Thai Baht May Hit 30 To The Us Dollar

[bkkandrew]

The currencies that I would expect to strengthen are dinars, roubles and Canadian, Australian and New Zealand dollars.

And if you cannot work out what has happened to your own currency during the past year, God help anyone who follows you 'advice' on predicting other currencies' movements in the future!

And he wants Thai's to go back to the land and produce rice to feed themselves and sell thus a rising baht ;-)

"The Good Life"

That would make Thailand the part of Tom and Barbara, with Singapore playing the Ledbetters

Edited July 20, 2007 by bkkandrew

[ray23]

You know it has been interesting watching all this and I have followed closely, however I lack the experience to really understand. Thus far it would seem to me that there is two sides to this. One is weaking dollar, America does not seem to be all that concerned about it, they have done nothing nor atttempted to do anything to strengthen it. Could that be because they are enjoying a advantage in export at the moment? With all that seem to be terrible situation there economy seems to be going up 2.5% this year. Is that primarily coming from exports?

The other side of the coin is that huge sums of money are flowing into Asia, not just Thailand. Thailand wouls seem to be good place for that money to go, if what I have read is correct it's stock market was undervalued, hence good money can be made in the rise. That money can be secured if you know when to leave. Just a wild guess is that these fund come in now are short term and profits will be taken in a short period of time.

The speculation on the currency benefited by the stock market rising a well. So a good place to make money as well, again if you know when to leave.

Where the baht should really be at the moment I don't have a clue. However I have seen it argued that it should be at 25 where it was ten years ago. That one I have a hard time understanding simply because that number takes no consideration for inflation over a ten year period.

I'm left with the impression that in the end Thailand can really do very litle about this, simply because of the amounts of money involved. I'm also left with the impression that America has no intention of making any moves to strengthen the dollar. I understood that if interest rates were raised there that investment monies would gravitate back to the dollar. The official stance is the Fed Chairmen only is thinking in terms of inflation. I seriously doubt that.

Well it's all beyond me I appreciate all the input those with knowledge have contributed, sometimes I could follow it sometimes not.

[rayw]

That rate of 68.60 I have not seen anywhere on 18th in fact I would say that you did very well as it looks like the clerk who changed your money gave you the rate for buying Baht back off of you rather than selling Baht to you. Yesterday the £ bank note rate was around 67.40 Baht per pound sterling. Where is this Super Rich place I must go and buy some Baht bank notes I could make a nice little profit on that. I wasn't ripped off either as was only quoting you the true rates form the various Thai banks updated websites.

You lack of knowledge of such places happily demonstrates your inability to read this board (or presumably any other). Why not try a search of this forum for the words "Super Rich" and you may be able to see why you are now embarrassed...

STILL nobody has got onto these western organisations who are quoting silly rates like 29.xx Baht/US$ or 61.xx Baht/UK Pound and asked them what rate they buy say 1000 Baht bank notes back. That would tell the story finally and completely !!

Who has been defending them? Why would anyone want to?

The Bank of Thailand as I say quote the true rates for both buying and selling Baht just use that it is accurate and close to what you get in the Thai High Soi Banks again here is the website url :-

http://www.bot.or.th/Bothomepage/databank/.../exchange_e.asp

Note that today this site quote the Average Interbank Exchange Rate = 33.446 Baht/US Dollar and this is indeed a proper middle rate so take off about 2.5 % (twice the percentage the main Thai banks take off) = 32.60, getting less Baht per dollar than this then you ARE being ripped off for certain. Today 33.15 is the going rate for US$ bank notes ($50-$100 notes) in the main Thai public banks.

You should find that the middle money market rate is the average between the buying and selling rates on that BoT site. It will be about the same middle rate as the rip off western rate tourist traders, it is just the spread that is fair and honest here but far from it in the west.

No, the BOT is simply the indicator of onshore rates. A fact that you are seemingly not able to understand...

Please read the rest of the forum on this subject before posting again, as this is tedious..

