The Baht Thread

[nigelforbes]

4 minutes ago, morrobay said:

Yes when the baht is weak at 37 they buy baht. Then when it switches up in value at 32 they buy dollars. And it is no coincidence that those that benefit from this are also in influential positions. Again with a very minor currency it is not difficult to do this. Not saying this is the total picture, as outlined by the OP . 

It is not the rate that causes intervention it is the volatility over short timescales. Not is in the business of smoothing peaks and valleys, .not influencing minimum and maximum.

[nigelforbes]

4 minutes ago, nigelforbes said:

It is not the rate that causes intervention it is the volatility over short timescales. Not is in the business of smoothing peaks and valleys, .not influencing minimum and maximum.

I don't think everyone understands that the swing between 32 and 38 and back to 32 was solely a function of USD, it had almost nothing to do with THB.

[morrobay]

36 minutes ago, nigelforbes said:

I don't think everyone understands that the swing between 32 and 38 and back to 32 was solely a function of USD, it had almost nothing to do with THB.

Could have fooled me. $19 billion not exactly chump change. And why do knowledgeable people like Enrico say they expect the baht to be about 37/$.https://www.thaienquirer.com/44229/thai-baht-heads-to-near-37-baht-us-as-bot-defends-its-use-of-19-billion-in-defending-the-currency/

[LS24]

1 hour ago, nigelforbes said:

It was down, so? Anecdotal evidence of your bike clutch is not representative of the economy as a whole. Go look at the export numbers at tradingeconomics.com for the actual numbers. Also, you may not have fully understood how small THB and how little money it takes to change it's value.

Nigel, I appreciate you spending time with your posts. Could you please offer some comment on a hypothetical assumption? If there was a significant reduction in volumes in import / export / GDP yet the ratios of exports remained at that 60% mark, what would be the effect on the THB in general terms if all other external variables were equal?

 

What role does the gross GDP of Thailand play if exports remain higher?

[nigelforbes]

5 minutes ago, morrobay said:

Could have fooled me. $19 billion not exactly chump change. And why do knowledgeable people like Enrico say they expect the baht to be about 37/$.https://www.thaienquirer.com/44229/thai-baht-heads-to-near-37-baht-us-as-bot-defends-its-use-of-19-billion-in-defending-the-currency/

It depends whether you believe the 19 bill story, I personally don't. And predicting 37 in September was hardly rocket science, not when the Us inflation story and interest rate story was already painted crystal clear.

[nigelforbes]

13 minutes ago, LS24 said:

Nigel, I appreciate you spending time with your posts. Could you please offer some comment on a hypothetical assumption? If there was a significant reduction in volumes in import / export / GDP yet the ratios of exports remained at that 60% mark, what would be the effect on the THB in general terms if all other external variables were equal?

 

What role does the gross GDP of Thailand play if exports remain higher?

Phew! :;)

 

if the ratios remained the same and only the relative value changed,  I don't think there would be any effect. It is the rate of growth of GDP that is important, that and the import export ratio.

 

 

[nigelforbes]

39 minutes ago, morrobay said:

Could have fooled me. $19 billion not exactly chump change. And why do knowledgeable people like Enrico say they expect the baht to be about 37/$.https://www.thaienquirer.com/44229/thai-baht-heads-to-near-37-baht-us-as-bot-defends-its-use-of-19-billion-in-defending-the-currency/

I don't have a horse in this race, other than to come up with the right answer so let me try and put this issue to rest.

 

USD 19 bill. is around THB 630 bill., that is around a fifth of the annual budget. Given the number of enemies the present government has, if there hadn't been a satisfactory explanation regarding this supposed shortfall, I'm pretty sure the repercussions would have been far greater than they were and at a minimum, people would have been replaced....they weren't.

 

Secondly, the story was only given fleeting coverage in the international financial press, as far as the marklets were concerned this was a non-story.

 

Thirdly, the author of the article in the link provided earlier is not exactly a financial expert. He wrote, "I calculate......". THB I'm not certain he has the knowledge to calculate those differences, especially given that his other pieces of journalism include, coverage of an exhibition on postpartum depression! The author also quoted BOT the following month when they said that:

 

 “If you ask if the BoT has gone to intervene in the market, then yes, we have,” Sethaput said but added that “this was being done when the Thai Baht was witnessing a volatility and it was not to change the direction of the deprecating currency because Thailand has learnt its lesson from the 1997 financial crisis by going against the market trend.” For whatever reason, that quote seems to have been "overlooked" by those who appear to cling to an inflatable rubber duck in a Tsunami in the hope that manipulation and fraud can be proven by government.

