because Thailand's economy is central to many economies in the region, the entire Southeast Asian region suffered a tremendous blow--reaching as far as to Australia.

 

When we're all propping each other up, it's dominoes when one goes down.

Quote

Asian financial crisis, major global financial crisis that destabilized the Asian economy and then the world economy at the end of the 1990s.

The 1997–98 Asian financial crisis began in Thailand and then quickly spread to neighbouring economies. It began as a currency crisis when Bangkok unpegged the Thai baht from the U.S. dollar, setting off a series of currency devaluations and massive flights of capital.

Source: https://www.britannica.com/event/Asian-financial-crisis

 

The "Buffet Governments" of Gen. Chavalit, and earlier Banharn were mostly responsible for not having enough currency to support the peg, after acquiring a lot of foreign debt (from IMF and World Bank), but there were a lot of other factors:

Quote

Credit bubbles and fixed currency exchange rates

The causes of the debacle are many and disputed. Thailand's economy developed into an economic bubble fueled by hot money. More and more was required as the size of the bubble grew. The same type of situation happened in Malaysia and Indonesia, which had the added complication of what was called "crony capitalism".^[8] The short-term capital flow was expensive and often highly conditioned for quick profit. Development money went in a largely uncontrolled manner to certain people only – not necessarily the best suited or most efficient, but those closest to the centers of power.^[9] Weak corporate governance also led to inefficient investment and declining profitability.^[10][11]

In the mid-1990s, Thailand, Indonesia and South Korea had large private current account deficits, and the maintenance of fixed exchange rates encouraged external borrowing and led to excessive exposure to foreign exchange risk in both the financial and corporate sectors.

https://en.wikipedia.org/wiki/1997_Asian_financial_crisis

[gearbox]

2 hours ago, John Drake said:

It's bizarre in its way. The one country Thailand has not targeted with a tourism campaign is the US. In the past seven or eight months, they've announced campaigns to bring the British, the Scandinavians, the Germans, South Americans, Malays, the Indians, the Chinese, and now the Russians (again). And as you say, the Russians are about to be penned up. They Chinese already have been penned up with no sign they'll be let loose any time soon. But that is who Thailand targets. One of the fastest ways to turn around that dollar/baht exchange rate would be to get American tourists buying baht with their dollars. But Thailand clearly doesn't want Americans to come here.

It will be waste of money to target the Americans. The long haul airfares are through the roof, it is getting expensive for the ordinary folks in North America to come here.

 

Much better targets are the Indians, the Arabs and East Asia, direct much shorter flights, surely more expensive than pre-covid but still bearable.

[ThailandRyan]

Seems the pudgy little acting PM has now walked back his words on 35 Thb to $1 Usd.  Sometimes it amazes me how folks in this Government or in one of the ministries just opens up their piehole and spouts nonsense because it makes them feel better without realzing the extent of the comment and how it is perceived.....but it is not only here, and yes my the same can be said for my comments and posts herein this forum..

[Zack61]

He has a big brown paper bag full of baht he wants to convert. He’s kicking himself he never did it when the rate was 30

[Hockeybik]

11 hours ago, Fairynuff said:

An overvalued USD helps nobody but dollar carrying tourists and expats. In the short to medium term it causes more harm than good to the world economy.

Define "overvalued"

[Autonuaq]

expansion of the Thai economics is with the exchange rate of USD to 50 THB as in the past that made all grow and Thailand as it is now.

 

most products are made and used local so that will not have an effect.

 

and the rest makes just that it is very attractive to do business with Thailand.

 

therefore the 1 to 50 exchange rate would solve the problems and create growing internal economics.  

[Hockeybik]

Perhaps Prawit would benefit from an online economics course?

[ThailandRyan]

1 hour ago, Hockeybik said:

Define "overvalued"

Far from overvalued in reality

 

https://am.jpmorgan.com/us/en/asset-management/institutional/insights/portfolio-insights/currency/why-the-US-dollar-may-not-be-as-overvalued-as-you-think/

The US dollar has been strong in recent years against major peers, such as the euro and renminbi. The dollar has also been strong on broader measures, including the trade weighted exchange rate. After adjusting for differences in inflation rates, the real value of the dollar is close to the strongest it has been during the near 50-year modern history of floating exchange rates

[Hockeybik]

1 hour ago, ThailandRyan said:

Far from overvalued in reality

 

https://am.jpmorgan.com/us/en/asset-management/institutional/insights/portfolio-insights/currency/why-the-US-dollar-may-not-be-as-overvalued-as-you-think/

The US dollar has been strong in recent years against major peers, such as the euro and renminbi. The dollar has also been strong on broader measures, including the trade weighted exchange rate. After adjusting for differences in inflation rates, the real value of the dollar is close to the strongest it has been during the near 50-year modern history of floating exchange rates

Thank you for the source. My point exactly.

[ThailandRyan]

1 minute ago, Hockeybik said:

Thank you for the source. My point exactly.

It is from an article I look at periodically to assess my trading strategies just to ensure I am looking at things appropriately.  It is 3 years old, but the premise is still the same, not overvalued as people think,  The fed keeps things in check and banks would never loose money like they did in the home loan crisis from years ago with the checks and balances put in place after the fact.  Of course that's my view.

[Bangkok Barry]

42 minutes ago, ThailandRyan said:

Sometimes it amazes me how folks in this Government or in one of the ministries just opens up their piehole and spouts nonsense

It's just one of the things about Thailand that I'll never understand. In a country where saving face is so important, even more than life itself on occasions, we regularly have someone come out with absolute nonsense about something they clearly have no proper understanding of and haven't thought through, making themselves look like fools. It happens several times a week. Baffling.

