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

[engamann]

Good for the junta boys when them ship all of the coorupt money them have grabed since 2014 out of the country.

[Gknrd]

Anyone that has follows currency knows this was coming. I left a month ago. Enjoyed the rate for 6 months. It happens all the time. Other countries are now on my radar. Thailand is one of my least favorite countries. But, when the Baht is low agains my currency it is ok to visit. 

Edited February 11, 2023 by Gknrd

[ikke1959]

10 hours ago, nigelforbes said:

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

What a bullsh..

[ikke1959]

8 hours 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.

It is surely the BOT that has a hand in the THB ... you can write what you want but look bad news makes the THB stronger instead of weaker.. How can anyone explain that?? .. Indeed the people with money will profit as they will buy the cheap THB now and when the rate collapse they are the winners.. Nothing to do anything you say I am sorry.. In the previeous times when tourism and economy were florishing the THB was traded for 40THb and now with the struggling of Thai tourism sector and the declining export the THb is too expensive.. 

[nigelforbes]

16 minutes ago, ikke1959 said:

What a bullsh..

If you want to ask a question or make a statement, do so, but don't just say something's BS without giving a reason why, otherwise you have zero credibility.

[nigelforbes]

14 minutes ago, ikke1959 said:

It is surely the BOT that has a hand in the THB ... you can write what you want but look bad news makes the THB stronger instead of weaker.. How can anyone explain that?? .. Indeed the people with money will profit as they will buy the cheap THB now and when the rate collapse they are the winners.. Nothing to do anything you say I am sorry.. In the previeous times when tourism and economy were florishing the THB was traded for 40THb and now with the struggling of Thai tourism sector and the declining export the THb is too expensive.. 

I suggest you read the Baht Thread and better understand the constructs of the Baht exchange rate.

[zzaa09]

2 hours ago, engamann said:

Good for the junta boys when them ship all of the coorupt money them have grabed since 2014 out of the country.

That's been the practice forever among the Thai elite circle. 

[nigelforbes]

It's sad that people can't educate themselves on this, especially since this is home for many, instead many continue to believe bar stool stories. Oh well!

[ikke1959]

3 hours ago, nigelforbes said:

I suggest you read the Baht Thread and better understand the constructs of the Baht exchange rate.

I understand it very well ..... for me it seems that you try to find an excuse for the interventions, manipulations or whatever you call it of the THB exchange rate...based on nothing except looking important.. explain please why the inflation is so low in Thailand compared with the rest of the world.. explain why , as you earlier said the opposite that Thai exporters were happy with the strong THB, the exporters now complaining about the expensive THB.... you admitted than already that there is manipulation. Explain why the THB several years back was weaker than now, while there has been a global economic slow down.... Thailand manipulate everything as we can see in Covid numbers, tourist arrivals, spendings etc.. and an increasing household debt. And not lons ago the banks were even lower rated... that are facts were the THB not on respond... 

[ikke1959]

1 hour ago, nigelforbes said:

I have enjoyed studying the Thai economy for over two decades, different people have different hobbies, this is mine. A little bit nerd like, I understand that, what I can I say, I find it interesting and it keeps me off the street and out of bars! I  like to think that I can get some of the things I know, to rub off on others here because I'm so tired of hearing the bar stool stories about the Baht and the economy.

 

Economics is very complex, it's a huge jig saw puzzle but eventually everything does link together, trying to explain it however is not easy, you have to take one piece at a time.

 

Intervention and manipulation are not the same, they mean different things. Intervention means. "to intervene, action taken to improve a situation, especially a medical disorder, to step in and do something to prevent something from happening or to make something happen". Manipulate means to:  "control or influence (a person or situation) cleverly, unfairly, or unscrupulously".

 

BOT operates a managed floating currency under IMF rules, it's the most popular way for a central bank to manage their currency. The Baht could be Fixed to USD, Floating, or Managed Floating, BOT has the latter. Fixed means the Baht is hard pegged to USD, when USD moves, the Baht moves. Fully Floating means the USD and the Baht do whatever they want, fully independent of each other, they are both driven only by market forces. Managed Floating means the Baht moves according to market forces BUT at time of increased volatility, when the Baht peaks or troughs at relatively extreme levels, or is forecast to do so, the BOT can intervene to smooth out those highs and lows by buying and selling currency. Exports and Imports, particularly oil imports, don't like sudden swings in the value of the currency, one minute you were going to have to pay 100K, two hours later you have to pay 105k. That's why the rule exists, every central bank using the same rule, does the same thing.

