Baht becoming ridiculously strong

[fulhamster]

Can some of the experts on here please explain in layman's terms how the baht has got so strong in the last week or so ?  With all the political manouverings and sky high household debt, how has is moved from close to 37 / USD to today's level of 33.5  ??

[MalcolmB]

So my 800,000 baht in my retirement visa fund has gone up in value even more.

 

Thankyou Thailand! 

probably because we have Thaksin back in charge I am guessing?

[msbkk]

Increased sentiment because a new government will start to work. Funds flowing into the Thai Stock Exchange. Hope of decreasing interest rates in the US weaken the USD.

[Raindancer]

Just doesn't make sense to me.

 

In simplistic terms, tourists get less for their exchange currency.   So, their spending power is less.

 

Exports cost more to other countries,  because they actually pay more for the same items, than when the exchange rate was more in their favour.

 

Or are those thought incorrect?

[Berkshire]

As is usually the case, the currency exchange rate has more to do with your home countries rather than Thailand.  In my case, the US is set to start lowering interest rates....which will inherently make the USD weaker.  There are other dynamics at play as well, including how much foreign capital is coming into the country by way of FDI and other investments. 

[gamb00ler]

About ½ of the US$ vs THB movement for the last 6 months is due to a weaker US $.  Look at chart for USDX.

https://www.marketwatch.com/investing/index/dxy/charts

[John Drake]

Some rich Thai elites want to buy things for themselves abroad, such as houses for their offspring paying tuition in foreign currency at expensive schools, sports teams they want to own, and probably a buyout of some expensive Western company.

[Cameroni]

21 minutes ago, fulhamster said:

Can some of the experts on here please explain in layman's terms how the baht has got so strong in the last week or so ?  With all the political manouverings and sky high household debt, how has is moved from close to 37 / USD to today's level of 33.5  ??

 

It's very simple. All the currencies of the world are valued against the dollar. If the dollar is strong, the other currency falls. If the dollar is weak, the other currency goes up, unless there are very particular reasons that prevent this. At the moment it is absolutely clear that the Fed will weaken the dollar, because they have said so and given big hints this will happen. They will cut interest rates, so this will weaken the dollar.

 

As a result the dollar is weakening at the moment. Therefore the Baht is going up. 

 

This will get worse, because when the interests rates are cut the dollar will fall more, so the Baht will go up further.

[harryviking]

My national currency is falling. That of course means Thai Baht is getting more expensive!! That again mean Thailand is suddenly not so interesting anymore....

[John Drake]

14 minutes ago, MalcolmB said:

So my 800,000 baht in my retirement visa fund has gone up in value even more.

 

Thankyou Thailand! 

probably because we have Thaksin back in charge I am guessing?

 

The 800,000 you can't touch until you leave the country, which will just sit there otherwise until you die?  Meanwhile, what about the money you're bringing into Thailand in order to live on that retirement visa? That's going down. You're losing both ways.

[Raindancer]

1 minute ago, Cameroni said:

 

It's very simple. All the currencies of the world are valued against the dollar. If the dollar is strong, the other currency falls. If the dollar is weak, the other currency goes up, unless there are very particular reasons that prevent this. At the moment it is absolutely clear that the Fed will weaken the dollar, because they have said so and given big hints this will happen. They will cut interest rates, so this will weaken the dollar.

 

As a result the dollar is weakening at the moment. Therefore the Baht is going up. 

 

This will get worse, because when the interests rates are cut the dollar will fall more, so the Baht will go up further.

Thank you.  Simple and easy to understand explanation.  Makes sense now. 

[gearbox]

26 minutes ago, fulhamster said:

Can some of the experts on here please explain in layman's terms how the baht has got so strong in the last week or so ?  With all the political manouverings and sky high household debt, how has is moved from close to 37 / USD to today's level of 33.5  ??

You mean the American toilet paper got cheaper? Have you had a look at your budget deficit? No wonder everyone is buying gold...looks like on its way to 3000.

[Pouatchee]

44 minutes ago, fulhamster said:

With all the political manouverings and sky high household debt, how has is moved from close to 37 / USD to today's level of 33.5  ??

 

i agree with you. though some here like @BuddyPish would tell you if you depend on a good exchange rate go back home. havent seen him insulting anyone lately thogh... he'll be along shortly

[Patong2021]

24 minutes ago, Cameroni said:

 

It's very simple. All the currencies of the world are valued against the dollar. If the dollar is strong, the other currency falls. If the dollar is weak, the other currency goes up, unless there are very particular reasons that prevent this. At the moment it is absolutely clear that the Fed will weaken the dollar, because they have said so and given big hints this will happen. They will cut interest rates, so this will weaken the dollar.

 

As a result the dollar is weakening at the moment. Therefore the Baht is going up. 

 

This will get worse, because when the interests rates are cut the dollar will fall more, so the Baht will go up further.

