Assessing the impact of a strengthening US Dollar on Srettha’s administration

[webfact]

In the realm of global finance, exchange rates serve as a crucial indicator of economic stability and prospects. The current juncture witnesses the Thai economy confronting a notable shift in the strength of the US dollar (USD) against the Thai baht (THB), a development driven by escalating interest rates in the United States.

 

Impact

 

The foundation of a strengthening USD lies within the complex interplay of global financial variables, with the adjustment of interest rates by the US Federal Reserve emerging as a defining factor. Heightened interest rates in the US serve as a magnet for international investors in pursuit of enhanced yields, thereby triggering an increased demand for the USD. Consequently, the USD appreciates relative to other currencies, presenting intricate economic consequences.

 

The dollar’s ascent bears direct implications for Thailand’s export sector, traditionally a cornerstone of its economy. A stronger USD and a weaker baht means that local manufacturers may have to spend more acquiring needed resources within their supply chain. Thai exports could then become more expensive for international consumers, dampening the demand for locally produced goods. Inversely, a weak baht compared to the US dollar can be favorable for tourism in Thailand due to its impact on the purchasing power of foreign visitors.

 

By Arun Saronchai

 

Full story: https://www.thaienquirer.com/50657/assessing-the-impact-of-a-strengthening-us-dollar-on-sretthas-administration/

 

-- THAI ENQUIRER 2023-09-06

 

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[retarius]

It will be temporarily good for Thai exports, but Thai interest rates have to go up sooner or later, so not much use long term.

Thailand had the luxury of low GDP to borrowing ratio in the era of Yingluck, but Prayut's irresponsible spending has taken away that small advantage and soon investors in Thai government debt will demand higher interest rates to compensate for the increased risk. This will rebalance currency rates in the longer term. 

[ftpjtm]

4 hours ago, webfact said:

A stronger USD and a weaker baht means that local manufacturers may have to spend more acquiring needed resources within their supply chain. Thai exports could then become more expensive for international consumers,

Some pretty convoluted logic there. 

 

My export oriented customers absolutely thrived when the baht was weak vs the USD, and their prices lower in the markets they exported to. 

[Eric Loh]

29 minutes ago, ftpjtm said:

Some pretty convoluted logic there. 

 

My export oriented customers absolutely thrived when the baht was weak vs the USD, and their prices lower in the markets they exported to. 

Some truth is your assertion if your export customers don't import their raw materials and shipping cost is based in Baht. 

[lordgrinz]

Soon as it hits B38 to the USD I will be buying more Baht ✌️

[koolkarl]

The baht is grossly overvalued for numerous reasons and will depreciate a lot against the USD over time.

[Cake Monster]

Thai Interest Rates are not going up any time soon

The overriding factor for this is the Eye watering amount of Household Debt ( 90 .6 % of GDP )

Even a very small increase from the present level will trigger a massive amount of NPL on unsecured and Toxic Loans that are equivalent to 80 % of the Countries GDP

Already at the present Interest Rate, there are a huge number of NPL, with Car Loan NPL increasing some 30 % from the start of the Year and Thousands of other Loans being placed into Special Mention measures ( NPL with a high probability of default )

Edited September 6, 2023 by Cake Monster

[RichardColeman]

Amazing the $ keeps so much value when Biden keeps printing so much of it ! Hopefully Brics will put a dent in the $ one day

[retarius]

1 hour ago, Cake Monster said:

Thai Interest Rates are not going up any time soon

The overriding factor for this is the Eye watering amount of Household Debt ( 90 .6 % of GDP )

Even a very small increase from the present level will trigger a massive amount of NPL on unsecured and Toxic Loans that are equivalent to 80 % of the Countries GDP

Already at the present Interest Rate, there are a huge number of NPL, with Car Loan NPL increasing some 30 % from the start of the Year and Thousands of other Loans being placed into Special Mention measures ( NPL with a high probability of default )

When you have to borrow, sometimes you are at the mercy of the lender. It's what loan sharking is all about, but it also applies to governments. When they have to borrow, they have to find someone to loan to them. If their spending is out of control, and debt to GDP ratio is high, then you can float your bonds, but no one buys them, and you lose control of your local rate. Thailand's government give-aways are not an encouraging signs that the government will live within its budget and it debt to GDP ratio is almost twice what it was when Yingluck was 'couped'. Prayut spent like a drunken sailor and Srettha doesn't look very much different. It lt looks to me like they are between a rock and a hard place and when they go to the market for a loan it might not be on terms that are as attractive as now, irrespective of NPLs. The lender isn't going to say "Oh your NPLs are sky high, so we'll give you a cut rate deal on your loan." Sorry, but rates follow risk if you have to borrow. 

[Gknrd]

Wish it would increase against the Mexican Peso... uggggg. My favorite place to spend the winter is now to expensive and many are leaving.  Dam% China, if they would have been happy with just getting rich and not wanting to rule the world then the factory's would not have started moving.  Now the construction and huge boom in re-shoring is making the Mexicans rich and the dollar is taking a huge beating..

Mexico is the next China, and it is getting very expensive...  Luckily it hasn't hit South America YET... But, it is coming.  I may have to eat my words and come back to SE Asia once China decoupling drives the cost up to much here in the west.

Edited September 6, 2023 by Gknrd

[Mavideol]

5 hours ago, lordgrinz said:

Soon as it hits B38 to the USD I will be buying more Baht ✌️

please let me know when as I will follow you 555... wishful thinking, the Baht is controlled/manipulated by the BoT

[isaanistical]

The OP's premise is nonsense. USD is NOT appreciating vs baht. Apart from that, it's fine.........  as usual.

[thailand49]

1 hour ago, Mavideol said:

please let me know when as I will follow you 555... wishful thinking, the Baht is controlled/manipulated by the BoT

I hope it does come true, but like you " controlled manipulated but those who live under a rock will soon tell you " Rubbish "  ????  will cut and paste you Economy 101 that isn't possible.

[connda]

It's been awhile since it was 38.84 

[fulhamster]

5 hours ago, koolkarl said:

The baht is grossly overvalued for numerous reasons and will depreciate a lot against the USD over time.

Been saying that for years now. The baht is pure Teflon

[fulhamster]

3 hours ago, Mavideol said:

please let me know when as I will follow you 555... wishful thinking, the Baht is controlled/manipulated by the BoT

I thought the US were looking at such claims ??

[Jelli]

Who dreams this up?

[lordgrinz]

3 hours ago, Mavideol said:

please let me know when as I will follow you 555... wishful thinking, the Baht is controlled/manipulated by the BoT

It hit 38.4 I think last year, I bought substantial amounts then, will buy again when it jumps.....creeping up right now, it's at 35.56 ????

[Mavideol]

16 hours ago, lordgrinz said:

It hit 38.4 I think last year, I bought substantial amounts then, will buy again when it jumps.....creeping up right now, it's at 35.56 ????

please tell us when it hit 38.++++++ as I don't want to miss it.... as you, I am always looking for the higher rate and buy a lot of baht, was lucky last year

[Mavideol]

16 hours ago, fulhamster said:

I thought the US were looking at such claims ??

they are still looking 555