 

Exports (and imports) want a Baht that is historically in the range, 30 to 34, ideally 32 or 33. At those levels everyone is happy. Outside of that range, somebody begins to suffer, the stronger it is, the more exporters begin to suffer, the weaker it is, the more importers suffer. BUT how many Baht we can get for 1 USD is not under the control of one of the worlds smallest currencies, the Baht, it's under the control of the worlds largest, the Dollar. Wherever the Dollar goes, the Baht has to follow because USD is the worlds Reserve Currency and all export bills are settled in USD, BOT and the Thai economy are at the mercy of the Federal Reserve in that respect.

 

Why is inflation so low? There are many different types of inflation, many causes. A major one is oil related, when the price of oil goes up, the cost of transportation increases so consumer prices increase, when consumer prices increase, everyone wants a salary increase. Thailand successfully operates a Fuel Subsidy Fund which removes the highs and lows in the oil price, just like BOT removes the peaks and troughs in the Baht exchange rate. This keeps the cost of fuel lower than it would normally be. Later, when the price of oil on the international markets normalise and the price of oil falls, consumer prices will be higher than they would otherwise be as the fuel subsidy fund is replenished. This fund recently spent a lot of money during covid reopening and now owes over Baht 125 billion. All of that was done to prevent inflation. You think the price of petrol was high recently, it would have been much much higher, if it wasn't for the Fuel Subsidy Fund.

 

Another factor is that Thailand doesn't import inflation from other countries, its imports are very tightly controlled so imported price inflation is also very low.  

 

Explain why the Baht was weaker several years ago: see the graph, the problem, as I said at the beginning, is USD, not the Baht. The US Dollar Index shows the strength of the US Dollar, look at 2015 when suddenly USD strengthened.

The following news article explains what happened that year and why USD strengthened.

 https://www.nytimes.com/2018/09/29/upshot/mini-recession-2016-little-known-big-impact.html#:~:text=The vicious circle of a,plummet starting in mid-2015.

 

I hope that answers some of your questions, if you have more questions, ask them and I'll try and answer them.

 

The USd is only 1 currency... there is GBP, Euro, and other currencies too... not mention of that besides the interest is rising all over the world, which is used to control the inflation..My opinion is too much narrow minded thinking...I am sorry but not the whole world is hanging on the USD....and why is the THB watched than if it is so easy as you pretent it is...

[nigelforbes]

3 minutes ago, ikke1959 said:

The USd is only 1 currency... there is GBP, Euro, and other currencies too... not mention of that besides the interest is rising all over the world, which is used to control the inflation..My opinion is too much narrow minded thinking...I am sorry but not the whole world is hanging on the USD....and why is the THB watched than if it is so easy as you pretent it is...

70% of the Thai economy depends on exports, 70%. Over 65% of all export bills are settled in US Dollars, that's the global convention, USD is the only currency that matters to trade, the only one.

 

In the FOREX, USD is at the very top of the exchange rate pair tree, all other currencies have a direct or indirect relationship with it, GBP and EURO all have direct relationships with USD. It doesn't matter what happens to GBP or EURO, when it comes to the GBP or EURO exchange rate with the Baht, it's USD that matters because the Dollar is directly involved in determining the exchange rate. GBP and EURO do NOT have direct relationship with THB, the way the Pound/Baht exchange rate is calculated is:  USD/THB x GBP/USD. Once again, it's USD that matters, nothing else, unfortunately, the whole world is hanging on USD but much of it wishes it wasn't.

 

You seem to have a question or point about inflation but I can't tell what it is, sorry.

 

When you ask, why is the THB being watched, I presume you mean watched by the US Federal Reserve for money laundering and why is it on a watch list?  I must have answered that question ten times this month alone but let's make it eleven! There is an imbalance of trade between NAFTA and particularly the US and Thailand, Thailand exports more to the USA than it imports. This results in a trade surplus for Thailand which feeds into their current account surplus. That results in a stronger Baht. The issue is trade, not currency, all of this is described in the opening post in the Baht Thread which I've linked for you a couple of times, which clearly you have not read or understood, despite you claiming to understand all of this very well.....you don't understand much of it all! Go read that thread, especially the first post and please don't ask me to repeat the same things over that are already in that post. Here it is yet again:

 

 

 

 

 

 

[JimmyJ]

  "Thailand successfully operates a Fuel Subsidy Fund which removes the highs and lows in the oil price, just like BOT removes the peaks and troughs in the Baht exchange rate. This keeps the cost of fuel lower than it would normally be. Later, when the price of oil on the international markets normalise and the price of oil falls, consumer prices will be higher than they would otherwise be as the fuel subsidy fund is replenished. "

(The above is nigelforbes quote - for some reason the software is attributing it to.someone else, and also making my type tiny).

 

I don't understand the last sentence.

 

Why it follows that Consumer Prices will be higher.

