Looks like the BOT is buying the baht again

[Kwasaki]

20 minutes ago, fulhamster said:

Perhaps they are already doing that ??

Yeah i only asked because i didn't think that world money market would allow it. 

I guess they no control over what a bank gives in exchange in Thailand anyway. ????

[nigelforbes]

1 hour ago, Kwasaki said:

Yeah i only asked because i didn't think that world money market would allow it. 

I guess they no control over what a bank gives in exchange in Thailand anyway. ????

Of course they can't set their own rates, the value of the Baht is determined solely by the global FOREX system of buying and selling against other currencies.

 

An interesting point though, indeed BOT has no control  over the rates used by banks in Thailand, once again, this is determined solely by the FOREX and market forces. If any one bank was substantially higher than the others, nobody would buy or sell through it, apart from the occasional tourist perhaps. 

 

 

[eisfeld]

1 hour ago, fulhamster said:

Perhaps they are already doing that ??

As explained earlier in the thread they can't just fix the Baht to any value they want. That's what I ment by arbitrage and nigelforbes wrote one effect it would have. If one place (e.g. BOT) is more expensive then simply no one would buy there. And if it were cheaper then everyone would buy there instead of other banks. This effect would close any gap very quickly as there would be profit to be made simply buying at one place and selling at the other. Buying Baht strengthens it and selling it would weaken it. So the price at the cheap place increases and the price at the expensive place decreases until they meet in the middle.

 

This is one of the most important basic mechanisms to keep markets efficient.

 

Could the BOT still manipulate the market? Yes and actually it's one of the jobs of a central bank - to influence aka "manipulate" the market. The question is in which direction. They are supposed to counter moves in the wrong direction and let the currency wonder too much into extremes. Manipulation in the sense that most common people would think of with the aim to profit from it would be detected as the numbers are visible. On top a very strong Baht hurts Thailand's exporters and Thailand is a big net exporter, they have a big trade surplus and so Thailand doesn't want the Baht to appreciate too much.

[Kwasaki]

2 hours ago, nigelforbes said:

Of course they can't set their own rates, the value of the Baht is determined solely by the global FOREX system of buying and selling against other currencies.

 

An interesting point though, indeed BOT has no control  over the rates used by banks in Thailand, once again, this is determined solely by the FOREX and market forces. If any one bank was substantially higher than the others, nobody would buy or sell through it, apart from the occasional tourist perhaps. 

 

 

I still haven't had my question answered like dollar at 1•16 to £ can 43 to £ .

Dollar store 120 to £ baht 40?? 

[nigelforbes]

14 minutes ago, Kwasaki said:

I still haven't had my question answered like dollar at 1•16 to £ can 43 to £ .

Dollar store 120 to £ baht 40?? 

Sorry I missed that post.

 

"i noticed that I'm no expert but thought when dollars 1.14 to £ the baht was say 43 and the dollar today is 1.20 to £ the baht is at 40.???"

 

There are four classes of FOREX currency pairs, Major, Minor, Cross and Exotic.

 

There is no fixed relationship or scale whereby if one currency has a value of X to USD, then another currency must equal Y to USD. Both sides of a currency pair move independently, unless a fixed rate of exchange exists. USD is the very top of the FOREX tree, SOME other currencies have a direct relationship with USD, currencies such as GBP, EURO, YEN etc which are also lesser reserve currencies, those are the major pairs, USD/GBP, USD/YEN, USD/EURO etc.

 

Minor pairs are those that involve other reserve currencies such as the YEN or EURO, paired against lesser currencies. These lesser currencies do not have a direct relationship with USD.

 

Then we have cross currency pairs, an example of which is GBP/THB. THB does not have a direct FOREX relationship with GBP, instead its value is determined by USD/THB and USD/GBP, the calculation is USD/THB x GBP/USD. 

 

Finally we get to THB which is an exotic or boutique currency, it has a direct relationship with USD but it is so small as to not be of consequence in FOREX terms.

 

Soooo, Dollar/Pound is subject to movements in either the Dollar or the Pound whilst Dollar/Baht is subject to movements in either Dollar or the Baht. But Pound/Baht is subject to movements in either Dollar, Pound or Baht.

 

There's a link below in this forum where FOREX is explained is greater detail, if that helps.

 

 

 

 

 

 

[Kwasaki]

48 minutes ago, nigelforbes said:

Sorry I missed that post.

