Volatile and expensive baht a problem for the economy, could be subject to speculative trading

[webfact]

Minister of Finance Arkhom Termpittayapaisith on Friday warned that the higher-valued Thai baht is negatively impacting the kingdom’s economy and exports. Ironically, it comes just four days after the baht suffered its steepest one-day loss against the US dollar in 23 years amid signs that the Thai currency has again become a focus of international financial speculators betting against or shorting the US dollar after the dollar bucked the market following a stronger than expected jobs report.

 

by Joseph O' Connor

 

The government’s economic planners are nervously pouring over the numbers on the economy. This has already led to the 2022 growth figure being pared back and on Friday, we saw the country’s finance minister warn about the damage being done by the higher-priced Thai baht.

Thailand’s currency, the baht, could be the subject of speculation, driving the baht higher, as traders short the US dollar in anticipation of an easing of interest rates by the Federal Reserve in the United States. This proposition took a hit on Monday when we saw the baht decline by over 3% against the US dollar in one day, its largest drop in 23 years. Nevertheless, on Friday, Minister of Finance Arkhom Termpittayapaisith insisted the ongoing strength of the baht was a key concern for the kingdom’s economic prospects in 2023 as the Fiscal Policy Office gets ready to scale back finalised GDP growth figures for 2022 which will be released on February 17th.

 

The Thai government will release its definitive 2022 GDP data on February 17th next amid reports that a sharp downturn in the last three months of 2022 led by a decline in exports could mean significantly lower than anticipated GDP growth for last year.

 

Full story: https://www.thaiexaminer.com/thai-news-foreigners/2023/02/10/expensive-baht-a-problem-for-the-economy/

 

-- © Copyright Thai Examiner 2023-02-11

 

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[Stargeezr]

Wow, is the Thai Baht, the go to currency now? How is it so strong when the main world currencies

are all going down in value?

[nigelforbes]

As said previously on page 5 of the linked thread below:

 

"Hot money is flowing out of Thai equities on rate increase concerns in March, over USD 0.5 bill since 1 February. That outflow saw the Baht weaken by one baht against USD, now recovering slightly". 

 

This was hot money that was betting against the US economy. When the US jobs data came in hot it changed side and bet in favor of USD, the logic for doing this was further supported by a belief that BOT will once again raise rates in March.  As a consequence, THB was sold and USD was purchased, that's what caused the 3% decline which is not a big concern. If anything it's exports positive plus the rate remains in a cost effective range.

 

 

 

 

 

 

[Pique Dard]

1 hour ago, webfact said:

Thailand’s currency, the baht, could be the subject of speculation,

money speculation is an inherent part of trading

[nigelforbes]

15 minutes ago, Pique Dard said:

money speculation is an inherent part of trading

Except THB is not fully convertible, it can't be traded for delivery outside Thailand. So this is not about currency speculation as in currency trading, this is about economic growth forecasts, the US economy and USD and recovery after covid.

 

 

[hotchilli]

2 hours ago, Stargeezr said:

Wow, is the Thai Baht, the go to currency now? How is it so strong when the main world currencies

are all going down in value?

In a word, manipulation.

[mikebell]

Playing havoc with my UK pension.

[RichardColeman]

These numpties have no idea that rising baht causes less exports and less 'potential' tourists - i certainly would think twice about going to a place this year where my currency has lost 8-10%

[nigelforbes]

23 minutes ago, hotchilli said:

In a word, manipulation.

The lazy persons way of saying they don't understand. 

[hotchilli]

2 minutes ago, nigelforbes said:

The lazy persons way of saying they don't understand. 

Cheap shot...

[nigelforbes]

3 minutes ago, mikebell said:

Playing havoc with my UK pension.

It's USD that's playing havoc with your UK pension, not THB.

[nigelforbes]

Just now, hotchilli said:

Cheap shot...

How else can it be said? Saying it's manipulation is an easy answer, just say one word and you've explained it all but said nothing. Saying I don't know is another easy answer but it's three words and far less interesting and intriguing. 