This IS tedious indeed, as you just fail to understand what I have quoted. I stand by ALL I have quoted here and no my friend I worked in the City of London in a busy bank dealing room not a Thomas Cook Currency Exchange Counter !!! I was also a full member of the London Forex Club if you are aware of what that is (or what it was as I am admittedly out of touch with it now so may it have changed name for all I know). So yes I do resent your insults as they are not called for, so give over as it makes you look silly not me which I don't want either. Seriously there is no need for anyone to look silly or feel embarrassed we are all human and thus can make mistakes and be able to realistically admit them, though I have so far made none I can see here as yet. If you read one of my earlier posts here I am sure I did say I worked it the forex money markets which should imply not a currency exchange counter for tourists!! No I do not claim to be an expert or up to date but I do have good ground knowledge and understanding of this field which you do NOT appear to fully have by what you state!! I have read all of this thread and have said from the beginning, as I think you have too, that it is NOT so much the strong Baht but much more so the very weak dollar and several head in the sand "God Bless Bloody America 'guys here would not accept that saying how good the US economy is !!! Crazy. Fortunately I have many American friends who are more realistic

I KEEP SAYING MIDDLE RATES no matter if you go offshore or onshore the middle rate is the international mid point between buying and selling a particular currency in respect of another currency (usually against the majors like US$, £, Euro etc.) SO PLEASE just do what I ask, if you can, and get the FULL offshore rates and quote me today's OFFSHORE Buying AND Selling rate for Baht against the US$ or £ and I think my point will be made that the middle market rate will be pretty much the same at any given point in time. It is when they are out of kilter form one curency marke to another that the switched on Forex dealing rooms make their money. My posts have been here to try and help those not so much in the know to save being screwed by western crooks (read Banks). Jeez you are hard work matey. Of course as said from the start I know what the offshore rates are, they are the rip off ones whether buying or selling with around 20% spread and rates nobody in their right mind should be using if they can avoid it.

As a direct piece of advice nobody here with even a modicum of common sense would use an offshore rate to buy or sell their required Thai Baht whether for a holiday or buying a property or car. So the on shore rate is really what we all should be using and sod the western banks and their fraudulent ways. I have only a small pension each month to convert so it effects me very little but I do pay attention to what is happening, even with interest rates and the related forward currency markets. What I state is to help others not to knock any country or people just to try and be helpful. As I said up to every one if they want to listen or ignore it but I assure you I only quote what I see and know are the facts. Do what you want with it I am done with it, hope it has not been a waste of time and effort for most of the sensible guys here.

Oh I do not know of Super Rich and have not bothered to search for it here but will do if you like. It still cannot change anything about the rates I quoted factually off of he various currency boards.including the FT money Market Bid and Offer rates and those are not Onshore Thai rates but somehow they seem to be pretty much in sync with BoT I never said you were defending the rip off merchants but the point I was making is it is pointless in quoting their rates as nobody here would surely use them and also those rates are of course no truer than a Gold trader selling gold at 15K Baht a baht and buying it at 5K per baht ripping off unsuspecting tourists, it does not then make the gold rate 20K Baht per baht does it ?? though the middle rate will remain about the same as the true rate.

[rayw]

Another new high on the offshore rate with the USD:

Live rates at 2007.07.20 08:19:33 UTC

Notice: The THB rate shown below is the international rate. Rates used within Thailand may vary.

1.00 USD = 29.8595 THB

United States Dollars Thailand Baht

1 USD = 29.8595 THB 1 THB = 0.0334901 USD

Source: xe.com

Oh dear oh dear. NOW PLEASE for the umpteenth time what is their rate for buying Baht back and selling you US$'s ?? Only then can we all see clearly that their mid rate is pretty much the same and that they are supporting the rip off brigade with disgusting 20% plus spreads between buying and selling rates. Why pray tell me do they not quote their buy and sell rates like the FT reports and the Thai banks do hmm ?? It seems difficult to establish what the other rate is from them, strange don't you think??? Because they have something to hide maybe ???