 

"i noticed that I'm no expert but thought when dollars 1.14 to £ the baht was say 43 and the dollar today is 1.20 to £ the baht is at 40.???"

 

There are four classes of FOREX currency pairs, Major, Minor, Cross and Exotic.

 

There is no fixed relationship or scale whereby if one currency has a value of X to USD, then another currency must equal Y to USD. Both sides of a currency pair move independently, unless a fixed rate of exchange exists. USD is the very top of the FOREX tree, SOME other currencies have a direct relationship with USD, currencies such as GBP, EURO, YEN etc which are also lesser reserve currencies, those are the major pairs, USD/GBP, USD/YEN, USD/EURO etc.

 

Minor pairs are those that involve other reserve currencies such as the YEN or EURO, paired against lesser currencies. These lesser currencies do not have a direct relationship with USD.

 

Then we have cross currency pairs, an example of which is GBP/THB. THB does not have a direct FOREX relationship with GBP, instead its value is determined by USD/THB and USD/GBP, the calculation is USD/THB x GBP/USD. 

 

Finally we get to THB which is an exotic or boutique currency, it has a direct relationship with USD but it is so small as to not be of consequence in FOREX terms.

 

Soooo, Dollar/Pound is subject to movements in either the Dollar or the Pound whilst Dollar/Baht is subject to movements in either Dollar or the Baht. But Pound/Baht is subject to movements in either Dollar, Pound or Baht.

 

There's a link below in this forum where FOREX is explained is greater detail, if that helps.

 

 

 

 

 

 

Thanks so much for that i didn't to be honest understand all that stuff.

Anyway have a good new year and the £ to baht will 60 by this time next year, i reckon.  ????????????

[eisfeld]

@KwasakiI think it's a fair question and I'm sure many other people are wondering the same.

 

I took some time and looked up some points in time that match with your numbers, took snapshots of the exchange rates of USD/THB, GBP/USD and GBP/THB from xe.com. Then I compared the recorded exchange rate and compared it to a calculated rate of GBP/THB via GBP/USD and USD/THB. It actually checks out and just deviates by less a fraction a percent.

 

In the below screenshot the three first lines for each date are the snapshot values and the fourth line with "usd_thb_calc" shows the derived exchange rate. The deviation can be explained by what nigelforbes said (no direct GBP/THB) and other small inefficiencies. Plus I rounded the values to the nearest cent values when taking the snapshots.

 

[Kwasaki]

5 minutes ago, eisfeld said:

@KwasakiI think it's a fair question and I'm sure many other people are wondering the same.

 

I took some time and looked up some points in time that match with your numbers, took snapshots of the exchange rates of USD/THB, GBP/USD and GBP/THB from xe.com. Then I compared the recorded exchange rate and compared it to a calculated rate of GBP/THB via GBP/USD and USD/THB. It actually checks out and just deviates by less a fraction a percent.

 

In the below screenshot the three first lines for each date are the snapshot values and the fourth line with "usd_thb_calc" shows the derived exchange rate. The deviation can be explained by what nigelforbes said (no direct GBP/THB) and other small inefficiencies. Plus I rounded the values to the nearest cent values when taking the snapshots.

 

Yeah thanks so much, i luv maths but not that much. ????

I understand now why i was looking at rate's,  which was on a more so simplicitic way. 

Have a good new year. ????

[nigelforbes]

"Global funds have poured $1.5 billion into Thai bonds in the first nine days of January, the largest inflows in Asia, amid optimism China’s reopening will mean more mainland travelers visiting Thailand. 

The baht has also been buoyed by bets that cooling wage pressures in the US will prompt the Federal Reserve to slow the pace of its interest-rate hikes. Morgan Stanley maintained its short dollar-baht recommendation, and lowered the target level for the trade to 32. The pair was at 33.456 on Tuesday".

https://www.bnnbloomberg.ca/global-inflows-during-china-reopening-put-baht-in-a-sweet-spot-1.1867905

 

[nigelforbes]

The Baht is in the news again, in the newspaper whose name cannot be mentioned:

 

Exporters say the strong Baht is hurting exports which is growing too far, too quickly. Three factors are in play: 1) capital inflows or hot money, USD1.5 bill so far this year 2) USD weakness which is making the Baht appear stronger. 3) large scale increases in tourist numbers now that China has opened up.