[itsari]

25 minutes ago, nigelforbes said:

How else can it be said? Saying it's manipulation is an easy answer, just say one word and you've explained it all but said nothing. Saying I don't know is another easy answer but it's three words and far less interesting and intriguing. 

Manipulate a currency  could mean be done cleverly , unfairly or unscrupulously . 

Nobody ever explains how the said manipulation occurs .

However I understand the frustration of the accusers seeing  there pension diminish markedly .

 

[nigelforbes]

2 minutes ago, itsari said:

Manipulate a currency  could mean be done cleverly , unfairly or unscrupulously . 

Nobody ever explains how the said manipulation occurs .

However I understand the frustration of the accusers seeing  there pension diminish markedly .

 

I agree, nobody has ever volunteered how that is done. The BIG problem is that most people think of the definition of currency manipulation in a very narrow and literal way. The truth is that Thailand, like Switzerland and Germany and many other countries, all can be said to manipulate their currency using trade as a vehicle where exports exceeding imports. Only the US Fed thinks that is manipulation, well, and a few posters on AN, everyone else thinks that's a trade imbalance.

 

There's an interesting chart in the link below explaining trade vs currency manipulation and the countries the Fed thinks are manipulators, it will make you chuckle..

 

https://www.cfr.org/article/tracking-currency-manipulation

[hotchilli]

1 hour ago, nigelforbes said:

How else can it be said? Saying it's manipulation is an easy answer, just say one word and you've explained it all but said nothing. Saying I don't know is another easy answer but it's three words and far less interesting and intriguing. 

I said one word "manipulation" as it explains adequately why the baht acts as it does..

I didn't go into details as that might be treated as deformation by certain people or enterprises.

Nuff siad.

[nigelforbes]

1 minute ago, hotchilli said:

I said one word "manipulation" as it explains adequately why the baht acts as it does..

I didn't go into details as that might be treated as deformation by certain people or enterprises.

Nuff siad.

BOT wont be concerned if you want to theorise on the subject, they've heard and seen it all before. The problem with suggesting currency manipulation is two fold: the first is there's another explanation for Baht volatility that is supported by global markets, central banks and economists globally. And let's face it, if any central bank thought that BOT was indeed playing fast an free with the Baht, it would be easily noticed and other countries would refuse to deal with them, least of foreign investors, especially not the Japanese who are the biggest investor. The second aspect I've already mentioned which is the imbalance of trade and the US fed. But an extension of that is that BOT is actually required to intervene in markets by IMF rules, in order to smooth volatility. To then suggest there is a third layer which is manipulation for gain, well, it's just silly.

[hotchilli]

1 hour ago, nigelforbes said:

BOT wont be concerned if you want to theorise on the subject, they've heard and seen it all before. The problem with suggesting currency manipulation is two fold: the first is there's another explanation for Baht volatility that is supported by global markets, central banks and economists globally. And let's face it, if any central bank thought that BOT was indeed playing fast an free with the Baht, it would be easily noticed and other countries would refuse to deal with them, least of foreign investors, especially not the Japanese who are the biggest investor. The second aspect I've already mentioned which is the imbalance of trade and the US fed. But an extension of that is that BOT is actually required to intervene in markets by IMF rules, in order to smooth volatility. To then suggest there is a third layer which is manipulation for gain, well, it's just silly.

Thank you for outlining my very same thoughts... glad you put it into print.

[nigelforbes]

2 minutes ago, hotchilli said:

Thank you for outlining my very same thoughts... glad you put it into print.

OK but to be clear, that's intervention, not manipulation, intervention is smoothing the peaks and troughs. But glad we agree.

[NoshowJones]

5 hours ago, Stargeezr said:

Wow, is the Thai Baht, the go to currency now? How is it so strong when the main world currencies

are all going down in value?

Manipulation by the soldiers government, and before I get negative answers about this, ask yourself what is the value of the baht against the GBP now compared to 2014 when the unelected PM stole the country.

Is it just coincidence that the Thai baht was about 50 baht to the £ then, and now it is only little more than 40 baht now.

Coincidence? I don't think so.