[Mid]

US dollar weakness continues

Fri, Jul 20 2007, 16:23 GMT

by Nicole Elliott

Mizuho Corporate Bank

snip

and Thailand shaved 25bp to 3.25% in what seem increasingly random moves to prop up/protect the economy. Small industry has a new $149M fund to help against a rising baht (at ten year high) because the Bank of Thailand says it does not plan to fix the exchange rate.

snip

FXstreet.com

[BlissfullyIgnorant]

rayw: I really don't want to get pulled into any flaming sessions (this thread is already out of control), but I think the major point others are trying to get across is that the Thai domestic (onshore) forex market was decoupled from the international (offshore) market by the BOT some months ago now, in an effort to regain at least some control over local rates. The prices you see quoted locally are totally independant of whatever rates you might see abroad. Of course the local market will still follow the basic trends of the international market, but it's not directly related to them.

If you look at my posts here, I've been quoting the ever increasing spread between the Thai domestic forex rates and the international mid-market rates. I'm very curious as to why there's such a huge spread between offshore and onshore prices even with the decoupling, as conventional wisdom suggests that the two ought to have a lot more in common, especially after profiteering has taken place.

There is an export limit of 50,000 Baht and the 30% withholding of anything over USD$20K, which puts the brakes on any institutions that would want to take advantage of the spread, but I'm sure there's some smaller investors out there who've figured out how to make 8-10% a day on the spread, so they should have some type of equalizing effect, but they don't. Which leads me to speculate that the domestic market is being sponsored - it's the only thing that makes sense to me.

Anyone want to chime in with a theory?

[PeaceBlondie]

... One is weakening dollar, America does not seem to be all that concerned about it, they have done nothing nor atttempted to do anything to strengthen it. Could that be because they are enjoying a advantage in export at the moment? With all that seem to be terrible situation there economy seems to be going up 2.5% this year. Is that primarily coming from exports?

The other side of the coin is that huge sums of money are flowing into Asia, not just Thailand. Thailand wouls seem to be good place for that money to go, if what I have read is correct it's stock market was undervalued, hence good money can be made in the rise. That money can be secured if you know when to leave. Just a wild guess is that these fund come in now are short term and profits will be taken in a short period of time.

The speculation on the currency benefited by the stock market rising a well. So a good place to make money as well, again if you know when to leave.

Where the baht should really be at the moment I don't have a clue. However I have seen it argued that it should be at 25 where it was ten years ago. That one I have a hard time understanding simply because that number takes no consideration for inflation over a ten year period.

I'm left with the impression that in the end Thailand can really do very litle about this, simply because of the amounts of money involved. I'm also left with the impression that America has no intention of making any moves to strengthen the dollar. I understood that if interest rates were raised there that investment monies would gravitate back to the dollar. The official stance is the Fed Chairmen only is thinking in terms of inflation. I seriously doubt that.

Well it's all beyond me I appreciate all the input those with knowledge have contributed, sometimes I could follow it sometimes not.

If I may comment on several of those excellent points. I suspect that almost all the big money coming from outside Thailand into the SET (and going to Shanghai) is very short time money by big speculators who know when to leave, and they will leave soon. I also have the impression that Thailand can really do very little about this, and that America likes to have more exports, even though retail consumers in the USA like cheap foreign goods. I suspect that inflation of the two economies has very little connection to the baht:US dollar exchange rate, because both have had relatively minor inflation of the same magnitude.

[rayw]

rayw: I really don't want to get pulled into any flaming sessions (this thread is already out of control), but I think the major point others are trying to get across is that the Thai domestic (onshore) forex market was decoupled from the international (offshore) market by the BOT some months ago now, in an effort to regain at least some control over local rates. The prices you see quoted locally are totally independant of whatever rates you might see abroad. Of course the local market will still follow the basic trends of the international market, but it's not directly related to them.

If you look at my posts here, I've been quoting the ever increasing spread between the Thai domestic forex rates and the international mid-market rates. I'm very curious as to why there's such a huge spread between offshore and onshore prices even with the decoupling, as conventional wisdom suggests that the two ought to have a lot more in common, especially after profiteering has taken place.

There is an export limit of 50,000 Baht and the 30% withholding of anything over USD$20K, which puts the brakes on any institutions that would want to take advantage of the spread, but I'm sure there's some smaller investors out there who've figured out how to make 8-10% a day on the spread, so they should have some type of equalizing effect, but they don't. Which leads me to speculate that the domestic market is being sponsored - it's the only thing that makes sense to me.

Anyone want to chime in with a theory?