 

Earlier, I set out four reasons why I didn't believe the shortfall existed, I am happy to be proven wrong and have my opinion changed but that article alone isn't going to do the trick.

 

 

https://www.thaienquirer.com/44863/bank-of-thailand-expects-thai-economy-to-return-to-pre-pandemic-levels-by-year-end-or-early-2023-but-warns-of-possible-speed-bumps/

[morrobay]

4 hours ago, nigelforbes said:

It depends whether you believe the 19 bill story, I personally don't. And predicting 37 in September was hardly rocket science, not when the Us inflation story and interest rate story was already painted crystal clear.

So because the $19 billion manipulation does not jive with your agenda here then it's a "story". And maybe you should read this again non selectively; 37/$ by mid 2023. expected.

4 hours ago, nigelforbes said:

 

 

 

 

 “If you ask if the BoT has gone to intervene in the market, then yes, we have,” Sethaput said but added that “this was being done when the Thai Baht was witnessing a volatility and it was not to change the direction of the deprecating currency because Thailand has learnt its lesson from the 1997 financial crisis by going against the market trend.” For whatever reason, that quote seems to have been "overlooked" by those who appear to cling to an inflatable rubber duck in a Tsunami in the hope that manipulation and fraud can be proven by government.

 

 

 

 

 

And from this BOT mumbo jumbo  quote it seems "volatility" only requires intervention when the baht is weakening as this case in point. I ain't clinging to anything here Hoss, my standard of living is not affected whatsoever by these FX games the thai government is playing.

 

 

[nigelforbes]

41 minutes ago, morrobay said:

So because the $19 billion manipulation does not jive with your agenda here then it's a "story". And maybe you should read this again non selectively; 37/$ by mid 2023. expected.

And from this BOT mumbo jumbo  quote it seems "volatility" only requires intervention when the baht is weakening as this case in point. I ain't clinging to anything here Hoss, my standard of living is not affected whatsoever by these FX games the thai government is playing.

 

 

I have no agenda, perhaps you need to go back and read through things more slowly. If anyone has an argument that proves the 19 bill was wasted/lost, I'll listen to it, I've given you four reasons why it wasn't. All I've read so far is that it was, because some hack said it was, that's not enough for me.

 

 

[nigelforbes]

47 minutes ago, morrobay said:

So because the $19 billion manipulation does not jive with your agenda here then it's a "story". And maybe you should read this again non selectively; 37/$ by mid 2023. expected.

And from this BOT mumbo jumbo  quote it seems "volatility" only requires intervention when the baht is weakening as this case in point. I ain't clinging to anything here Hoss, my standard of living is not affected whatsoever by these FX games the thai government is playing.

 

 

MB - rather than let this thread be consumed by something neither one of us seems able to prove conclusively to the other, why not let's wait and see what happens by mid year. In the meantime, we can agree to disagree and let the thread move on to other aspects of the Baht.

[KhaoYai]

9 hours ago, nigelforbes said:

I can only explain it for you, it's up to you what you believe. But be aware that promoting the flat earth concept isn't always well received at cocktail parties.

Its not what I believe, its what's happening in the real world so don't be flippant.

[nigelforbes]

11 hours ago, KhaoYai said:

Its not what I believe, its what's happening in the real world so don't be flippant.

Yes, it is about what you believe. The evidence that you have seen personally, your bike clutch and your brother in laws business, is still anecdotal and not representative of the economy as a whole. The same is true of swings in the value of the baht over short timescales or even worse, intraday swings..... neither mean much at all.

 

Your two observations means there's huge amount you don't see which when factored in, change the answer you would otherwise have arrived at. In opinion polls, surveys of 1,150 people on any given subject is statistically proven to be representative of the views of the population as a whole and most likely to be fact. Trend is also important, in financial markets the 200 day moving average is the most reliable, the 200 day MA will more or less confirm direction, anything less than that is not reliable. Seeing a couple of things a couple of times, doesn't make what you see a factually correct observation that is representative of the entire economy, which is spread over 500,000 square kilometers of Thai countryside!

