Thai Baht vs Sterling Exchange Rate

[Raindancer]

Hi

 

Could someone please help me to understand, in layman's terms, the mechanism behind the exchange rate fluctuation.

 

Example:   When the UK GBP was fluctuating between $1.11/$1.19  to £1.00 Gbp, the Thai baht was around 42/43 baht per £1.00 GBP.

 

Yesterday the £ rose to $1.22  per £1.00  from $1.21 and the Thai baht went from 40.60 to 40.15 per £1.00 straight away.

 

  All I wish to do is have a better understanding of why.

 

Thank you.

 

 

 

 

 

[nigelforbes]

(copied from a previous thread/post of mine, linked at the very end below).

 

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.

 

 

 

 

[sammieuk1]

Simple answer is no one can explain the Baht no matter what the economic outlook is good or bad ridiculous actions and statements from unelected generals makes no difference ???? 

[OneMoreFarang]

9 minutes ago, nigelforbes said:

Pound/Baht is subject to movements in either Dollar, Pound or Baht.

Thanks for the long explanation but isn't that obvious even without all those fancy terms? ???? 

[nigelforbes]

1 minute ago, OneMoreFarang said:

Thanks for the long explanation but isn't that obvious even without all those fancy terms? ???? 

Apparently not, many many posters seem not to understand.

 

Sorry, you've lost me, which fancy terms, if there's something you don't understand, feel free to ask. And I'm sorry the post was so long, not everyone has your lightening fast intellect and intelligence and need things spelled out in detail.

 

[Raindancer]

@nigelforbes

Thank you.  Got a wee bit lost with all the technical stuff, but got the gist of it.    The link you provided was also very helpful.

 

Regards

[nigelforbes]

3 minutes ago, Raindancer said:

@nigelforbes

Thank you.  Got a wee bit lost with all the technical stuff, but got the gist of it.    The link you provided was also very helpful.

 

Regards

"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".

 

That's the short answer, the long answer is background and explanation why  GBP/THB is subject to the movements of three currencies not two so that posters can better understand.

 

 

[Raindancer]

Ok.  I understand dollar/pound.  But dollar/ pound/ thai baht is my issue. 

 

In simple terms why is the pound getting better against the dollar, and as soon as it does the Thai baht produces less against the pound.

 

BOT manipulation comes to mind.  Something they have been doing for years.

 

But thank you for trying to help. Much appreciated. 

[RichardColeman]

Good news in UK economy - pound goes up against the baht for an hour before settling lower than previous.

 

Bad news in UK economy - pound goes down against the baht and stays down for weeks.

 

Best suggestion from me is have the £/baht conversion open all day - or check it every few hours - and send your money when it blips up , rather than wait for a specific day of the month

 

[nigelforbes]

1 minute ago, Raindancer said:

Ok.  I understand dollar/pound.  But dollar/ pound/ thai baht is my issue. 

 

In simple terms why is the pound getting better against the dollar, and as soon as it does the Thai baht produces less against the pound.

 

BOT manipulation comes to mind.  Something they have been doing for years.

 

But thank you for trying to help. Much appreciated. 

The US Dollar is weakening, that's why the Pound appears to be getting stronger. USD is measured on the US Dollar Index, see the graph below. USD has gone from 95% up to 115% in the first 10 months of 2022 and has then fallen from 115% to it's current 102%, in the last two and a half months.

 

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

 

As the Dollar has weakened and appeared to provide more Pounds, it also has made THB appear to be stronger. Independent of that appearance, THB has strengthened in it's own right, because of capital inflows and because of news that Chinese tourists will arrive.

 

Sooo, USD down, Pound flat, Baht up, ergo, the Baht produces less against the Pound.

 

 

[Raindancer]

Best suggestion from me is have the £/baht conversion open all day - or check it every few hours - and send your money when it blips up , rather than wait for a specific day of the month

 

Yes....I do that anyway.  Just trying to understand the " logic".  But, no probs...seems to have no logic.????????

 

[ripstanley]

5 minutes ago, Raindancer said:

Ok.  I understand dollar/pound.  But dollar/ pound/ thai baht is my issue. 

 

In simple terms why is the pound getting better against the dollar, and as soon as it does the Thai baht produces less against the pound.

 

BOT manipulation comes to mind.  Something they have been doing for years.

