Another dip for the baht or are economic danger signals flashing for both Thailand and the world?

[webfact]

The business community, despite its leadership cooperating with the new government and Prime Minister Srettha Thavisin, increasingly fears its policies of accepting a higher public debt level and wages to spur growth as it may not work in a world economic downturn caused by the rising cost of money as financial markets, primarily based in the United States, have become risk averse leading to higher yields on US ten year bonds feeding into similar rises for Thai instruments.

On Tuesday, Srettha Thavisin pointed to the declining baht saying that the Bank of Thailand was monitoring the situation and that it would help boost Thai exports and tourism. The baht has fallen 7% this year but is still higher than the rates set in October 2022 with Bangkok analysts suggesting that although it may fall to ฿37.55 to the dollar in the weeks ahead, but then recover with the High Season for foreign tourism, to anywhere between ฿35 and ฿36 by the end of 2023. However, could this year be different? In the last week alone, Thailand’s 10-year bond yields have risen 4.57% amid a similar surge in the United States as markets have become wary of risk. This will make the government’s contentious expansionary stimulus plans for the economy more expensive in a darkening economic environment with an implosion of the Chinese economy and market scepticism about Pheu Thai’s expansionary policies at a time when world economic danger signals are flashing.

 

The Thai Baht, on Wednesday, ended up at ฿37.05 to the dollar after a week in which the currency hit a ten-month low against the dollar, driven, in part, by signs of a rift between the government and the Bank of Thailand regarding the Kingdom’s economic policy and more significantly, rising bond yields in the United States which are driving up the value of the US dollar significantly.

 

by Joseph O' Connor

 

Full story: Thai Examiner.com 2023-10-05

 

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[RichardColeman]

The issue really is not the Thai baht weakening but the crazy over-inflated dollar rising due to USA debt and short term returns on USA yields. 

 

The USA stock market has pretty much been in decline since 13th September , reflecting almost a mirror image of the rise/decline Thai baht against the dollar since the same date - mostly again due to crazy returns on usa debt.

 

Yesterday the US stock market went up a little - so I wold expect the baht to gain strength against the dollar today - unless there is more bad news on Chinese being put off by Thai gun violence 

[hotchilli]

Keep sliding... 

[Skipalongcassidy]

1 minute ago, hotchilli said:

Keep sliding... 

Stupid much... you do realize that you will get more baht in exchanging money and that the gain plus some will be eaten up by higher prices... inflation will always outpace the currency.

[CartagenaWarlock]

1 hour ago, RichardColeman said:

The USA stock market has pretty much been in decline since 13th September

In the first half of the year, I have made 20% gains in some index funds and, of course, they are down now 7%  but still the return is 13% YTD. Bond yield has risen significantly and the dollar is away from equities world wide in search of a safe heaven in the time of equity market turmoil. 

[jippytum]

. Phu thai to ensure the safe return of de facto leader Thaksin promised to pay every citizen 10,000baht. Now they are going to borrow the money they don't have. Some 560Billion Baht the country can ill afford from the Government Savings Bank. That is the reason the Baht is in trouble and  foreign investors are exiting Thailand. 

When you are seeking election  candidates usually promise policies to help the economy not bankrupt it. 

[Elkski]

China isn't going to return in numbers in the next 8 months.   Tourism numbers are actually pretty high for the 9 months so far but still hurting? 

[KhunLA]

Haven't a clue myself.   But many thought the THB was controlled by TH selling off it's USD reserve.  Maybe after almost a decade of generals running (pillaging) the coffers, along with mega project cost, that reserve is dwindling.

 

Or it's simply a free market (as much as allowed)  adjusting itself back to reality.   It went from a steady/controlled 25 to 50 almost overnight (1997), to 40 when I got here (2000), to <30 a few time, then stayed basically 30-35 for the past 15 ish years.  

 

Occasionally breaking 35 level, as now, but will it keep going back to 40?  Would be nice, though I suspect not, and back to 35 or less again.

[soalbundy]

2 hours ago, RichardColeman said:

The issue really is not the Thai baht weakening but the crazy over-inflated dollar rising due to USA debt and short term returns on USA yields. 

 

The USA stock market has pretty much been in decline since 13th September , reflecting almost a mirror image of the rise/decline Thai baht against the dollar since the same date - mostly again due to crazy returns on usa debt.