 

Then there's newspaper articles. I don't know at what point people started to believe that newspapers only report facts and are never wrong. Even worse, that they are more accurate at making financial calculations than the Central Bank and more likely to tell the truth than the horses mouth. Personally, I need to read at least four or five different versions of an important story, from different reliable well known sources, before I am willing to believe anything written in the press.

 

I have come across quite a few people who simply are unwilling to believe any financial figures  produced by anyone in Thailand, even BOT, especially not government. Export levels, unemployment, Foreign  Currency Reserves levels, inwards FDI, the exchange rate, all the numbers are accused of having been manipulated at various times, nearly always by foreigners. Yet when you ask those people to prove their theories, they can't, at least not with overwhelmingly convincing evidence. I imagine this attitude is just an extension of the fact that corruption does exist here so readers assume if that's the case, it must exist everywhere in everything......that's very peculiar thinking and very unhealthy, I think, I don't believe I could live here if I thought that or felt that way.

 

 

 

[nigelforbes]

The Thai Bond Market is an important element of Baht strength. Prior to the 1997 crash, the Thai government did not issue bonds, which meant that financing depended on banks and customer deposits. It’s reasonable to assume that this was a factor in the country attracting retired Western expats because in the early days this bolstered bank deposits.

 

Corporate bonds were issued but the quality of them was sometimes less than desirable hence there was a need to establish an alternate form of high quality financing. Establishing and growing the bond market has been an important priority of government ever since. The three main types of bonds are:

 

Government Bonds - typically issued to finance annual budget deficits where spending has exceeded the budget. These bonds are regarded as high quality and are in very high demand nationally and overseas because they are considered secure debt.

  

BOT Bonds - issued to finance capital expenses such as new railroads or similar, this is also regarded as secure debt.

 

Corporate Bonds - issued to finance company expansion.

 

A secondary bond market exists to buy and sell bonds.

 

The Thai bond market today has grown substantially since inception and is worth USD 450 bill, about 45% of which is government bonds. Consequently, the bond market, bank lending and equities market have become more balanced and higher quality corporate bonds have grown in quantity and quality.

 

Crucially, about 96% of government borrowings are in Thai Baht, less than 4% are in foreign currency. Government borrowings represent about 60% of GDP, which means financing the interest payments on the bonds is a low overhead, especially since they are in Baht and not subject to exchange rate fluctuations.

 

Foreign currency dealers, banks and the FOREX system understands these things and view the level of government debt as very low by comparison to other countries, a major factor that adds to Baht strength.

 

A link to the Thai Bond Market Association follows, for those wanting to understand this aspect in greater detail.

 

https://www.thaibma.or.th/EN/Education/ThaiBondMarket.aspx

 

 

[nigelforbes]

Capital Flows is yet another element of Baht strength and refers to the large scale flow of money in and out of the country, for specific purposes. Capital inflows is money coming into Thailand, from overseas, for investment or speculative purposes. Hot money refers to capital inflows that is chasing yield because interest rates are favourable or because the bond or equities market offer favorable returns. Capital outflows is the opposite of the above. Net capital flows into equities and bonds are frequently reported in the media.

 

Capital flows should not be confused with capital investments which are by their very nature, longer term cash injections by foreign entities, into new or existing business here and are typically approved and monitored by the Bank of Investment (BOI)

 

Generally speaking, the higher the capital inflows, the stronger the economy is forecast to be. Critically, capital inflows must exchange foreign currency for Baht and outflows do the obverse hence the higher the capital inflows, the stronger the Baht is likely to become.  

[ExpatOilWorker]

30 minutes ago, nigelforbes said:

Capital Flows is yet another element of Baht strength and refers to the large scale flow of money in and out of the country, for specific purposes. Capital inflows is money coming into Thailand, from overseas, for investment or speculative purposes. Hot money refers to capital inflows that is chasing yield because interest rates are favourable or because the bond or equities market offer favorable returns. Capital outflows is the opposite of the above. Net capital flows into equities and bonds are frequently reported in the media.

 

Capital flows should not be confused with capital investments which are by their very nature, longer term cash injections by foreign entities, into new or existing business here and are typically approved and monitored by the Bank of Investment (BOI)

 

Generally speaking, the higher the capital inflows, the stronger the economy is forecast to be. Critically, capital inflows must exchange foreign currency for Baht and outflows do the obverse hence the higher the capital inflows, the stronger the Baht is likely to become.  

One interesting and surprising aspect of capital flow is that a currency often gets stronger after a major national disaster, such as a large earthquake or like in Japan tsunami. 

