Dollar hits 38 baht, UK pound rallies slightly as new chancellor acts

[webfact]

File photo

 

Exchange rates for a US dollar have hit 38.10 baht while the UK pound has recovered slightly to 42.7 baht.

 

The pound had traded lower due to the strength of the greenback as well as market turmoil caused by a mini-budget in the UK that led to the sacking of the Chancellor of the Exchequer Kwasi Kwarteng on Friday.

 

New chancellor Jeremy Hunt sought to calm market volatility with a swathe of measures reversing previous decisions. 

 

The pound was trading as high as mid 45 baht in January.

 

In latest SuperRich rates available online the Euro was at 37.05, Aussie dollar at 23.65, Canadian $ at 27.45 and NZ $ at 21.2 baht. 

 

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[vivananahuahin]

40 end of this year?

[RichardColeman]

14 minutes ago, vivananahuahin said:

40 end of this year?

Hopefully you mean the dollar and not my pound !

[ThailandRyan]

Looks like the hits for other currencies continue.  Vietnam has just basically devalued the the dong currency by widening the exchange rate trading band to 5.0% from 3.0%.  Dollar right now can buy a lot of currencies in certain countries......

[dunroaming]

Pound dropped back again and now one cent back up. Hunt making an emergency statement in ten minutes time that should bring the pound up again, but we are in the deep brown stuff yet again thanks to the morons in government.  New Prime Minister anyone?

 

Beggars belief but no surprise with this shower in charge.  Desperately need a general election, but more importantly, a viable opposition party!!!

[Onerak]

Hope it reaches 40 and stay there for at least a decade for Thailand to recover to pre-covid economic growth.

[Isaan sailor]

USD up nicely, but the formula holds.  When US stocks tank—Baht follows down.  Would love to sell stocks to convert to Baht—but this small time investor only sells stocks when they rise.

[hotchilli]

18 hours ago, webfact said:

New chancellor Jeremy Hunt sought to calm market volatility with a swathe of measures reversing previous decisions. 

The government really need to get to grips with the economy or get someone in who knows what they're doing..

The reversal of the crazy measures introduced by Truss & Co is a good start.

 

[hotchilli]

18 hours ago, vivananahuahin said:

40 end of this year?

I'll be 63..

If they can match that I'll be happy again, as It was around 20 years ago.

[nigelforbes]

11 hours ago, Isaan sailor said:

USD up nicely, but the formula holds.  When US stocks tank—Baht follows down.  Would love to sell stocks to convert to Baht—but this small time investor only sells stocks when they rise.

US markets and THB do not have an inverse relationship, why would they? One is a forward view of the US economy, the other is a foreign currency that is unrelated to the US economy and is not pegged to the USD! US markets and USD often have an inverse relationship. When US markets fall, the VIX Index or fear gauge usually rises and the US Dollar index also rises, which means that USD strengthens. It's conceivable that the link you imagine is between falling US markets, Asian bourse contagion and the negative impact that contagion has on minor currencies such as THB but there is no direct relationship whatsoever.

[nigelforbes]

13 hours ago, Onerak said:

Hope it reaches 40 and stay there for at least a decade for Thailand to recover to pre-covid economic growth.

I also wish for that but realistically it won't happen. As soon as the current account is in surplus once again, the value of THB will strengthen. For that to happen, either exports or tourism will need to increase and not by a huge amount, 15 million tourists per year looks like the inflection point. In practice a combination of the two things may see THB strengthen sooner. 

[Isaan sailor]

30 minutes ago, nigelforbes said:

I also wish for that but realistically it won't happen. As soon as the current account is in surplus once again, the value of THB will strengthen. For that to happen, either exports or tourism will need to increase and not by a huge amount, 15 million tourists per year looks like the inflection point. In practice a combination of the two things may see THB strengthen sooner. 

Relax. It’s just my theory—mainly for conjecture and some amusement.  No need to get hot and bothered about it.

Besides—it worked perfectly again today.  US Stocks up a tad—Baht up on USD a tad.  Let me have some fun…

[mikebell]

19 hours ago, RichardColeman said:

Hopefully you mean the dollar and not my pound !

Agreed.  When I first moved here I got 73 & managed to spend all of it every month.  Now austerity has set in + my UK pension is the same as it was 15 years ago.

[Gknrd]

Love Thailand when the Dollar to Baht is so good.. Laos is a bargain also.  Just spent a month there exploring and it was hard to spend 1000 dollars..   I will enjoy it while it lasts then vacate SE Asia.  Much better places when the dollar is not so strong.

[nigelforbes]

38 minutes ago, Isaan sailor said:

Relax. It’s just my theory—mainly for conjecture and some amusement.  No need to get hot and bothered about it.

Besides—it worked perfectly again today.  US Stocks up a tad—Baht up on USD a tad.  Let me have some fun…

I understand those things, it's just information, there's nothing hot or bothered about any of this. I just thought you might find it helpful to understand what conditions need to exist for us both to be disappointed by the future exchange rate.

[Orinoco]

Wake me up,  if it gets to about 52 to the GBP. 

[sandyf]

16 hours ago, dunroaming said:

Beggars belief but no surprise with this shower in charge.  Desperately need a general election, but more importantly, a viable opposition party!!!