[hotandsticky]

1 minute ago, NoshowJones said:

Manipulation by the soldiers government, and before I get negative answers about this, ask yourself what is the value of the baht against the GBP now compared to 2014 when the unelected PM stole the country.

Is it just coincidence that the Thai baht was about 50 baht to the £ then, and now it is only little more than 40 baht now.

Coincidence? I don't think so.

 

 

So you have totally ignored the Brexit effect just to suit your pro-Thaksin the Crook agenda. Pathetic!

 

 

What about the rate being 70 AFTER he left office?    Coincidence?

[NoshowJones]

6 minutes ago, hotandsticky said:

 

 

So you have totally ignored the Brexit effect just to suit your pro-Thaksin the Crook agenda. Pathetic!

 

 

What about the rate being 70 AFTER he left office?    Coincidence?

I would say it is you who is the pathetic one, at least Thaksin was elected by the Thai people unlike this poor excuse of a PM who is in office now.

[hotandsticky]

2 minutes ago, NoshowJones said:

I would say it is you who is the pathetic one, at least Thaksin was elected by the Thai people unlike this poor excuse of a PM who is in office now.

A typical 'attack the poster' comment where you have been proved wrong.....????

[NoshowJones]

2 minutes ago, hotandsticky said:

A typical 'attack the poster' comment where you have been proved wrong.....????

Sorry my mistake, the unelected PM was actually elected in 2019, and Thaksin was not elected at all. Debate now closed.

[nigelforbes]

28 minutes ago, NoshowJones said:

Manipulation by the soldiers government, and before I get negative answers about this, ask yourself what is the value of the baht against the GBP now compared to 2014 when the unelected PM stole the country.

Is it just coincidence that the Thai baht was about 50 baht to the £ then, and now it is only little more than 40 baht now.

Coincidence? I don't think so.

Correct, there was no coincidence, neither did the one thing have any effect on the other. Once again, USD is at the heart of the matter, look at the GBP/USD relationship and then look at GBP/THB, you don't see Thaksin or an army general anywhere! What you do see is a Pound loosing value against USD, which translates into the Pound loosing value against THB.

 

 

 

 

[NoshowJones]

2 minutes ago, nigelforbes said:

Correct, there was no coincidence, neither did the one thing have any effect on the other. Once again, USD is at the heart of the matter, look at the GBP/USD relationship and then look at GBP/THB, you don't see Thaksin or an army general anywhere! What you do see is a Pound loosing value against USD, which translates into the Pound loosing value against THB.

 

 

 

 

and has this been the case for all of the nine years the unelected PM has been in office? I know about Brexit and the US dollar, but I still say that the soldiers have been manipulating the Baht up to a degree, and the main thing is still the word coinsidense.

[nigelforbes]

13 minutes ago, NoshowJones said:

and has this been the case for all of the nine years the unelected PM has been in office? I know about Brexit and the US dollar, but I still say that the soldiers have been manipulating the Baht up to a degree, and the main thing is still the word coinsidense.

I presume you can see the graphs, your coincidence argument is so far out on a limb that the tree fell over years ago. I know how much you dearly want to blame the PM for this but you're going to have find something else to blame on him, I know, how's about global warming!

[rabiedabruce]

7 hours ago, RichardColeman said:

These numpties have no idea that rising baht causes less exports and less 'potential' tourists - i certainly would think twice about going to a place this year where my currency has lost 8-10%

They don't care. Have you seen the front page BP advertorials for property in Kensington?  Btw, it dropped 20% after Brexit. Which really didn't happen

 

[rabiedabruce]

Odd that none of this happened before the junta took hold

[spidermike007]

5 hours ago, hotchilli said:

I said one word "manipulation" as it explains adequately why the baht acts as it does..

I didn't go into details as that might be treated as deformation by certain people or enterprises.

Nuff siad.

Deformation is a terrible thing. It is the greatest nightmare of every parent. 

 

Defamation, if that is what you meant, is simply a vehicle cowards use, to get around offering good service, products or simply being very substandard. Some of us pay no heed to it, and refuse to be cowed into submission by fools. 

[connda]

A weak THB is fine by me!