The reason is that insurance companies repatriate a lot of money to pay for the damage claims.

[nigelforbes]

33 minutes ago, ExpatOilWorker said:

One interesting and surprising aspect of capital flow is that a currency often gets stronger after a major national disaster, such as a large earthquake or like in Japan tsunami. 

The reason is that insurance companies repatriate a lot of money to pay for the damage claims.

Indeed, interesting and surprising.

 

I read something many moons ago about the Japanese car companies and their Baht holdings in Thailand that apparently are massive, but I can't remember the details....I'll try and dig it out! The implications as I recall were that if ever they sold those holdings, perhaps because of a change in business strategy, massive currency problems would follow.

 

Another Baht strengthening event is at the start of the month when US Social Security payments are issued to claimants in Thailand, mostly retirees such as myself. Wiki says there's 40,000 American expats here, FOR EXAMPLE, let's generously assume only half are retirees who receive SSc payments. The average SSc payment is USD 2,500 per month, let's call it USD 2,k per month in Thailand. That's a total of USD 4 mill which at 32 is THB 128 mill., big enough I would think to move a very small currency, at least somewhat. Perhaps watch the charts around the 4th of the month.

[KhaoYai]

11 hours ago, nigelforbes said:

Yes, it is about what you believe. The evidence that you have seen personally, your bike clutch and your brother in laws business, is still anecdotal and not representative of the economy as a whole. The same is true of swings in the value of the baht over short timescales or even worse, intraday swings..... neither mean much at all.

I was simply using examples - I'm in touch with several business people in Thailand - in very different fields and in widespread locations. Everyone I talk to says things are not good at the moment which in other countries would affect the value of the currency.

[Phulublub]

5 minutes ago, KhaoYai said:

I was simply using examples - I'm in touch with several business people in Thailand - in very different fields and in widespread locations. Everyone I talk to says things are not good at the moment which in other countries would affect the value of the currency.

Yes, but many (most?) other countries are suffering, so everyone is equally weak and relatively, currencies will remain at broadly the same levels.

 

PH

[nigelforbes]

14 minutes ago, KhaoYai said:

I was simply using examples - I'm in touch with several business people in Thailand - in very different fields and in widespread locations. Everyone I talk to says things are not good at the moment which in other countries would affect the value of the currency.

Economies in different countries earn their GDP in different ways, the way in which it is earned determines the extent to which that economy is affected by a downturn. Exports are the major contributor to Thai GDP (over 65%), this is very different from say an economy that earns a majority of its GDP via Services which is more dependent on consumer spending. In an export led economy, during a downturn, manufacturers and producers large and small continue to produce and farmers continue to grow and harvest, this is particularly true of an economy where there is little by way of social support, unemployment benefits etc. International Tourism is also classed as an export which took a substantial hit during the downturn, hence, when exports are reported as being down, that doesn't necessarily mean that manufacturers have stopped producing or that farmers have stopped growing and harvesting. 

 

Before you compare the things you think you see here with the results you would export to see in another country, make sure you are comparing apples and apples, export led vs export led economies.

[nigelforbes]

Perhaps it’s time to dispel yet another myth that Thailand is dependent on China for trade, and always acts in China’s best interests, it is not, Japan is the main focus of Thailand’s attention.

 

“Between 1985 and 2016, Japanese investment in Thailand cumulatively totalled 2.9 trillion baht (US$85 billion; 2017 rates), more than double the next biggest investor—the USA—which stands at 631 billion baht ($18 billion). Cumulative investment from all investors into Thailand for this period was 6.8 trillion baht, meaning that investment from just Japan represented 43 per cent of all foreign investment into the kingdom. Moreover, this interest in Thailand has been shockproof, remaining a consistent annual average of 42 per cent of total FDI with a peak of 69 per cent in 1989”.

  

FDI plunged in 2019 because of the covid pandemic and in 2020 FDI was negative as funds were withdrawn and repatriated.  By 2022, Japan was once again the biggest (BOI) foreign investor in Thailand at THB 40 bill., whereas Chinese (Taiwan) investment was just over half of that amount at THB 23 bill. At the same time as Japan has been investing in Thailand they have been reducing their investments in China.