Previous economic crisis combined with political problems has led to a change of government. How Maggie Thatcher and Tony Blair came to power, almost inevitable the same will happen again.

[sandyf]

2 hours ago, nigelforbes said:

US markets and THB do not have an inverse relationship, why would they?

Of course there is a relationship. 

Following the financial crisis in the 90s it became policy for Thailand to hold much of its foreign reserves in USD so a strong $ is good for the baht.

But only to a certain extent, too much strength in the baht will start to impact on trade, hence the speculation on intervention.

The downside is that intervention is ok in the west but in other countries it becomes currency manipulation.

[nigelforbes]

3 minutes ago, sandyf said:

Of course there is a relationship. 

Following the financial crisis in the 90s it became policy for Thailand to hold much of its foreign reserves in USD so a strong $ is good for the baht.

But only to a certain extent, too much strength in the baht will start to impact on trade, hence the speculation on intervention.

The downside is that intervention is ok in the west but in other countries it becomes currency manipulation.

Perhaps I wasn't entirely clear when I said markets, I referred to equity markets, not FOREX, there is no inverse relationship between US equity markets and THB.

 

But on the subject of the relationship between USD and the BAHT: Thailand operates the Managed Floating Peg against USD, it is not fixed hence the movements between the two are variable and unpredictable, in both directions, as we are seeing currently.

 

Also, BOT holds it's Foreign Currency Reserves in 24 foreign currencies that are the currencies of its major trading partners, less than 50% is currently held in USD although all the reserves are accounted for in USD. Foreign currency swaps are becoming the order of the day as different countries attempt to replace USD with other things.

[sandyf]

5 hours ago, nigelforbes said:

Perhaps I wasn't entirely clear when I said markets, I referred to equity markets, not FOREX, there is no inverse relationship between US equity markets and THB.

 

But on the subject of the relationship between USD and the BAHT: Thailand operates the Managed Floating Peg against USD, it is not fixed hence the movements between the two are variable and unpredictable, in both directions, as we are seeing currently.

 

Also, BOT holds it's Foreign Currency Reserves in 24 foreign currencies that are the currencies of its major trading partners, less than 50% is currently held in USD although all the reserves are accounted for in USD. Foreign currency swaps are becoming the order of the day as different countries attempt to replace USD with other things.

Spin it any way you want but facts are facts.

Over the last year the dollar index has moved steadily from 94 to 110 and during the same period the USD/THB has effectively followed the same path from 32 to 38.

Hanging on to someones coat tails was never seen as a "fixed" arrangement.

[nigelforbes]

25 minutes ago, sandyf said:

Spin it any way you want but facts are facts.

Over the last year the dollar index has moved steadily from 94 to 110 and during the same period the USD/THB has effectively followed the same path from 32 to 38.

Hanging on to someones coat tails was never seen as a "fixed" arrangement.

There's no spin involved, it's a matter of very simple fact. The previous poster wrote, "When US stocks tank—Baht follows down". I replied that there is no inverse relationship between US stocks and the value of the baht. What that posters statement says is that when Facebook, Tesla and Amazon stock falls in value, THB follows that fall. Why would they, simply, they don't. If the poster had written that frequently, USD strengthening is the cause of US stock market falls and frequently, that translates into contagion which spreads to the Thai stock markets and causes them to fall also, that would have been accurate. Or if he would have said, when USD strengthens THB weakens that could possibly be correct, (but there's much more to it than just that). But to draw the connection between movements in US equity markets and the value of THB is utter nonsense.

 

You do understand I hope that the US Dollar Index is only an index in the same way that the S&P and the Nasdaq are indexes. It is possible to buy index trackers for either of them but they are not considered to be a part of core equity market stock per se. So yes, the value of USD does move in line with US Dollar Index, the one tracks the other, that's how they are designed. And when USD strengthens or weakens, THB strengthens or weakens accordingly. But THB doesn't tank every time the US equity market tanks. You might want to read up what the US Dollar Index is, it's FOREX based, not equities based: https://www.investopedia.com/terms/u/usdx.asp 

The Dollar Index is dependent on the performance of 6 currencies, not on equities, it's only connection with equities is that the Index is reported via a tracker.

 

Lastly, I never said or even implied that THB is fixed to USD. Under IMF rules THB maintains a floating peg to USD, that's the full extent of that point. 

Edited October 18, 2022 by nigelforbes

[shackleton]

Well can't get to excited about the pound sterling now $1.14

About 43 baht to the pound

Needs to be back up to $1.30 - $1.40  around 50 baht plus 

Can always dream ????

[dunroaming]

6 hours ago, sandyf said:

Previous economic crisis combined with political problems has led to a change of government. How Maggie Thatcher and Tony Blair came to power, almost inevitable the same will happen again.

 

6 hours ago, sandyf said:

Previous economic crisis combined with political problems has led to a change of government. How Maggie Thatcher and Tony Blair came to power, almost inevitable the same will happen again.

Problem is that only the current government can call an early general election and this shower are never going to do that knowing that they would lose by a country mile.  Therefore, another change of PM is the most likely while the country screams and shouts but has no influence whatsoever.