[Bernietravelling]

1 hour ago, SheungWan said:

Shorting is no more gambling than going long. Asian governments doing their King Canute routine are an inviting target. 

Well … at least, most guys, who do shorting, don’t call themselves

a “philanthropist”,

like George Soros does ????

[RTEA]

Interesting attempting to understand monetary issues.

[Bernietravelling]

1 minute ago, Bangkok Barry said:

It's just one of the things about Thailand that I'll never understand. In a country where saving face is so important, even more than life itself on occasions, we regularly have someone come out with absolute nonsense about something they clearly have no proper understanding of and haven't thought through, making themselves look like fools. It happens several times a week. Baffling.

Well, that’s not limited to Thai government, isn’t it ?
 

eg. the EU commission and German ministers coming immediately  to my mind

- I’m leaving comments regarding US presidents to the US forum members … ????

[Bangkok Barry]

4 minutes ago, Bernietravelling said:

Well, that’s not limited to Thai government, isn’t it ?
 

eg. the EU commission and German ministers coming immediately  to my mind

- I’m leaving comments regarding US presidents to the US forum members … ????

This is a forum about Thailand so I referred to Thai politicians.

[Jai Dee]

[Update] Prawit backs down from statement of asking for Thai Baht to be around 35 to US$ as currency continues its downward trend

 

Acting Prime Minister General Prawit Wongsuwan said the government was not trying to interfere with the weakening Baht after suggesting that the most suitable level for the currency is 35 Baht per US dollar.

 

“No, not related,” he replied to reporters after they asked him whether the government was trying to interfere with the Baht movement or not.

 

“You have to go ask the economic team as I have only instructed them to monitor the situation,” he said.

 

 

Read  the full article from Thai Enquirer here.

[newnative]

1 hour ago, gearbox said:

It will be waste of money to target the Americans. The long haul airfares are through the roof, it is getting expensive for the ordinary folks in North America to come here.

 

Much better targets are the Indians, the Arabs and East Asia, direct much shorter flights, surely more expensive than pre-covid but still bearable.

   Agree.  People always talk about the large number of Chinese tourists in 2019, around 11 million.  But they forget, or perhaps don't know, that other Asian and Indian visitors that year were around 14 million, not including Laos and Cambodia.   That's far more than Europe and North America combined.  

[Fairynuff]

1 hour ago, Hockeybik said:

Define "overvalued"

My opinions on here are undervalued so I’d best not 

[Steve Vincent]

Never realised prawit was a financial genius add the high cost of living / covid and the war on Ukraine banks around the world have had no choice but to raise interest rates,. Thailand already on the watch list for suspicion of manipulating the currency back in 2020,.
 

2yrs down the line without tourists the baht has remained strong ! Outperforming other currencies when majority expected the baht to depreciate in value,. 

[Stocky]

Interest Rates by Country:

 

Thailand  0.75%
USA  3%-3.25%

Malaysia 2.5%

Singapore 2.34%

Indonesia 4.25%

Philippines 4.25%

Vietnam 5%

China 3.65%

 

Is it any wonder the Thai Baht is heading south?

 

 

[Isaan sailor]

Hey, every dog has its day.  Give it up on Dollar bashing.  And 37 didn’t last very long.  At the moment you cannot get 37 Baht for a Dollar at Wise.  That ship has sailed.

[Cillary]

Thai exporters selling in USD can always reduce their prices to attract orders

[AsianAtHeart]

54 minutes ago, Cillary said:

Thai exporters selling in USD can always reduce their prices to attract orders

This statement, while of course true, is a bit naive.  When the baht/dollar exchange rate spiked to 57 baht/USD in 1997, the prices of domestic products did not change measurably.  What changed were the imported goods: steel, milk, corn flakes, etc.  Most Thai people didn't consume foreign foods, but the steel prices did have a delayed impact.  Even though the baht was nearly half its original value, within Thailand you could still buy a plate of fried rice for 20 baht, somtam for 15-20 baht (despite the old radio hit with the lyrics saying somtam could still be bought for 5 baht...ha!), and most other products like rice, locally grown or produced foods, garments, etc. stayed the same.  Thailand was still exporting--that hadn't changed.  Within Thailand, very little changed--at least at first.  

 

That all happened pre-Taksin.  By the time Taksin took office, the trickle-down economic effects had definitely hit, and Thailand was experiencing inflation due to the costs of imports.  Taksin was able to turn the economy around, and Thailand soon saw some of its best economic developments in its history.  The baht returned to around 37 per dollar, then headed toward 35.  It took years before it finally got back to around 32 where it had been trading before the crash.  Of course, some may lament that it never got back to 29 or better where it had been at one point in time.  But when the baht is too strong, exports will be fewer. 

 

American buyers, and perhaps those of other Western nations, do not fancy the idea of supporting sweat shops when purchasing their cheap goods.  They like good prices, but not at the ethical/moral cost of encouraging economic slavery.  Yet, in order to market more cheaply, Thai manufacturers would be forced to cut their own expenses somewhere.  Their profit margin is not typically as high as a typical profit margin in a more developed country would be.  To reduce their costs, and sell their products for less, might eventually backfire when the product is found to be of poor quality by the consumer.

 

So, can they really just lower their prices?  Not without sacrificing somewhere in the process.  When an exchange rate gets set, it equally affects both imports and exports.  In a country with a neutral balance of trade, all other things being equal, the exchange rate itself will balance/cancel out.  But if the manufacturer reduces sales prices without having a commensurate reduction in the prices of the raw materials used for production, the difference is felt as pressure on that particular manufacturer. 

 

It's like a tug-of-war: add more pulling force to each side and balance still exists.  For a manufacturer to reduce prices is to have less pulling force on the manufacturer's side only.