 

So what does this have to do with the Baht you ask? The first point to make is that Japan is the biggest investor in Thailand by a huge margin, not China, and since the Japanese YEN is a major currency, the relationship between THB and JPY is arguably just as important as the THB link to USD and in the future will be more so.  The Baht has strengthened against JPY since 2016 and in 2022 has gained almost 16%. Trade with Japan results in large capital inflows, significant increases in Foreign Currency Reserves, job creation, business tax generation plus the continued economic support of a major currency, all factors that cause the Baht to strengthen.

 

https://www.xe.com/currencycharts/?from=THB&to=JPY

 

 https://fulcrum.sg/the-ones-to-watch-chinese-investors-in-thailand-trends-and-opportunities/

https://www.lloydsbanktrade.com/en/market-potential/thailand/investment

 

 

 

 

[ExpatOilWorker]

2 hours ago, nigelforbes said:

Perhaps it’s time to dispel yet another myth that Thailand is dependent on China for trade, and always acts in China’s best interests, it is not, Japan is the main focus of Thailand’s attention.

 

“Between 1985 and 2016, Japanese investment in Thailand cumulatively totalled 2.9 trillion baht (US$85 billion; 2017 rates), more than double the next biggest investor—the USA—which stands at 631 billion baht ($18 billion). Cumulative investment from all investors into Thailand for this period was 6.8 trillion baht, meaning that investment from just Japan represented 43 per cent of all foreign investment into the kingdom. Moreover, this interest in Thailand has been shockproof, remaining a consistent annual average of 42 per cent of total FDI with a peak of 69 per cent in 1989”.

  

FDI plunged in 2019 because of the covid pandemic and in 2020 FDI was negative as funds were withdrawn and repatriated.  By 2022, Japan was once again the biggest (BOI) foreign investor in Thailand at THB 40 bill., whereas Chinese (Taiwan) investment was just over half of that amount at THB 23 bill. At the same time as Japan has been investing in Thailand they have been reducing their investments in China.

 

So what does this have to do with the Baht you ask? The first point to make is that Japan is the biggest investor in Thailand by a huge margin, not China, and since the Japanese YEN is a major currency, the relationship between THB and JPY is arguably just as important as the THB link to USD and in the future will be more so.  The Baht has strengthened against JPY since 2016 and in 2022 has gained almost 16%. Trade with Japan results in large capital inflows, significant increases in Foreign Currency Reserves, job creation, business tax generation plus the continued economic support of a major currency, all factors that cause the Baht to strengthen.

 

https://www.xe.com/currencycharts/?from=THB&to=JPY

 

 https://fulcrum.sg/the-ones-to-watch-chinese-investors-in-thailand-trends-and-opportunities/

https://www.lloydsbanktrade.com/en/market-potential/thailand/investment

 

 

 

 

FDI is important enough for Thailand that they have separate immigration offices for BOI visa holders, but is it really big enough to affect the baht?

Using TAT's numbers (I know!) of $2,000 spend per tourist, 15 million annual tourist per year in the above 30 years period and 35 baht/$, the 6.8 trillion baht FDI is "only" 21.6% of the 31.5 trillion baht tourist revenue. 

 

[nigelforbes]

13 minutes ago, ExpatOilWorker said:

FDI is important enough for Thailand that they have separate immigration offices for BOI visa holders, but is it really big enough to affect the baht?

Using TAT's numbers (I know!) of $2,000 spend per tourist, 15 million annual tourist per year in the above 30 years period and 35 baht/$, the 6.8 trillion baht FDI is "only" 21.6% of the 31.5 trillion baht tourist revenue. 

 

No, I don't think it is, that's just window dressing and a perk, I'm sure of it. But what is clear is that Japanese influence and impact on the Thai economy is huge, if ever Japan was to withdraw or experience a serious downturn, the impact would be extensive.

[nigelforbes]

Here’s a conundrum, what does the media mean and do they actually know, and what do you think you understand from the article you just read? Let me try to step through this:

 

An export in economics is defined as, something that is purchased using money from overseas that is brought into the country to pay for it and where the product is then taken out of the country. Simple enough in the case of say rice for example but it’s not always that simple.

 

International Tourism is classed as an export because people from overseas bring money into the country to pay for their holiday in Thailand and then when they leave, they take that holiday  experience with them. Really, that’s the way it works!

 

So when the media writes, “Exports are Down by xx Percent”, what do they mean? Do they mean that manufacturers have stopped producing and goods have stopped being shipped or do they mean that International Tourism is down? It gets even more confusing when they write, Exports are Down and then they say, but Tourism is up! And, when they write, Tourism is Down, do they mean the 11% that is International Tourism or the 9% that is Domestic Tourism, the latter is not an export by the way?

