Thailand’s baht leads Asian currency downturn amid China’s economic worry

[snoop1130]

 

Asian currencies experienced a downturn yesterday, led by Thailand‘s baht, as concerns heighten surrounding the recovery status of the global economy’s second-largest player, China.

 

The baht plunged by a substantial 0.8%, marking it as the largest depreciation against the US dollar in half a dozen weeks. Across the waters of offshore markets yesterday afternoon, it was changing hands at approximately 35.30 to the dollar.

 

Growing anxieties stem from the July data on China’s industrial output and retail sales, which display a decelerating rate and lower-than-expected figures respectively. These trends bolster the already present batch of unsatisfying economic statistics. The idea that policymakers may indeed need to increase their support for the economy is gaining credence.

 

Interestingly, policymakers in Beijing also announced their discontinuation of the release of statistics about youth unemployment, a figure which marched to a record high of 21.3% in June.

 

Mirroring the ominous cloud hanging over the data release, the central bank of China, in a surprising move, cut significant policy interest rates for the second time in only three months just under an hour before. This starkly highlights the evaporating rebound from the post-Covid-19 economy. ING analysts said…

 

“As we take a broader view of things, today’s policy decisions prove to be somewhat beneficial. They would aid in enhancing the debt-service abilities of local governments and property companies lagging in cash. But this isn’t a turning point of massive proportions, thus, we hesitate to believe that market sentiment will see a profound improvement based solely on this.”

 

By Alex Morgan

Caption: Picture courtesy of Chiang Rai Times

 

Full Story: https://thethaiger.com/news/business/thailands-baht-leads-asian-currency-downturn-amid-chinas-economic-worry

 

-- © Copyright Thaiger 2023-08-15

 

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[ikke1959]

yes I believe that, but I think that the political situation is more of influence of the Thai Baht than China.. Negative publications about high household debts in Thailand are doing no good too and an economy that stays behind because of outdated laws and ideas are of more influence  

[hotchilli]

6 hours ago, ikke1959 said:

yes I believe that, but I think that the political situation is more of influence of the Thai Baht than China.. Negative publications about high household debts in Thailand are doing no good too and an economy that stays behind because of outdated laws and ideas are of more influence  

Apart from the elite families and other millionaires most of Thailands population is in debt to some degree, many people I know have borrowed from every source they can since Covid and are struggling to pay anything back.

[bignok]

.8% is less than 1%. Not much. A 5% fall is substantial.

[IAMHERE]

If the China Juan falls, will the hi speed railway cost less?  The Thai section of the silk road can be paid for on the cheap.

[Ben Zioner]

Good

[sammieuk1]

Nothing sticks to the Teflon Baht for longer than 5 nano seconds ????

[jacko45k]

Time for a 'Wise' transfer then!

[2baht]

Good, crash and burn!

[retarius]

I must say that I thought the insanity of the post election shenanigans would have hurt the baht. I have some money I want to bring over and have been waiting for the baht to drop. The other observation here is that if China has such a profound effect on the regions economy, it might be wise to help and not rock the boat by flirting with the US. 

[mikebell]

57 minutes ago, jacko45k said:

Time for a 'Wise' transfer then!

I'm biding my time till the UKP gets back to 70+ again.

[mfd101]

No help for Aussies here. The AUD suffers from much the same (Chinese) issues as the ฿.

[morrobay]

1 hour ago, sammieuk1 said:

Nothing sticks to the Teflon Baht for longer than 5 nano seconds ????

Teflon bought with billions in foreign currency reserves (37 $billion in past two and a half years) by BOT to prop up/defend the baht.   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/

Edited August 16, 2023 by morrobay

[jacko45k]

29 minutes ago, mikebell said:

I'm biding my time till the UKP gets back to 70+ again.

I do hope you have that much time.......

[Peterphuket]

46 minutes ago, mikebell said:

I'm biding my time till the UKP gets back to 70+ again.

I think you'll have to wait until you are die.

[morrobay]

You can do some searching on what this Thai economist knows about the foreign currency reserves and the Bank of Thailand intervening in the exchange rate. 