I agree with you totally and also hate flaming too as I stated it is unnecessary. My wish here is only to proffer some sound advice and state some hard facts and that is what I feel I have done. Either way if you look at the London Forex market as quoted daily in the FT then you will see the money market inter bank spread outside of Thailand shows as very similar to the BoT with the mid rate really the same for any given time. I did give the url for the FT Bid and Offer Forex board before and have not time to look it up again right now but Google it and look for the proper Forex market Bid and Offer page. I am really talking mid rates generally not tourist Bank Note conversion rates or at least more the TT rates which I personally use.

I must admit that Super Rich dealer in Bangkok looks superb with their very narrow buying /selling spread, but do they charge commission though by any chance?? I cannot see how they can make any profit at all at those rates after paying their overheads without making a commission charge per transaction. If a small flat rate commission it still would give you a great bargain if changing a larger amount of currency :-) I had not seen that dealer mentioned before as never really been looking at changing cash in Bangkok so it was not me being unobservant just no need to have looked for it before. Mind you their rates only further underline my points

Incidentally someone asked about which is the best way to get you Baht for trips over here. Well one thing that needs adding is that as the UK banks charge between £15 to £20 to make a telegraphic transfer in sterling (or any currency) it means that as you get here about 1 more Baht per pound sent TT rather than changing cash here if you are only changing say up to £1000 to £2000 then it is better bringing cash (ignoring the security aspect). The cash rate will give you about 1000 less Baht per £1000 changed but that is almost £15 so much the same as a £15 international transfer fee charged in the UK (or very likely much more) plus they do charge a small percentage here in transferring it to your local Thai Bank branch especially if it is outside of the Bangkok area (like in my case my bank is in Rayong) So generally if it is less than about £2500 and you are not worried as to security then by all means bring sterling cash it is easier and likely to end up giving you the same end result or a better result even though remember rates can change for the better or worse during the interim time you are travelling or waiting to change your money here. To use the TT method you do of course need to have a Thai Bank account anyway or use a friend's account here. Cannot comment on the NW method as never used it though indeed have heard that they are very good compared to most other UK financial institutions as they do not seem so hel_l bent on stitching up their customers.

Edited July 21, 2007 by rayw

[LaoPo]

Strong baht needs strong medicine

A noted economist this week cautioned that the problems created by a rapidly strengthening national currency cannot be ignored

Some excerpts:

The former deputy prime minister [economist Dr Virabongsa Ramangkura] noted that the strong baht during the past year had forced several small factories to shut down, but this did not become known until the recent closure of a large garment firm in Samut Prakan. Not only were many people laid off, the closed factories became NPLs, placing a burden on the financial institutions. If the situation is allowed to continue there will be a second round of financial crisis soon, as the baht is now touching 33 baht/dollar, said Dr Virabongsa, adding that the BOT must be courageous in implementing some medicine to stop the baht from gaining more strength.

He proposed that the BOT immediately cut the repurchase rate by 1-1.5% and also heavily intervene in the forex market. Many observers who remember the past intervention by the central bank, which cost the country billions in losses, were worried that it might happen again.

However, Dr Virabongsa argued that if the BOT successfully intervenes and the baht is weakened, the bank will make a profit. Thailand would not be bankrupted by buying a lot of dollars because the currency can be used as external reserve, which can then be used to invest in government bonds and other financial instruments overseas which yield higher returns than in Thailand. The best example is China, which uses its huge reserve to buy debt instruments in the US market.

"The BOT must intervene strongly and sufficiently, while the Finance Ministry must not hesitate in permitting the central bank to issue bonds to drain off excessive liquidity... The International Monetary Fund (IMF) may criticise the BOT's intervention because the hedge funds cannot make a killing from manipulating the market, but this is all right," said Dr Virabongsa.

"The baht value that is appropriate for Thailand and exporters is 36 baht/dollar, not 33 baht. By lowering the BOT's repurchase rate aggressively, it can prevent selling of dollar holdings and stop money flowing into the country without having to issue any additional measure," noted Dr Virabongsa, who disagreed with last year's BOT measure of a 30% reserve requirement for hot money inflow because it distorts the market: the stock market is exempt while the money market is under this control.