 

Are you confused yet, because the media certainly seems to be, yet many people form their opinions about what is happening within the Thai economy, based on what they write?

 

It’s difficult to know whether this is an English language comprehension problem, an economics understanding problem or whether it’s a subject matter interpretation problem as the information is relayed to reporters. Which ever it is, it sure as sugar is a reader comprehension problem and it’s a very serious one because expat readers seem more confused today than they ever have been.

 

The answer is to go to the source and read the detail information for yourself, that way you have a fighting chance of really knowing what’s really going on. Read what BOT says, BOT puts out some seriously interesting and easily readable reports. Here’s a link to a presentation given last November by BOT, on the state of the economy, all the data and graphs is right there, including the latest financial and tourism data….the information on the BAHT, exchange rates and Foreign Currency Reserves will answer lots of questions.

 

https://www.bot.or.th/English/MonetaryPolicy/EconomicConditions/PressRelease/DocPressRelease/Slide_eng_November2022_te72nv8.pdf

 

[ExpatOilWorker]

4 hours ago, nigelforbes said:

Here’s a conundrum, what does the media mean and do they actually know, and what do you think you understand from the article you just read? Let me try to step through this:

 

An export in economics is defined as, something that is purchased using money from overseas that is brought into the country to pay for it and where the product is then taken out of the country. Simple enough in the case of say rice for example but it’s not always that simple.

 

International Tourism is classed as an export because people from overseas bring money into the country to pay for their holiday in Thailand and then when they leave, they take that holiday  experience with them. Really, that’s the way it works!

 

So when the media writes, “Exports are Down by xx Percent”, what do they mean? Do they mean that manufacturers have stopped producing and goods have stopped being shipped or do they mean that International Tourism is down? It gets even more confusing when they write, Exports are Down and then they say, but Tourism is up! And, when they write, Tourism is Down, do they mean the 11% that is International Tourism or the 9% that is Domestic Tourism, the latter is not an export by the way?

 

Are you confused yet, because the media certainly seems to be, yet many people form their opinions about what is happening within the Thai economy, based on what they write?

 

It’s difficult to know whether this is an English language comprehension problem, an economics understanding problem or whether it’s a subject matter interpretation problem as the information is relayed to reporters. Which ever it is, it sure as sugar is a reader comprehension problem and it’s a very serious one because expat readers seem more confused today than they ever have been.

 

The answer is to go to the source and read the detail information for yourself, that way you have a fighting chance of really knowing what’s really going on. Read what BOT says, BOT puts out some seriously interesting and easily readable reports. Here’s a link to a presentation given last November by BOT, on the state of the economy, all the data and graphs is right there, including the latest financial and tourism data….the information on the BAHT, exchange rates and Foreign Currency Reserves will answer lots of questions.

 

https://www.bot.or.th/English/MonetaryPolicy/EconomicConditions/PressRelease/DocPressRelease/Slide_eng_November2022_te72nv8.pdf

 

Tourism of course show up on the current account balance sheet, but is it really classified as export?

In that case outbound tourism should be import, bit confusing. 

[nigelforbes]

13 minutes ago, ExpatOilWorker said:

Tourism of course show up on the current account balance sheet, but is it really classified as export?

In that case outbound tourism should be import, bit confusing. 

Yes it is, tourism is regarded as an invisible export:

 

"Inbound tourism covers all international tourist traffic entering a country. It is also known as 'export tourism' (England is the export), because although tourists enjoy their travel experience within England, they are paying for it using foreign currency".

 

"Tourism is trade; tourism is export. It grows a country's national output and increases foreign currency earnings; it is subject to the rigours of the international market place".

 

https://www.wto.org/english/forums_e/public_forum17_e/s36_Anton_Said.pdf

[nigelforbes]

One of the very few writers on Thai economics that I do enjoy reading is Chartchai Parasuk who writes in the Opinion section of the newspaper whose name may not be spoken. Chartchai is one of the few people I have come across who not only understands the subject matter but is also an excellent writer whose views are well balanced. His last half dozen articles are out there, waiting to be read on various aspects of the Thai economy.