 

BOT repeated that it is unwilling to do anything to counter market forces, other than smooth out the peaks and valleys in the ex. rate. Any thoughts of intervention in the future, at the current levels, will be a desire to weaken THB, not strengthen it.

[nigelforbes]

Given that poster @eisfeld independently confirmed the calculation above that proves there is no direct GBP/THB link, along with anecdotal reasons why THB is strengthening, whilst BOT wishes it would weaken, real time evidence emerges this morning of independent THB strengthening, in the ex. rates. The US Dollar Index, the measure of USD strength/weakness, weakened less than 0.1% yesterday whilst the Pound continued to fall. Meanwhile this morning at open, THB strengthened to 33.18 against USD and to 40.08 against the Pound.  Given the furor over exports becoming uncompetitive, along with BOT's stance on intervention, the only explanation for the increase is heavy Baht buying against.

 

https://www.marketwatch.com/investing/index/dxy

 

https://daytodaydata.net/

[Adumbration]

AUD/THB retesting 23 again today.  I have been here a very long time and have never witnessed intraday swings like have been occurring in the last few months.  

[BritManToo]

6 minutes ago, Adumbration said:

AUD/THB retesting 23 again today.  I have been here a very long time and have never witnessed intraday swings like have been occurring in the last few months.  

Agree, same for the pound.

[Adumbration]

1 minute ago, BritManToo said:

Agree, same for the pound.

Something is going on...and in a systematic fashion...each day now the baht starts falling in value and then it is pumped straight back up and on some days by more than 2 percent.  I have never seen such a pronounced saw tooth pattern in the currency pair charts.

[BritManToo]

7 minutes ago, Adumbration said:

Something is going on...and in a systematic fashion...each day now the baht starts falling in value and then it is pumped straight back up and on some days by more than 2 percent.  I have never seen such a pronounced saw tooth pattern in the currency pair charts.

I would assume the Thai Baht is failing big time, and the BoT is propping it up.

Will be fun to watch when the BoT run out of foreign currency reserves.

 

For those claiming Thailand has an amazingly successful economy .......

1st Military governments usually have failing economies and failing currencies.

2nd All the manufacturing has either moved out, or is planning to move out.

3rd That latest COVID vaccine game must have done some damage.

Edited January 12, 2023 by BritManToo

[Adumbration]

54 minutes ago, BritManToo said:

I would assume the Thai Baht is failing big time, and the BoT is propping it up.

Will be fun to watch when the BoT run out of foreign currency reserves.

 

For those claiming Thailand has an amazingly successful economy .......

1st Military governments usually have failing economies and failing currencies.

2nd All the manufacturing has either moved out, or is planning to move out.

3rd That latest COVID vaccine game must have done some damage.

That was the topic of my original post...BOT is buying the baht, all of the subsequent posts by other members have been arguing otherwise...

[nigelforbes]

5 hours ago, BritManToo said:

I would assume the Thai Baht is failing big time, and the BoT is propping it up.

Will be fun to watch when the BoT run out of foreign currency reserves.

 

For those claiming Thailand has an amazingly successful economy .......

1st Military governments usually have failing economies and failing currencies.

2nd All the manufacturing has either moved out, or is planning to move out.

3rd That latest COVID vaccine game must have done some damage.

 

4 hours ago, Adumbration said:

That was the topic of my original post...BOT is buying the baht, all of the subsequent posts by other members have been arguing otherwise...

Most often, it is what it appears to be, rather than something it could be! Doctors are taught that in Med. School and they are usually right...perhaps think about that for a moment.

 

And whilst I have offered up evidence and arguments to say it is not, those who think otherwise can only ever offer up what they imagine, rather than any proof.....some evidence to support what you think, may be useful for your argument.

 

As for BOT running out of Foreign Currency Reserves (FCR), I don't know what you think they are. Just for info., FCR are not held by BOT, they are held by the BIS (Bank of International Settlements) and they are not just FCR, they comprise Gold, SDR's and guess what else, apart from the 24 currencies of the major trading partners....Yes, THB. Once an asset is designated as FCR it remains so, it can't suddenly decide to become plain old vanilla THB, just because somebody sold the FCR in another currency. Even if BOT sold all its FCR it would still be left holding an equal amount of THB, or at least BIS would. And the last piece of the picture is that whilst the contents of the FCR are all manner of things, they are accounted for as USD so they can be compared to GDP and the FCR of other countries etc. It therefore follows that BOT cannot run out of FCR although it can run out of Foreign Currency, which doesn't mean that much at all.