 

Nice theory, but only one of the factors involved. Almost every currency has dropped in value compared to the baht. The Russian Rouble, Chinese Yuan, Korean Won, Japanese Yen,  as well as the Australian $, Canadian $,  UK Pound and Euro have all shown a similar drop in value compared to the Thai baht. 

 

Canada, the UK  have cut their reserve bank rates too  and both have shown an increase in value against the USD.  Australia's rate has remained  steady , but  has been below  the UK and Canada rate so a rate cut isn't expected because of  international forces.

 

Thailand is sitting on a growing current account surplus and its booming tourism industry has brought in foreign money. 2 years ago, there were no tourists and the Thai government cut back on many expenditures to keep a  functioning economy. Now those tourism revenues are back. Thailand is sitting on  a Scrooge McDuck worthy foreign reserve.

 

 

 

[LosLobo]

28 minutes ago, John Drake said:

 

The 800,000 you can't touch until you leave the country, which will just sit there otherwise until you die?  Meanwhile, what about the money you're bringing into Thailand in order to live on that retirement visa? That's going down. You're losing both ways.

I am losing three ways!

Besides my 800k and pension payment for my monthly living expenses, my pension is reduced by the value of my assets and my Thai assets just increased by 10% 😞

[FritsSikkink]

53 minutes ago, Cameroni said:

 

It's very simple. All the currencies of the world are valued against the dollar. If the dollar is strong, the other currency falls. If the dollar is weak, the other currency goes up

Not true, currency of countries are based on economic values within that country. 

Dollar goes down, Euro could go down too.

[FritsSikkink]

54 minutes ago, Raindancer said:

Thank you.  Simple and easy to understand explanation.  Makes sense now. 

Sadly it isn't a correct explanation as it leaves out many other factors.

[chiang mai]

3 minutes ago, FritsSikkink said:

Not true, currency of countries are based on economic values within that country. 

Dollar goes down, Euro could go down too.

It's entirely true and correct.

[KhunBENQ]

Next month a new central bank chairman will be appointed.

There is an ongoing dispute between the new government and the BoT that keeps interest rate high,

Let's hope things change to the better for us.

I don't share the optimistic view on the state of the Thai economy.

[Cameroni]

46 minutes ago, Patong2021 said:

 

Nice theory, but only one of the factors involved. Almost every currency has dropped in value compared to the baht. The Russian Rouble, Chinese Yuan, Korean Won, Japanese Yen,  as well as the Australian $, Canadian $,  UK Pound and Euro have all shown a similar drop in value compared to the Thai baht. 

 

Canada, the UK  have cut their reserve bank rates too  and both have shown an increase in value against the USD.  Australia's rate has remained  steady , but  has been below  the UK and Canada rate so a rate cut isn't expected because of  international forces.

 

Thailand is sitting on a growing current account surplus and its booming tourism industry has brought in foreign money. 2 years ago, there were no tourists and the Thai government cut back on many expenditures to keep a  functioning economy.  Thailand is sitting on  a Scrooge McDuck worthy foreign reserve.

 

 

Australia's interest rates have not been cut because Australians are already paying an increase in the cash rate from 0.1% to 4.35%  which has meant Australians are now paying on average in real terms almost as much on interest repayments as they were in June 2008 – when the cash rate was 7.25%:

 

https://www.theguardian.com/business/grogonomics/article/2024/sep/05/australia-economy-gdp-growth-rba-interest-rates

 

The British pound has increased in value because the Dollar is weakening. There are also other reasons such as the Bank of England being very slow to cut interest rates, and also the Pound's performance now is a rebound from years of underperformance after Brexit.

 

Your statement that the Japanese Yen has fallen against the Baht in the same way as the Euro, Pound etc, is simply false. Anyone can look at the chart of the JPY/THB and see that you are wrong.

 

If you don't think the Baht's performance is related to the Dollar, you may want to consider this statement by Kanjana Chockpisansin, head of research, banking and the financial sector at Kasikorn Research Center (K-Research):

 

"The baht has quickly gained strength amid continued fund inflows as the market is convinced the Fed will cut rates in September," said Kanjana Chockpisansin, head of research, banking and the financial sector at Kasikorn Research Center (K-Research)"

 

https://www.bangkokpost.com/business/general/2851417/baht-poised-to-reach-34-to-the-greenback#:~:text="The baht has quickly gained,Center (K-Research).

 

So looks my "nice theory" is shared by the head of research banking and the financial sector at Kasikorn Bank.

 

Okay then.
 

 

 

[Cameroni]

11 minutes ago, FritsSikkink said:

Not true, currency of countries are based on economic values within that country. 

Dollar goes down, Euro could go down too.

 

Hence my qualification "...unless there are very particular reasons that prevent this".. There can of course be anomalies caused by particular circumstances, but in the absence of those the general rule is that when the Dollar falls other currencies go up.