Complete article here:

http://www.bangkokpost.com/News/21Jul2007_news96.php

LaoPo

[bkkandrew]

I KEEP SAYING MIDDLE RATES no matter if you go offshore or onshore the middle rate is the international mid point between buying and selling a particular currency in respect of another currency (usually against the majors like US$, £, Euro etc.) SO PLEASE just do what I ask, if you can, and get the FULL offshore rates and quote me today's OFFSHORE Buying AND Selling rate for Baht against the US$ or £ and I think my point will be made that the middle market rate will be pretty much the same at any given point in time. It is when they are out of kilter form one curency marke to another that the switched on Forex dealing rooms make their money. My posts have been here to try and help those not so much in the know to save being screwed by western crooks (read Banks). Jeez you are hard work matey. Of course as said from the start I know what the offshore rates are, they are the rip off ones whether buying or selling with around 20% spread and rates nobody in their right mind should be using if they can avoid it.

What a muddle you are in. By middle rate, I assume you mean mid-market rate. Well, offshore-wise, that is precisely what I and others on this forum have quoted from Bloomberg, Reuters et al. Quite what you mean by FULL offshore rate, who knows? Who cares?

Whilst anyone who read this forum in detail (unlike you) would be aware not to use the offshore rate when doing transactions to THB, your rambling serves no purpose or help whatsoever.

[bkkandrew]

This IS tedious indeed, as you just fail to understand what I have quoted. I stand by ALL I have quoted here and no my friend I worked in the City of London in a busy bank dealing room not a Thomas Cook Currency Exchange Counter !!! I was also a full member of the London Forex Club if you are aware of what that is (or what it was as I am admittedly out of touch with it now so may it have changed name for all I know). So yes I do resent your insults as they are not called for, so give over as it makes you look silly not me which I don't want either. Seriously there is no need for anyone to look silly or feel embarrassed we are all human and thus can make mistakes and be able to realistically admit them, though I have so far made none I can see here as yet. If you read one of my earlier posts here I am sure I did say I worked it the forex money markets which should imply not a currency exchange counter for tourists!! No I do not claim to be an expert or up to date but I do have good ground knowledge and understanding of this field which you do NOT appear to fully have by what you state!! I have read all of this thread and have said from the beginning, as I think you have too, that it is NOT so much the strong Baht but much more so the very weak dollar and several head in the sand "God Bless Bloody America 'guys here would not accept that saying how good the US economy is !!! Crazy. Fortunately I have many American friends who are more realistic

I have no idea what you are trying to get across with this rant. Maybe you could explain. On reflection, no, don't bother...

[bkkandrew]

As a direct piece of advice nobody here with even a modicum of common sense would use an offshore rate to buy or sell their required Thai Baht whether for a holiday or buying a property or car. So the on shore rate is really what we all should be using and sod the western banks and their fraudulent ways. I have only a small pension each month to convert so it effects me very little but I do pay attention to what is happening, even with interest rates and the related forward currency markets. What I state is to help others not to knock any country or people just to try and be helpful. As I said up to every one if they want to listen or ignore it but I assure you I only quote what I see and know are the facts. Do what you want with it I am done with it, hope it has not been a waste of time and effort for most of the sensible guys here.

You really have a bee in your bonnet about those Western Banks! Guess you were sacked from the one in London. I can see why!

I wonder if you include Nationwide in your sideswipe, as they often offer an ATM rate on par with Super Rich!

Edited July 21, 2007 by bkkandrew

[bkkandrew]

Oh I do not know of Super Rich and have not bothered to search for it here but will do if you like. It still cannot change anything about the rates I quoted factually off of he various currency boards.including the FT money Market Bid and Offer rates and those are not Onshore Thai rates but somehow they seem to be pretty much in sync with BoT I never said you were defending the rip off merchants but the point I was making is it is pointless in quoting their rates as nobody here would surely use them and also those rates are of course no truer than a Gold trader selling gold at 15K Baht a baht and buying it at 5K per baht ripping off unsuspecting tourists, it does not then make the gold rate 20K Baht per baht does it ?? though the middle rate will remain about the same as the true rate.

Yes - you can't be bothered to look for the facts, just would rather spout opinions and false assumptions. This creates misleading advice and confusion. Clearly a common factor when you are concerned.