[Bangkok Barry]

10 hours ago, ikke1959 said:

yes I believe that, but I think that the political situation is more of influence of the Thai Baht than China.. Negative publications about high household debts in Thailand are doing no good too and an economy that stays behind because of outdated laws and ideas are of more influence  

The same situation has existed for many years. Certainly for as long as I can remember.

[JonnyF]

27 minutes ago, morrobay said:

Teflon bought with billions in foreign currency reserves (37 $billion in past two and a half years) by BOT to prop up/defend the baht.   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/

Exactly.

 

It won't fall much further as the BOT won't allow it to. The last thing they want is a collapse like the late 90's.

[Bangkok Barry]

56 minutes ago, mikebell said:

I'm biding my time till the UKP gets back to 70+ again.

I was lucky enough to buy my house then, in cash. And, the way things are going, I think a return to that rate is more likely than not. It's just a question of when. But what caused the crash then wasn't the political situation or high personal debt, it was the Bangkok Bank of Commerce handing out huge unsecured loans to their friends which eventually led to the bank's collapse.

[KhunLA]

Success ... read byline first, then ignore ????

[Caldera]

12 hours ago, snoop1130 said:

The baht plunged by a substantial 0.8%

I would prefer to see it plunge by a substantial 8%. In addition, of course. 

[Berkshire]

I'd noticed the USD going up rather rapidly against the THB.  If it gets to 36, I may have to bring over another pile of cash....555

[superal]

36 minutes ago, morrobay said:

Teflon bought with billions in foreign currency reserves (37 $billion in past two and a half years) by BOT to prop up/defend the baht.   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/

So the Thai baht is artificially inflated . What affect can that have on the Thai economy ? An overrated currency , pretending to be strong whilst in reality the country has lost manufacturing companies along with a drop off in tourism . I can only assume that it is the wealthy Thais who are benefiting from the supported baht through held tangible assets such as Bangkok buildings and office blocks etc .

[morrobay]

10 minutes ago, JonnyF said:

Exactly.

 

It won't fall much further as the BOT won't allow it to. The last thing they want is a collapse like the late 90's.

But the bahts value now is not in line with fundamentals. And if those fundamentals, tourism, exports, outflows, household debt/consumer spending keep going South then how sustainable is this artificial baht exchange rate. Those foreign currency reserves are going to be needed to cover the aboves. 

[Srikcir]

2 hours ago, IAMHERE said:

If the China Juan falls, will the hi speed railway cost less?  The Thai section of the silk road can be paid for on the cheap.

The Prayut government agreed originally to 100% financing by China at an interest rate higher than the then Thailand Sovereign Bond rate, likely because for potential default (NCPO rejected under Article 44 any economic feasibility study required by law). So if the TSB rate increases (ie., due to collapse in attracting capital), it seems to me that China's financial advantage is neutralized or somewhat weakened.

But ...

In January 2021 Thailand and China renewed a baht-yuan currency swap for the exchange of local currencies up to 370 billion baht over five years starting December 2020. That results in $1 USD = 30.06 baht.

https://www.reuters.com

With 35 baht = $1 USD Thailand gains the advantage, if say at least for one quarter. And that assumes the HS system will be profitable enough to cover loan debt payments.

China now discovers that within China its HS rail system with minimal/no cargo will default because rates are not completely elastic to passenger personal fixed incomes. A phenonemum experienced by the Thai government with BTS contract rates. 

And Thailand criminalized gambling!

[KannikaP]

4 hours ago, bignok said:

.8% is less than 1%. Not much. A 5% fall is substantial.

Thanks BigOne, I never knew that 0.8 was less than 1.00

[Cake Monster]

A vary good friend of mine that spends an awful lot of time in China working, told me only last week over a Beer, that he had personally witnessed 40 Story Skyscrapers being demolished as here was no potential to sell the apartments within them.

Also there has been little reported in Thailand about the Large Credit Card Co in China hat has defaulted on Interest payments for Loans taken out

An issue that could be potentially larger than the property crisis according to a source I read.

Have the Wheels comeoff the Chinese Wagon ? Only time will tell, as it will the exposure Thailand has to these issues