 

But thank you for trying to help. Much appreciated. 

Yes the BOT are buying more Baht. With the increased tourism there is also a greater demand for Baht. Most countries currency has fallen against the Baht due increased demand for Baht.

[Dante99]

the real answer is that nobody really knows

 

there is a lot of guessing and sometimes a guess is correct

 

if anybody really knew they would be the richest person in the world and well known

[Raindancer]

@ripstanley.  Thanks.  That all makes sense now.

[nigelforbes]

2 minutes ago, ripstanley said:

Yes the BOT are buying more Baht. With the increased tourism there is also a greater demand for Baht. Most countries currency has fallen against the Baht due increased demand for Baht.

That's true about tourism and the demand for Baht except BOT will not be buying Baht under therpesent circumstances. As said in other postings, if anything, BOT will be selling Baht in an attempt to stop it from rising too quickly, that's the biggest problem today which is likely to impact exporters soon. 

[nigelforbes]

4 minutes ago, Dante99 said:

the real answer is that nobody really knows

 

there is a lot of guessing and sometimes a guess is correct

 

if anybody really knew they would be the richest person in the world and well known

That's not true at all. Many people find it difficult to understand, others find it easier to cling to the simple story line of manipulation. With a little effort and concentration it's all really quite simple. You don't have to be a Soros to understand it but you don't need to be a bumkin and ignore it either. 

 

To add. BTW there's no getting rich from understanding this, it doesn't change much at all.

[Raindancer]

11 minutes ago, nigelforbes said:

That's true about tourism and the demand for Baht except BOT will not be buying Baht under therpesent circumstances. As said in other postings, if anything, BOT will be selling Baht in an attempt to stop it from rising too quickly, that's the biggest problem today which is likely to impact exporters soon. 

That also makes sense.  So, at least I have all the different views, particularly on the baht being kept  low, and it's effect on exports.

 

But it seems crazy to want more tourism, and then give each tourist less for their home currency.   Rather defeats the object of trying to promote tourism.

 

 

[itsari]

9 minutes ago, nigelforbes said:

That's not true at all. Many people find it difficult to understand, others find it easier to cling to the simple story line of manipulation. With a little effort and concentration it's all really quite simple. You don't have to be a Soros to understand it but you don't need to be a bumkin and ignore it either. 

I dont think you can ignore that there is manipulation in the forex market when around 10 major banks are moving 80 percent of the market . 

[Forza2002]

GBP/THB is tied to USD/THB.. Whatever the USD/THB exchange rate is, multiply by GBP/USD rate and you get the GBP/THB rate, simples.... The USB/THB has fallen from 38 to 32 in 6 weeks or so which in turn weakened GBP/THB..

 

[nigelforbes]

1 minute ago, itsari said:

I dont think you can ignore that there is manipulation in the forex market when around 10 major banks are moving 80 percent of the market . 

Ah yes, that's a slightly different aspect. I say there's no manipulation by BOT but there is almost certainly collusion by major dealers because that is not uncommon even in London and New York.

[Raindancer]

2 minutes ago, Forza2002 said:

GBP/THB is tied to USD/THB.. Whatever the USD/THB exchange rate is, multiply by GBP/USD rate and you get the GBP/THB rate, simples.... The USB/THB has fallen from 38 to 32 in 6 weeks or so which in turn weakened GBP/THB..

 

Now, that is the easiest formula and explanation to understand.  Many thanks

[sandyf]

50 minutes ago, Raindancer said:

But dollar/ pound/ thai baht is my issue. 

You have to bear in mind that there is an individual outlook on the currency as well as the relative relationship in a currency pair.

At the moment the dollar is getting weaker, this can be seen on the dollar index. So if the baht stays the same the baht gets stronger against the dollar.

If the pound gets weaker it will also deteriorate agains the baht, but if the pound weakens less than the dollar it will appear to get stronger against the dollar.

Far too many permutations for it to be straightforward.

[Jerno]

1 hour ago, OneMoreFarang said:

Thanks for the long explanation but isn't that obvious even without all those fancy terms? ???? 

The more foreigners buy more of anything from Thailand, they must "buy" Thai Baht currency on world currency markets to pay for it.  Thus demand for Baht increases and the Baht goes up relative to other currencies.  Thai exports are increasing and so is tourism,  both increase demand for Baht.  AND the Thai Government likely is buying Thai Baht with their foreign currency reserves to further force up the Baht on the world currency markets.

