Thai Baht Leads Decline as Asian Currencies Dip Amid Quiet Trade

[webfact]

 

Emerging Asian currencies faltered in today's holiday-thinned trade, with the Thai baht bearing the brunt of the decline. The US dollar's continued strength and mixed Chinese economic data have further exacerbated the downward trend.

 

Trade was notably subdued across Asia due to market closures in Singapore, Malaysia, Indonesia, the Philippines, and India. However, the Thai baht fell by up to 0.5%, influenced by weaker gold prices. The South Korean won and the Taiwan dollar also saw marginal decreases.

 

Poon Panichpibool, a market strategist from Krung Thai Bank, shed light on the situation. He stated, “For the Thai baht specifically, there could be some pressures from gold-related flows as gold prices have moved lower from Friday levels.”

 

Adding to the turmoil, Thailand is grappling with political uncertainties that could lead to the potential dismissal of the prime minister through an upcoming court case.

 

This political instability has compounded investor apprehensions, dragging down the country's currency and stock markets. Analysts from ANZ have pointed out that Thailand's assets are amongst the region’s worst performers this year.

 

Poon also flagged concerns about foreign fund outflows as political instability deters international investors. Despite the attractive valuations of Thai stocks and bonds, these assets remain less appealing due to the ongoing turmoil.

 

Meanwhile, the Chinese yuan held steady even though shares dropped by approximately 0.6%. Investors are still digesting weaker-than-expected economic data pointing to ongoing challenges in the property sector. Expectedly, the People's Bank of China left a key policy rate unchanged.

 

Globally, all eyes are on the upcoming US retail sales numbers for May, slated for release tomorrow. These figures are anticipated to provide further clues regarding the Federal Reserve’s future interest rate cuts this year. Recent Fed projections indicate a single rate cut within this year as per the median forecast from the 19 US central bankers.

 

Picture courtesy: The Star

 

-- 2024-06-18

 

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[timendres]

Wouldn't have anything to do with the new tax grab, I am sure...

[expat_4_life]

Bangkok Bank USD transfers, closing rate on Fri 36.59, opening rate on Mon 36.52 strengthening over the weekend.  Closing at 36.68 on Mon.

Not what I'd exactly characterize as a significant dip/decline 

[Gsxrnz]

Some manure is finally beginning to stick to the Teflon Thai Baht.

[hotchilli]

Possibly evicting the PM, and dissolving the only opposition party doesn't send out a strong message of stability to the rest of the world.

Thailands influentials are screwing the country while trying to protect themselves.

[Mike Lister]

I read this as being 20% financial markets related and 80% political.

[koolkarl]

With interest rates in Thailand far below US rates, the baht should have fallen off a cliff a long time ago.  Obviously they have a USD swap line which means the Thai central bank can sell dollars and buy baht at will thus propping up the baht.  Also the baht is a controlled currency which means you cannot buy or sell large amounts of baht and I am referring to millions.  The world still accepts fiat currency which is a joke itself.  It is no different than monopoly money.

[Mike Lister]

39 minutes ago, koolkarl said:

With interest rates in Thailand far below US rates, the baht should have fallen off a cliff a long time ago.  Obviously they have a USD swap line which means the Thai central bank can sell dollars and buy baht at will thus propping up the baht.  Also the baht is a controlled currency which means you cannot buy or sell large amounts of baht and I am referring to millions.  The world still accepts fiat currency which is a joke itself.  It is no different than monopoly money.

No, there is no currency swap in place with USD but there is a swap in place with RMB. BOT does however engage heavily in the futures market to an amount equal to almost 50% of their foreign currency reserves. It was this activity that caused the US Fed to label Thailand as a currency manipulator.

[Tropicalevo]

2 hours ago, hotchilli said:

Possibly evicting the PM, and dissolving the only opposition party doesn't send out a strong message of stability to the rest of the world.

Thailands influentials are screwing the country while trying to protect themselves.

And a dying economy, thanks to ignorance, does does not help either.

[hotchilli]

11 minutes ago, Tropicalevo said:

And a dying economy, thanks to ignorance, does does not help either.