For other people's information Super Rich (and their competitors), no commission is charged. Cash only, passports/ID cards needed. You lose 10 satang per $ or pound for non high value notes ($100) GBP 50's.

No idea what you are on about regarding gold trading, but I guess it makes as little sense as the rest of your posts...

Edited July 21, 2007 by bkkandrew

[bkkandrew]

Another new high on the offshore rate with the USD:

Live rates at 2007.07.20 08:19:33 UTC

Notice: The THB rate shown below is the international rate. Rates used within Thailand may vary.

1.00 USD = 29.8595 THB

United States Dollars Thailand Baht

1 USD = 29.8595 THB 1 THB = 0.0334901 USD

Source: xe.com

Oh dear oh dear. NOW PLEASE for the umpteenth time what is their rate for buying Baht back and selling you US$'s ?? Only then can we all see clearly that their mid rate is pretty much the same and that they are supporting the rip off brigade with disgusting 20% plus spreads between buying and selling rates. Why pray tell me do they not quote their buy and sell rates like the FT reports and the Thai banks do hmm ?? It seems difficult to establish what the other rate is from them, strange don't you think??? Because they have something to hide maybe ???

Oh dear indeed. This is the mid market rate, i.e. the middle point between buying and selling of THB and USD. 'Their' rate for selling USD will be higher that their buying rate. Thats called business...

[bkkandrew]

He proposed that the BOT immediately cut the repurchase rate by 1-1.5% and also heavily intervene in the forex market. Many observers who remember the past intervention by the central bank, which cost the country billions in losses, were worried that it might happen again.

However, Dr Virabongsa argued that if the BOT successfully intervenes and the baht is weakened, the bank will make a profit. Thailand would not be bankrupted by buying a lot of dollars because the currency can be used as external reserve, which can then be used to invest in government bonds and other financial instruments overseas which yield higher returns than in Thailand. The best example is China, which uses its huge reserve to buy debt instruments in the US market.

Its actually pretty simple. Buy dollars to prevent local currency apprication, but accept that you will lose out on them due to their devaluation, or lose money by letting the Baht appriciate and hit exporting businesses. Its also called being between a rock and hard place. China is there too, but has much more money to throw around...

[SaamBaht]

It's not only the dollar that's losing steam against the baht. The pound is at 61 to the baht and the Euro is at 41. It wasn't long ago that the Euro was up around 50 to the baht and the pound was near 70. Those are mighty big dips, in my humble opinion.

Edited July 21, 2007 by SaamBaht

[bkkandrew]

It's not only the dollar that's losing steam against the baht. The pound is at 61 to the baht and the Euro is at 41. It wasn't long ago that the Euro was up around 50 to the baht and the pound was near 70. Those are mighty big dips, in my humble opinion.

No, onshore the Euro is IRO 45 and GBP 67. The Euro has not really been highr in Baht terms than its value today... Historical data is difficult to compare, due to the offshore/onshore disparity caused by the currency controls imposed by BOT 6-months ago..

[marshbags]

It's not only the dollar that's losing steam against the baht. The pound is at 61 to the baht and the Euro is at 41. It wasn't long ago that the Euro was up around 50 to the baht and the pound was near 70. Those are mighty big dips, in my humble opinion.

No, onshore the Euro is IRO 45 and GBP 67. The Euro has not really been highr in Baht terms than its value today... Historical data is difficult to compare, due to the offshore/onshore disparity caused by the currency controls imposed by BOT 6-months ago..

Surely the first priority of the BOT is to resind and kick this comparison into touch and have one currency valuation and then perhaps some sensible levels will come back into the equasion, along with the true worth of the Baht..................

Otherwise Thailand will suffer big time in the not to distant future and chaos will continue to prevail.

marshbags

Edited July 22, 2007 by marshbags

[LaoPo]

Thailand's baht pressured again a decade after crisis

Posted: 22 July 2007 1106 hrs Singapore time

Excerpts:

Woo Yuen Pau, president and chief executive of think-tank Asia Pacific Foundation of Canada, said current capital inflows were focusing on the equity market, not short-term debts that led to the 1997 meltdown.