 

[nigelforbes]

I forgot to say, GBP/USD and EUR/USD are usually positively corelated. so no help there.

[eisfeld]

6 hours ago, BritManToo said:

I would assume the Thai Baht is failing big time, and the BoT is propping it up.

And why would you assume the Thai Baht would be failing big time?

 

6 hours ago, BritManToo said:

Will be fun to watch when the BoT run out of foreign currency reserves.

Let's look at the actual numbers. Thailand has around $216B in FX Reserves. This is more than for example the UK has. In fact they have the 16th largest FX Reserves in the world. Not far off from the US even. You think the BOT sells off their reserves to prop the Baht? Well please explain why the reserves have actually increased since October last year while the Baht has strengthened significantly during that same time frame?

 

 

6 hours ago, BritManToo said:

2nd All the manufacturing has either moved out, or is planning to move out.

Where did you get that idea from? That's obviously not true. Please show some numbers. Some manufacturing has moved out, some has moved in. So I looked at the Manufacturing Output numbers of Thailand and seems like from a few dips during the financial crisis and Covid it's been steadily going up. More than tripled in the past two decades. I guess the manufacturers didn't get the memo that they should all leave ????

 

 

6 hours ago, BritManToo said:

3rd That latest COVID vaccine game must have done some damage.

You mean the very recent one the the past days? You wont notice that in the FX rates.

[nigelforbes]

The actual FCR figures that BOT publish monthly reflect the USD/THB exchange rate in play at the time so they may appear different from sites such as Tradingeconomics etc. There was a big to do a few months ago when the press got hold of the idea that BOT had been spending FCR defending the Baht. It was no coincidence that BOT repriced the FCR because the Baht had been trading at 38. When the repricing took effect it appeared as though there was a shortfall of USD 32 bill. which of course was nonsense but it didn't prevent the press from trying to make political capital out of what happened - the story was widely reported and is out there for those who are interested. Regardless, the official BOT numbers are shown in the link below.

 

https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=80&language=eng

[BritManToo]

2 hours ago, nigelforbes said:

And whilst I have offered up evidence and arguments to say it is not, those who think otherwise can only ever offer up what they imagine, rather than any proof.....some evidence to support what you think, may be useful for your argument.

What I imagine is usually better than most people's proof.

[nigelforbes]

18 minutes ago, BritManToo said:

What I imagine is usually better than most people's proof.

Is that really the best you can do BM, that's seriously disappointing, I had you down for better than that.

[ThailandRyan]

@nigelforbes

I guess you never saw this OP which I posted in.  Take a look again and read what is said.

 

[eisfeld]

47 minutes ago, BritManToo said:

What I imagine is usually better than most people's proof.

In your imagination? :D

[BritManToo]

27 minutes ago, nigelforbes said:

Is that really the best you can do BM, that's seriously disappointing, I had you down for better than that.

In order to trust published figures, you'd first need to trust the Thai government and the Thai banking system.

How did that work out for you in the last Thai currency crash?

[nigelforbes]

25 minutes ago, BritManToo said:

In order to trust published figures, you'd first need to trust the Thai government and the Thai banking system.

How did that work out for you in the last Thai currency crash?

If you don't trust or believe the BOT figures, the Finance Ministry figures, the FOREX data, the economic data or the markets views, there's no point in debating any of this with you. I'm pretty sure that if I had the same reservations about those things that you do, I certainly wouldn't be willing to call Thailand my home.

[nigelforbes]

39.99 at Bangkok Bank, ouch.

[Delight]

It is my belief that the rise in the Baht is a BOT initiative .

 

Motive . To make oil purchases cheaper.

Keep the Thai population happy.

Political move

[fulhamster]

14 hours ago, Delight said:

It is my belief that the rise in the Baht is a BOT initiative .

 

Motive . To make oil purchases cheaper.

Keep the Thai population happy.

Political move

90-odd percent of Thais have no interest in fx rates or how strong/weak the baht is.

They live day to day only caring how much their daily food will cost

[nigelforbes]

14 hours ago, Delight said:

It is my belief that the rise in the Baht is a BOT initiative .

 

Motive . To make oil purchases cheaper.

Keep the Thai population happy.

Political move

The country operates an oil stabilisation fund that does an excellent job of shielding the population from rapid increases in fuel costs and also keeps inflation lower than it would otherwise be.