And how the Fuel Subsidy Fund is replenished.

 

 

Edited February 11, 2023 by JimmyJ

[nigelforbes]

25 minutes ago, JimmyJ said:

  "Thailand successfully operates a Fuel Subsidy Fund which removes the highs and lows in the oil price, just like BOT removes the peaks and troughs in the Baht exchange rate. This keeps the cost of fuel lower than it would normally be. Later, when the price of oil on the international markets normalise and the price of oil falls, consumer prices will be higher than they would otherwise be as the fuel subsidy fund is replenished. "

(The above is nigelforbes quote - for some reason the software is attributing it to.someone else, and also making my type tiny).

 

I don't understand the last sentence.

 

Why it follows that Consumer Prices will be higher.

And how the Fuel Subsidy Fund is replenished.

 

 

When all things are equal and the price of oil on the open market is "normal", AND the value of the Fuel Stabilisation Fund, (sorry, I called this the fuel subsidy fund earlier) the price of petrol to the consumer per gallon is X and the Fund is neither being drawn down or replenished. 

 

When the price of oil increases and the price of fuel to consumers is increased, many times over short periods, the Fuel Fund absorbs some of that increase so the price per gallon remains lower than it would otherwise be. During these times the Fund is being drawn down.

 

As the price of oil falls and returns to normal, the rate at which the consumer price falls is slower than it might otherwise be because the Fuel Fund has to be replenished by the consumers as they pay for their tanks of petrol. Once the Fund is back to "normal" again, the price of fuel per gallon returns to its normal level.

 

You can think of the Fuel Fund as a system of free loans to the consumer that are available to used when needed, but they must be repaid later.

 

The Fund is run by government, I don't know how it was funded originally but it is now in substantial debt and bank loans have been taken out to replenish the fund,

 

I hope that's clear.

 

 

[jacko45k]

On 2/11/2023 at 7:17 AM, nigelforbes said:

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

I would blame the UK for most of it......

[jacko45k]

Just now, nigelforbes said:

It's USD

I cannot blame the USA for any impact on my UK pension, spent here in Thailand...... 

[nigelforbes]

Just now, jacko45k said:

I cannot blame the USA for any impact on my UK pension, spent here in Thailand...... 

Not for the quantity of Serling you receive you can't. But you can blame USD for the number of Baht those Pounds exchange for Baht because USD is a major part of that calculation.

[jacko45k]

1 minute ago, nigelforbes said:

Not for the quantity of Serling you receive you can't. But you can blame USD for the number of Baht those Pounds exchange for Baht because USD is a major part of that calculation.

Not really.... I have to buy baht and have no need of USD... how many I get is defined in the Sterling exchange rate. I know the old argument that all currency exchange must go via USA, but I have a grasp of relativity and can see past that. The UK government policies have driven Sterling down... and that is always reflected in USD....but, I buy no dollars. at TT exchange. 

[nigelforbes]

1 minute ago, jacko45k said:

Not really.... I have to buy baht and have no need of USD... how many I get is defined in the Sterling exchange rate. I know the old argument that all currency exchange must go via USA, but I have a grasp of relativity and can see past that. The UK government policies have driven Sterling down... and that is always reflected in USD....but, I buy no dollars. at TT exchange. 

Nope, read the first post in the Baht thread below.

 

There is NO direct exchange rate between the Pound and the Baht, it must be calculated every time using USD as an intermediary. That means that whatever happens to USD, influences how many Baht you get for your Pound, evevn if Pound and Baht remain constant. 

 

"GBP/THB is calculated using the following formulae: USD/THB x GBP/USD. This mean that whilst the value of USD/THB is influenced by two currencies/economies, the value of GBP/THB is influenced by three and the reason for movements in that pair is not always immediately obvious".

 

 

 

 

[jacko45k]

1 minute ago, nigelforbes said:

USD/THB x GBP/USD

USD cancels out in that calculation to give you GBP/THB.... I understand what you say, but it is not relevant to the average UK pensioner living here, simply USA hubris!

[ikke1959]

14 minutes ago, nigelforbes said:

Nope, read the first post in the Baht thread below.

 

There is NO direct exchange rate between the Pound and the Baht, it must be calculated every time using USD as an intermediary. That means that whatever happens to USD, influences how many Baht you get for your Pound, evevn if Pound and Baht remain constant. 

 

"GBP/THB is calculated using the following formulae: USD/THB x GBP/USD. This mean that whilst the value of USD/THB is influenced by two currencies/economies, the value of GBP/THB is influenced by three and the reason for movements in that pair is not always immediately obvious".