Indeed, 20 years ago one could of said Thailand was an emerging economy in the Asian arena, now due to incompetence, corruption and blind greed it's a dying nation.

Those with the ability are leaving for foreign employment, others are struggling to work for shrinking factory work, those with no choice are joining the tourist supply chain, with the lower end of that being sex workers.

Thailands elite have shafted Thailand.

[Thingamabob]

3 hours ago, hotchilli said:

Possibly evicting the PM, and dissolving the only opposition party doesn't send out a strong message of stability to the rest of the world.

Thailands influentials are screwing the country while trying to protect themselves.

Evicting the current PM, good. Dissolving the MFP, bad.

[CharlieKo]

6 hours ago, timendres said:

Wouldn't have anything to do with the new tax grab, I am sure...

Absolutely nothing to do with the new tax grab. 

[BuddyPish]

2 hours ago, Mike Lister said:

No, there is no currency swap in place with USD but there is a swap in place with RMB. BOT does however engage heavily in the futures market to an amount equal to almost 50% of their foreign currency reserves. It was this activity that caused the US Fed to label Thailand as a currency manipulator.

Even if the US Treasury Department had the high moral ground to label anyone a currency manipulator (it doesn't), it wouldn't be for the reason most foreigners think.

Most foreigners, particularly those from Western countries, think the Thais prop up the baht, keeping it stronger than it should be and they bemoan the impact that has on the buying power of currencies they bring in.

 

Wrong

The US treasury believed that the Thais were keeping their currency too WEAK and using that to gain competitive advantage for Thailand's exports. If the yanks had their way, the USDTHB exchange rate would be closer to 26 than the near-37 it is now. I think foreigners would have far more to bitch about if the exchange rate went that way.

Worth remembering that the US is the greatest currency manipulator in the history of the world. It issued trillions of worthless government bills, notes and bonds to sell to creditors in return for paltry yields in order to artificially suppress interest rates during the decade of QE. 

[Mike Lister]

7 minutes ago, BuddyPish said:

Even if the US Treasury Department had the high moral ground to label anyone a currency manipulator (it doesn't), it wouldn't be for the reason most foreigners think.

Most foreigners, particularly those from Western countries, think the Thais prop up the baht, keeping it stronger than it should be and they bemoan the impact that has on the buying power of currencies they bring in.

 

Wrong

The US treasury believed that the Thais were keeping their currency too WEAK and using that to gain competitive advantage for Thailand's exports. If the yanks had their way, the USDTHB exchange rate would be closer to 26 than the near-37 it is now. I think foreigners would have far more to bitch about if the exchange rate went that way.

Worth remembering that the US is the greatest currency manipulator in the history of the world. It issued trillions of worthless government bills, notes and bonds to sell to creditors in return for paltry yields in order to artificially suppress interest rates during the decade of QE. 

You might want to read the article linked below, after which, read the following. The US Fed has long tried to pin the badge of "currency manipulator" on Thailand, mostly because their trade surplus with the US is so large:

 

https://www.cfr.org/article/tracking-currency-manipulation

 

 

[BuddyPish]

19 minutes ago, Mike Lister said:

You might want to read the article linked below,

 

 

Why?
It's unlikely to clash with what I said.

[Mike Lister]

1 minute ago, BuddyPish said:

Why?
It's unlikely to clash with what I said.

Because you might find it interesting and useful, given we have similar interests in this topic. But if you don't wish to and you already know everything, don't, it's up to you.

[John Drake]

Wait until the digital wallet finally gets going and then watch the waterfall in the baht exchange rate.

[Eric Loh]

On 6/18/2024 at 3:12 AM, webfact said:

Globally, all eyes are on the upcoming US retail sales numbers for May, slated for release tomorrow. These figures are anticipated to provide further clues regarding the Federal Reserve’s future interest rate cuts this year. Recent Fed projections indicate a single rate cut within this year as per the median forecast from the 19 US central bankers.

 

Retail sales rose less than expected in May increasing by 0.1% v 0.2%. Offers an insight into the weakening of consumer spending and slowing economy which will prompt Federal Reserve to begin lowering interest rate in September. Baht will gain with the anticpated rate cut.