[KannikaP]

It's OK talking about this exchange rate etc, but there is Sweet Miss Adams any of us mere expats can do about it, so stop worrying. Change your USD & GBP when you need to.

[Raindancer]

5 minutes ago, KannikaP said:

It's OK talking about this exchange rate etc, but there is Sweet Miss Adams any of us mere expats can do about it, so stop worrying. Change your USD & GBP when you need to.

It certainly is not a question of worrying.  It was merely a question of someone explaining it to me.

 

Of course I change my money when it is beneficial.  That is only common sense.

[nigelforbes]

14 minutes ago, Jerno said:

The more foreigners buy more of anything from Thailand, they must "buy" Thai Baht currency on world currency markets to pay for it.  Thus demand for Baht increases and the Baht goes up relative to other currencies.  Thai exports are increasing and so is tourism,  both increase demand for Baht.  AND the Thai Government likely is buying Thai Baht with their foreign currency reserves to further force up the Baht on the world currency markets.

Two points:

 

The value of the Baht on the FOREX only goes up relative to other currencies, if it is bought using USD or a USD connected currency, it is the linkage between USD and THB that has to be influenced for the value of THB to change. Tourist spending from countries whose currency are not connected to USD, directly or indirectly, have no direct impact on the FOREX value of THB. There is however an indirect impact because that currency will become part of BOT's Foreign Currency Reserves, which also influences the value of the Baht. The majority of currency strengthening impact comes from exports and Capital inflow's rather than from tourism.

 

Under the present economic circumstance, BOT will be selling baht to weaken it, not buying it to strengthen it.

[Henryford]

58 minutes ago, Forza2002 said:

GBP/THB is tied to USD/THB.. Whatever the USD/THB exchange rate is, multiply by GBP/USD rate and you get the GBP/THB rate, simples.... The USB/THB has fallen from 38 to 32 in 6 weeks or so which in turn weakened GBP/THB..

 

That seems to work !

 

14/10/22     P/TB 42.99 P/US 1.13 US/TB 38.03  1.13 x 38.03  =  42.97

 

14/1/23        P/TB 40.09 P/US 1.22 US/TB 32.79  1.22 x 32.79 = 40.00

 

So even though the Pound has risen 8% against the dollar it's dropped 7% against the baht, because the dollar has dropped 14% against the baht.

[Celsius]

It is quite easy really. Guys there is not BOT manipulation.

 

You left UK because it apparently sucks hard. You draw your UK pension in baht or whatever because you need baht in Thailand. You and 20 million other tourists, expats and sexpats that will come to Thailand this year and they didn't even take care (yet) of a single buffalo. Meanwhile UK produces nothing.... it is a complete disaster.... taxes going on welfare and housing recipients, economic refugees that need to be housed, the never-ending healthcare suck hole and a high council tax that doesn't even cover 10% of the expenditures. Did I mention UK produces nothing? I mean it's worse than Canada and Trudeau set the bar pretty low. Remember, this is why you left for Thailand.

 

And then people wonder why UK pound tanks. It is going to low 30's.

 

I know your question was a bit different, but in reality you are just wondering how much pain will you get in the future. The answer is A LOT.

[BritManToo]

9 minutes ago, Celsius said:

Meanwhile UK produces nothing.... it is a complete disaster....

Someone pointed this out to me previously, UK makes nothing so it's currency is worthless.

My reply was,

Spain and Portugal grow most of the food for Europe, yet are the worst off financially (PIIGS).

USA also makes nothing but rules the world and it's currency is king.

China make almost everything for the world but is a financial basket case.

So your theory that manufacturing/production makes a country rich appears to fall at the first fence.

[Celsius]

12 minutes ago, BritManToo said:

Someone pointed this out to me previously, UK makes nothing so it's currency is worthless.

My reply was,

Spain and Portugal grow most of the food for Europe, yet are the worst off financially (PIIGS).

USA also makes nothing but rules the world and it's currency is king.

China make almost everything for the world but is a financial basket case.

So your theory that manufacturing/production makes a country rich appears to fall at the first fence.

 

Thailand is also pretty bad financially. 

 

China is 2nd only after United States by household wealth.

 

We are talking about currencies here.