 

And because we discussed it earlier, I read again his article from September 2022 where he talked about the fall in the Foreign Currency Reserves. Reading that, along with writing a post about Japanese FDI in Thailand and mentioning negative flows, made me remember that capital outflows in September 2022 were significant and that these manifested themselves in the FCR's.....it's worth reading soon (it will disappear at the end of the month), to understand the detail. And if you do read that article, read it in conjunction with BOT's graph on page 11 of the link I posted earlier about Foreign Currency Reserves because that will show visually what Chartchai has written, here's the link again: 

 

https://www.bot.or.th/English/MonetaryPolicy/EconomicConditions/PressRelease/DocPressRelease/Slide_eng_November2022_te72nv8.pdf

 

 

[ExpatOilWorker]

3 hours ago, nigelforbes said:

One of the very few writers on Thai economics that I do enjoy reading is Chartchai Parasuk who writes in the Opinion section of the newspaper whose name may not be spoken. Chartchai is one of the few people I have come across who not only understands the subject matter but is also an excellent writer whose views are well balanced. His last half dozen articles are out there, waiting to be read on various aspects of the Thai economy.

 

And because we discussed it earlier, I read again his article from September 2022 where he talked about the fall in the Foreign Currency Reserves. Reading that, along with writing a post about Japanese FDI in Thailand and mentioning negative flows, made me remember that capital outflows in September 2022 were significant and that these manifested themselves in the FCR's.....it's worth reading soon (it will disappear at the end of the month), to understand the detail. And if you do read that article, read it in conjunction with BOT's graph on page 11 of the link I posted earlier about Foreign Currency Reserves because that will show visually what Chartchai has written, here's the link again: 

 

https://www.bot.or.th/English/MonetaryPolicy/EconomicConditions/PressRelease/DocPressRelease/Slide_eng_November2022_te72nv8.pdf

 

 

The sky was (correctly) falling for the good Chartchai in September 2022, but then in November/December things turned around and FCR made back some of the losses and the baht rose again in value. Maybe the BOT was doing the right thing at the time after all.

 

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

[nigelforbes]

7 minutes ago, ExpatOilWorker said:

The sky was (correctly) falling for the good Chartchai in September 2022, but then in November/December things turned around and FCR made back some of the losses and the baht rose again in value. Maybe the BOT was doing the right thing at the time after all.

 

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

Yes, I agree. It was telling that in September he wrote about falling Currency Reserves  and even referenced BOT's failed support of the Baht in 1997. He went on to say that he would have to see what the next set of figures looked like but he never mentioned the subject again, very very clearly he was satisfied with BOT's explanation.

[nigelforbes]

Because another poster queried it, I did some more digging to reconfirm how BOT classifies Tourism. This may not seem like an important issue but it does help to understand more accurately what people are talking about when they say, "Exports". I was taught and have always known Tourism to be an export, the WTO, the UN and World Bank agrees, but it seems BOT may do things differently.

 

The BOT current account is a component of the Balance of Payments reporting and not unlike everyone else's bank current account. It is the repository for all financial inputs and the source of all outbound payments and is linked below:

 

.https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=646&language=eng

 

The two main Current Account headings are Goods and Services. Goods comprises exports whilst  Services comprises a whole host of categories including construction, Financial Services and Telecommunications. 

 

An article in The Diplomat (linked below) persuades me that BOT classifies Tourism as a Service hence it is not reported under exports, as I previously said. Apologies for any confusion. The article in the Diplomat is worth reading regardless because it reconfirms many of the other aspects mentioned thus far, in particular the gap between imports and exports, current account surplus and foreign currency flows.

 

Note: one of the problems with defining Tourism as a Service is that things such as hotel and cost of travel by international tourists is not separate from domestic consumption. Although it must be at some level because those things are reported separately elsewhere. If anyone else can shed light on this, I'll be pleased to hear.

 

https://thediplomat.com/2022/11/why-thailands-current-account-returned-to-surplus-in-september/

 

https://www.unwto.org/global/press-release/2019-06-06/exports-international-tourism-hit-usd-17-trillion

 

https://www.wto.org/english/forums_e/public_forum17_e/s36_Anton_Said.pdf

[nigelforbes]

Somebody mentioned that USD/THB will move to 32 as a result of the recent forecast that the BOT rate will increase by 0.25 on Wednesday. In fact, the rate increases have already been factored in and are reflected in current values, mostly because the increases were telegraphed well in advance. That fact notwithstanding, USD does seem to be weakening quite steeply against the Baht and has been for much of this year, as seen below. So yes, 32 is in our future but not necessarily because of the rate increase.