But Woo warned money inflows could quickly turn into capital flight if the government takes drastic measures, such as the capital controls it briefly imposed in December 2006 in a bid to halt the baht's rise.

"A sudden reversal of capital flows could have the same kind of impacts (as in 1997). That could happen through a variety of measures, such as the capital control rules imposed in December last year," he said in Bangkok.

The capital rules spooked foreign investors who saw them as a steep tax on equity investments. They quickly dumped shares, triggering the biggest-ever one-day drop on the Thai bourse in December.

The stock debacle forced the Bank of Thailand to quickly ease controls for equities and property.

The central bank was again under pressure last week to rein in the volatile baht and cut its key interest rate Wednesday by 25 basis points to 3.25 percent.

Despite the rate cut, the baht closed again Friday [July 20 - LP] at a near 10-year high of 33.65-67 to the dollar.

Article here:

http://www.channelnewsasia.com/stories/afp.../289668/1/.html

LaoPo

[Skoal]

This baht strength is painful

[SaamBaht]

It's not only the dollar that's losing steam against the baht. The pound is at 61 to the baht and the Euro is at 41. It wasn't long ago that the Euro was up around 50 to the baht and the pound was near 70. Those are mighty big dips, in my humble opinion.

No, onshore the Euro is IRO 45 and GBP 67. The Euro has not really been highr in Baht terms than its value today... Historical data is difficult to compare, due to the offshore/onshore disparity caused by the currency controls imposed by BOT 6-months ago..

What is the more accurate rate? It's strange that there is such disparity. By my calculations, there is a ten percent difference in the onshore and offshore rates across most currencies, at least the pound, dollar, and euro.

[BlissfullyIgnorant]

What is the more accurate rate? It's strange that there is such disparity. By my calculations, there is a ten percent difference in the onshore and offshore rates across most currencies, at least the pound, dollar, and euro.

They're both equally accurate - if you change your money into Baht abroad you'll get a rate based on the respective offshore market price, while if you change it locally you'll get a rate based on the local domestic market. The latter being the obvious choice

The domestic market works independantly of the international market (as it does everywhere) - the only logical explanation for the disparity is that the capital controls introduced a few months ago have been effective at stopping any profiteering from levelling the rates, as is normally the case.

[Naam]

They're both equally accurate - if you change your money into Baht abroad you'll get a rate based on the respective offshore market price...

not necessarily as an additional option exists. a couple of weeks ago i posted in this forum that my bank has offered the possibility to buy THB offshore at the prevailing onshore rate. i followed up the matter and it turned out that i can buy unlimited Baht, keep them at (presently) 2.875% interest and convert them any time again at onshore rate. however, i am not allowed to transfer these Baht unless converted.

edited for addendum: the reason given was to provide clients with the possibility to hedge their living cost and/or any planned investment in Thailand. i have declined the offer as i don't foresee much more appreciation of the currency. the latter is of course my personal opinion.

Edited July 23, 2007 by Dr. Naam

[Martin]

It may be that this appreciation of the baht relative to other currencies in general, and the American dollar in particular, is something that we will just have to live with from here on in.

Central banks of several countries are looking to reduce their holdings of US$ and increase the proportion of their reserves in things that have better long-term prospects than the US dollar.

As Thailand has still fundamentally an agricultural economy (i.e. grows more than it needs for its own consumption and looks to sell the surplus abroad, so it can import other things) it will be looking like a 'good bet' to those governmental banks.

They will have noted the employment figures for Thailand: 60% agriculture, 30% manufacturing, 10% tourism. And they will be aware that the manufacturing and tourism are recent phenomena, so the employees therein still have their rural knowledge and skills which permits agriculture to become stronger, if and as those other sectors 'catch a cold'.

Central bankers are not going to be deterred by the 30% witholding.

They are not "in and out in a few months" speculators.

So, as long-term investors in the baht, they will simply include the cost of the 30% withhold in their calculations of what holding bahts longterm is worth to their countries.

But they will not rush out of the US dollar precipitously and into better bets such as the baht, because they are aware of the danger of rocking the boat.

However they could be making some quiet, gentle moves that will have the effect of altering the trim of the boat steadily.