[chiang mai]

3 minutes ago, Cameroni said:

 

Australia's interest rates have not been cut because Australians are already paying an increase in the cash rate from 0.1% to 4.35%  which has meant Australians are now paying on average in real terms almost as much on interest repayments as they were n June 2008 – when the cash rate was 7.25%:

 

https://www.theguardian.com/business/grogonomics/article/2024/sep/05/australia-economy-gdp-growth-rba-interest-rates

 

The British pound has increased in value because the Dollar is weakening. There are also other reasons such as the Bank of England being very slow to cut interest rates, and also the Pound's performance now is a rebound from years of underperformance after Brexit.

 

Your statement that the Japanese Yen has fallen against the Baht in the same way as the Euro, Pound etc, is simply false. Anyone can look at the chart of the JPY/THB and see that you are wrong.

 

If you don't think the Baht's performance is related to the Dollar, you may want to consider this statement by Kanjana Chockpisansin, head of research, banking and the financial sector at Kasikorn Research Center (K-Research):

 

"The baht has quickly gained strength amid continued fund inflows as the market is convinced the Fed will cut rates in September," said Kanjana Chockpisansin, head of research, banking and the financial sector at Kasikorn Research Center (K-Research)"

 

https://www.bangkokpost.com/business/general/2851417/baht-poised-to-reach-34-to-the-greenback#:~:text="The baht has quickly gained,Center (K-Research).

 

So looks my "nice theory" is shared by the head of research banking and the financial sector at Kasikorn Bank.

 

Okay then.
 

 

 

Brits should be aware that the value of GBP/THB is calculated from USD/THB and GBP/USD, there is no direct GBP/THB rate, instead it is a cross rate. That means that if USD falls and GBP rises as a result, the impact on GBP/THB is less than the impact on USD/THB.

[Cameroni]

2 minutes ago, chiang mai said:

Brits should be aware that the value of GBP/THB is calculated from USD/THB and GBP/USD, there is no direct GBP/THB rate, instead it is a cross rate. That means that if USD falls and GBP rises as a result, the impact on GBP/THB is less than the impact on USD/THB.

 

Exactly right, you have to understand how currencies are related to understand foreign exchange rates, good point.

[realfunster]

1 hour ago, msbkk said:

Increased sentiment because a new government will start to work. Funds flowing into the Thai Stock Exchange. Hope of decreasing interest rates in the US weaken the USD.

 

1) Doubtful 🙂 

2) Possible

3) Likely - the US economy still makes the world go round and most currencies dance to their tune. I think around 2% Fed cut is priced in to most market/economic projections over the next year and I'd be extremely shocked if they don't start cutting this month.

 

There was a big blow up on markets a couple of weeks ago when the Japanese central bank raised interest rates which caused a lot of unwinding of certain positions where I understand institutions had borrowed in JPY at around 0% and then invested in USD or others at 5%+ (aka "carry trade').

 

Above my pay grade but the Japanese interest rate increase seemed to cause some major global market and currency wobbles.

[impulse]

How is the price of gold in Thai shops?

 

[CharlieKo]

2 hours ago, fulhamster said:

Can some of the experts on here please explain in layman's terms how the baht has got so strong in the last week or so ?  With all the political manouverings and sky high household debt, how has is moved from close to 37 / USD to today's level of 33.5  ??

It's not that the Baht is getting stronger. It's the USD that is getting weaker in Value, pushing up the value of weaker currencies like the Baht.

[david555]

37,28 Thai baht for 1 Euro  say's Google just now a minute ago
😔

Not so long ago he was worth 39,53 on his highest point.....

[Captain Monday]

1 hour ago, John Drake said:

 

The 800,000 you can't touch until you leave the country, which will just sit there otherwise until you die?  Meanwhile, what about the money you're bringing into Thailand in order to live on that retirement visa? That's going down. You're losing both ways.

You know that, just sitting there as dead money. Too much hassle to draw down to 400k for a few months

 

2008 to early 2010s  I was getting a nifty interest rate on BKK bank fixed accounts US CD not worth the bother

 

Been enjoying flipping CDs online ar Schwab for the past year or at around 5 percent. 

 

The exchange rate no different, about 34 to the dollar.

 

Thailand Yeah!

[ukrules]

1 hour ago, Cameroni said:

 

It's very simple. All the currencies of the world are valued against the dollar. If the dollar is strong, the other currency falls. If the dollar is weak, the other currency goes up, unless there are very particular reasons that prevent this. At the moment it is absolutely clear that the Fed will weaken the dollar, because they have said so and given big hints this will happen. They will cut interest rates, so this will weaken the dollar.

 

As a result the dollar is weakening at the moment. Therefore the Baht is going up. 

 

This will get worse, because when the interests rates are cut the dollar will fall more, so the Baht will go up further.

 

Correct, it's charted and known as the DXY, here you can see the decline of the USD since April and June

 

https://www.tradingview.com/chart/?symbol=TVC%3ADXY

 

 

 

[Cameroni]

2 minutes ago, ukrules said:

 

Correct, it's charted and known as the DXY, here you can see the decline of the USD since April and June

 

https://www.tradingview.com/chart/?symbol=TVC%3ADXY

 

 

 

The decline of the Dollar index coincidentally almost exactly happening druing the period when the Baht rose. What a shock.