 

 

 

 

So still manipulating by unreasonable exchanges between different currencies.... USDx THB x any currencyx x USD.... America and Thailand rule the currencies....hard to believe, as when I make a transfer from my account in Europe I get a rate that is not made by EUR x USD first... believe me 

Edited February 12, 2023 by ikke1959

[nigelforbes]

17 minutes ago, ikke1959 said:

So still manipulating by unreasonable exchanges between different currencies.... USDx THB x any currencyx x USD.... America and Thailand rule the currencies....hard to believe, as when I make a transfer from my account in Europe I get a rate that is not made by EUR x USD first... believe me 

You don't see it but that's how the FOREX calculates EUR/THB, what can I say, that's how the FOREX system is designed.

[nigelforbes]

28 minutes ago, jacko45k said:

USD cancels out in that calculation to give you GBP/THB.... I understand what you say, but it is not relevant to the average UK pensioner living here, simply USA hubris!

Sorry but you don't get it, yet!

 

I go through this loop several times a week with different posters, eventually they get it. Best I can tell you is to read that thread and the calculations others have made and you'll get it too. And if you don't get it, oh well, it's no skin off my nose.

[Henryford]

On 2/11/2023 at 4:43 AM, 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?

Maybe it's because the main currencies are running massive deficits and printing trillions of funny money.

[jacko45k]

Just now, nigelforbes said:

Sorry but you don't get it, yet!

And how do you know what I get? That is a ridiculous comment.

Let me simplify it for you... when I send my UK pension over here... I look at the GBP/THB rate, and never even consider the USD. 

[nigelforbes]

Just now, jacko45k said:

And how do you know what I get? That is a ridiculous comment.

Let me simplify it for you... when I send my UK pension over here... I look at the GBP/THB rate, and never even consider the USD. 

You don't have to consider USD but the exchange rate has to, it's only by considering USD/THB that the FOREX can arrive at GBP/THB, without USD there is no Pound Baht exchange rate.

 

Anyway, good for you, message me when the coin drops, after you've read that thread. 

[jacko45k]

1 minute ago, nigelforbes said:

Anyway, good for you, message me when the coin drops, after you've read that thread. 

I keep telling you I understand that... but it is not relevant to me and I can just simply go swap my Sterling directly at TT.... 

Don't bother to message me when you get that.

Jesus man, I have lost tens of thousands to bloody currency traders. 

[ikke1959]

3 hours ago, nigelforbes said:

You don't see it but that's how the FOREX calculates EUR/THB, what can I say, that's how the FOREX system is designed.

I am still happy that I don't bring more money than i need every month in this country... the THB is too dangerous 

[JimmyJ]

5 hours ago, nigelforbes said:

When all things are equal and the price of oil on the open market is "normal", AND the value of the Fuel Stabilisation Fund, (sorry, I called this the fuel subsidy fund earlier) the price of petrol to the consumer per gallon is X and the Fund is neither being drawn down or replenished. 

 

When the price of oil increases and the price of fuel to consumers is increased, many times over short periods, the Fuel Fund absorbs some of that increase so the price per gallon remains lower than it would otherwise be. During these times the Fund is being drawn down.

 

As the price of oil falls and returns to normal, the rate at which the consumer price falls is slower than it might otherwise be because the Fuel Fund has to be replenished by the consumers as they pay for their tanks of petrol. Once the Fund is back to "normal" again, the price of fuel per gallon returns to its normal level.

 

You can think of the Fuel Fund as a system of free loans to the consumer that are available to used when needed, but they must be repaid later.

 

The Fund is run by government, I don't know how it was funded originally but it is now in substantial debt and bank loans have been taken out to replenish the fund,

 

I hope that's clear.

 

 

"Later, when the price of oil on the international markets normalise and the price of oil falls, consumer prices will be higher than they would otherwise be as the <deleted>el subsidy fund is replenished. "

 

The Fuel Stabilization Fund takes out bank loans to refund itself.

 

Why are Consumer prices now higher than they would otherwise be?

 

 

 

 

Edited February 12, 2023 by JimmyJ

[nigelforbes]

3 minutes ago, ikke1959 said:

I am still happy that I don't bring more money than i need every month in this country... the THB is too dangerous 

I used to feel the same way years ago but today it's very different. Years ago I bought over a few million and let it earn interest here, by the time I was ready to do something with it I realized the exchange rate had moved considerably and I'd made a lot of money, about 35%. I'd also bought a new CRV which by the time I'd sold it, the exchange rate difference means it almost paid for itself. Today I keep 80% of my cash assets in Thailand and I sleep very well.

[jacko45k]

1 minute ago, nigelforbes said:

Today I keep 80% of my cash assets in Thailand and I sleep very well.

Nothing wrong with that..... it can act as self insurance for medical needs! Saves paying many thousands for more restrictive cover!