[Naam]

dail asian forex info from my bankers:

THB: Nullifying the inflows

Thai authorities are increasingly concerned by the strength of the THB as the politically sensitive Constitutional Referendum in September looms. The well documented closure of a textile company last week is an example of how this is beginning to affect the man in the street and the military government is concerned that the impact will spill over to the ballot box. Earlier this month, the government had to intervene to subsidise the operational cost of the textile company in question which has seen its profit margin eliminated by the strong THB to keep the company going and its 4,000 workers employed. Such predicaments are also felt by most other labour intensive industries in Thailand. Precisely due to its labour intensive nature, such industries are politically important ahead of the national referendum. The stronger offshore THB driven by the lack of baht supply following the capital controls put in place since December is drawing locals to expeditiously repatriate their USD earnings in the fear that the onshore rates would go the same way as the offshore USDTHB. Therefore we think the proposal to extend the 15-day limit for export income repatriation likely to be approved by the parliament next week would not be of much help to cap the baht's strength. The government is likely to face an uphill task to cap the THB for now, given the large current account surplus on the back of weak consumption demand and strong investment inflows. The latter is also keeping domestic investors away from considering foreign currency denominated investments which again leaves very little domestic demand for USD. What could potentially help weaken the currency is the plan to repay ahead of schedule the estimated US$3.5bn public sector's external debt this year. Additionally, we think the government is also likely to approve more fiscal spending to boost capital imports for the rest of the year to narrow the trade surplus further. We think only these measures would have any material impact on the USDTHB levels going forward.

[Naam]

it will be looking like a 'good bet' to those governmental banks.

a currency with attached restrictions part of any central bank reserves? you must be joking

[Jai Dee]

DPM believes Thailand should improve manufacturing capabilities to counter long term Baht appreciation

The government is currently unable to intervene in Thai currency trades in foreign and domestic exchanges due to the long term inability to prevent the Thai Baht's appreciation.

Deputy Prime Minister and Minister of Industry Kosit Panpiemras (โฆสิต ปั้นเปี่ยมรัษฏ์ ) hosted a seminar on Free Trade Areas and Thailand's Automotive Industry in order to train over 1,400 workers in developing the value of Thailand's automobile industry. Meanwhile Joint Economic Committee (คณะกรรมการขับเคลื่อนเศรษฐกิจส่วรวม) member Somchai Pokpatwiwat (สมชาย ภคภาสวิวัฒน์) proposed that the government cancels trading of the Thai currency in foreign and domestic exchanges.

Deputy Prime Minister Kosit believes the motion will not solve the Thai Baht appreciation situation in the long run, however, due to an inflow of foreign capital and investment into Thailand. Mr. Kosit believes that the government should instead increase the efficiency of Thailand's manufacturing capabilities in order to compete on the global market.

Source: Thai National News Bureau Public Relations Department - 23 July 2007

[cclub75]

Meanwhile Joint Economic Committee (คณะกรรมการขับเคลื่อนเศรษฐกิจส่วรวม) member Somchai Pokpatwiwat (สมชาย ภคภาสวิวัฒน์) proposed that the government cancels trading of the Thai currency in foreign and domestic exchanges.

Do you understand what... i understand ? This guy would like to cut-off Thailand from the world ? Burma style ?

Hopefully, he's only a "member" of this "committee" !

With crisis times, all the lunatics are back on track, at full speed, with all kind of miracles solutions to solve all problems...

Edited July 23, 2007 by cclub75

[midas]

We hear on a daily basis how this hurts exports. If tourism is an

"invisible export " has there been any noticeable effect by tourists using

US dollars ? I am not suggesting they will change their destination

because of all this but even if they are prepared to absorb the

higher costs ( ie. after they change their money )

I wondered if perhaps some now spend less time here

because for example they run out of money quicker ?

At what point does the tourism sector start to hurt badly?

[Scott]

No doubt the drop in the dollar affects tourism, but I think it is negligible. First of all, there aren't a lot of Americans who visit Thailand (as a % of the population) and those that do are generally people with a fair amount of disposable income. The drop in the dollar wouldn't change their plans too much.

Budget travelers from the US are more likely to go to places like Mexico and the Carribean rather than Thailand.