 

Yesterday the US stock market went up a little - so I wold expect the baht to gain strength against the dollar today - unless there is more bad news on Chinese being put off by Thai gun violence 

If one listens to Youtube programs from financial experts and analysts it is gloom and doom for some time to come. The west, especially America, have national debt levels that can never be paid back and the interest paid on these debts are taking a sizable chunk out of the economy and yet the borrowing continues, the high yields on government bonds reflects the nervousness of Investors. The housing market is about to collapse big time and the stock market is going into decline. All the financial charts show similarities with those of the great depression, the Fed soothes with statements of a soft landing while all the major investment houses, JP Morgen, Black rock et al are forecasting the biggest crash in history. With China's demise there is no cart left in the world that can pull us out of the quick sand, everything is going down worldwide simultaneously. Those of us on fixed incomes are powerless.

[Walker88]

There are short term and longer term trends that bode poorly for the world economy.

 

There is about $300,000,000,000,000 of debt in the world. The US has the highest Federal Debt, but as a % of GDP or revenue vs debt service, the US isn't even close. The country with the worst debt service ratio---by far---is Japan.

 

The world is awash in capacity. China added more steel-making capacity since 2012 than existed on Earth before 2012. Is another China going to be built somewhere requiring all that steel capacity?

 

Household debt in most developed countries is massive.

 

AI is going to obviate more and more jobs, including plenty of white collar jobs. Countries are going to have to provide for more and more redundant workers, and this at a time when sovereign debt is already stretched to the limit.

 

Populations in most developed countries are shrinking. Equity valuations are based on, inter alia, growth. Where is growth going to come from if populations are shrinking? The entire world economy and social programs have been constructed based on an assumption that population will always grow and age distribution is a normal pyramid shape. Now the pyramids are inverting.

 

People used to wonder if we'd have inflation or deflation. To put that in Biblical terms, is it "assets to ashes or debts to dust"?  Given declining populations but increasingly limited resources, I suspect the world we will see is deflation in assets but inflation in necessities like energy and food.

 

 

 

 

[webfact]

Thai baht hits new low against US dollar amid gold price drop
by Alex Morgan

 

Photo by energepic taken from Pexels

 

The 2023 financial year has seen the Thai baht rank as one of the region’s poorest performing currencies, depreciating to a low of 37.14 to the US dollar on Tuesday – a level not seen since November of the previous year.

 

The recent plummet in gold prices, with a decline of around 5% or US$7.45 (274.65 baht) per ounce, has prompted increased demand for dollars for gold purchases, further weakening the Thai currency.

 

Year-to-date, the baht has lost nearly 6.8% of its value, falling from its end-of-year position of 34.61 baht against the US dollar. This places the Thai currency as the third-worst performer this year, preceded only by the yen and Korean won, which have weakened by 12% and 7.7% respectively.

The Malaysian ringgit has also seen a similar depreciation trend to the baht, falling approximately 6.8%.

Kanjana Chockpisansin, head of research at Kasikorn Research Center (K-Research), made known that the depreciation since August, when the new government took office, saw the decline speed up more than other currencies in the region.

 

K-Research has subsequently downgraded its outlook for the Thai exchange rate to 37.55 baht to the dollar, a slip from 36.60 baht. This revision came after the baht fell past 37 to the greenback on Tuesday morning.

 

Full story: The Thaiger 2023-10-05

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

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[connda]

4 hours ago, hotchilli said:

Keep sliding... 

No complaints here.

[connda]

32 minutes ago, webfact said:

The recent plummet in gold prices, with a decline of around 5% or US$7.45 (274.65 baht) per ounce

That's not a "plummet."  That's fluctuation. 

[Purdey]

May be misleading to note the fall took place when the new government entered. They haven't had time to mess it up yet. Reports they want to borrow billions from the GSB implies they never really thought how they will pay for 10,000 Baht giveaways though...

[RichardColeman]

3 hours ago, Purdey said:

Reports they want to borrow billions from the GSB implies they never really thought how they will pay for 10,000 Baht giveaways though...

Add to that they recently said no more military stuff and I think the new government are seeing the hole the last lot left - have to say thailand is like the USA, living well beyond its means 

[xtrnuno41]

Ah bad news for "my" country and others.

They have, allegedly, only abroad 410 tons of gold in a basket and then some, 190 tons,  here. And they sold in the 9-ties 1100 tons!! Never saw anything of it.

Probably all wasted on EU forming, buildings and new buildings government.

In WW2, 61 tons were robbed by the Germans and is in Switzerland.

Can we have it back please?

How much would it cost to guard all that gold? 100 million/year/country?

IMF holds 2800 tons of gold, not stated from whom that gold eventually is. It is just stalled there. 

Of course USA is the biggest in gold reserve.

Off course merely of the gold would have been stolen in the past from other countries.