Baht becoming ridiculously strong

[FritsSikkink]

54 minutes ago, Cameroni said:

 

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.

No

[FritsSikkink]

1 hour ago, chiang mai said:

It's entirely true and correct.

Haven't studied Economics much, have you.

[Cameroni]

2 minutes ago, FritsSikkink said:

Haven't studied Economics much, have you.

 

Haven't traded much FOREX, have you?

[FritsSikkink]

3 minutes ago, Cameroni said:

 

Haven't traded much FOREX, have you?

Trading FOREX doesn't explain how world economics work.

[Cameroni]

2 minutes ago, FritsSikkink said:

Trading FOREX doesn't explain how world economics work.

 

Yes it does. 

 

I thought you were clueless about FOREX. Thanks for confirming it.

[chiang mai]

9 minutes ago, FritsSikkink said:

Haven't studied Economics much, have you.

Far more than most. But the issue is FOREX, not global economics.

Edited September 6 by chiang mai

[chiang mai]

As noted earlier:

 

 

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

[FritsSikkink]

3 minutes ago, chiang mai said:

Far more than most. But the issue is FOREX, not global economics.

The issue is the THB against multiple currencies, not just trading with 2 currencies.

[chiang mai]

Just now, FritsSikkink said:

The issue is the THB against multiple currencies, not just trading with 2 currencies.

 

[KhaoTakiab]

2 hours 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.

This explanation is indeed very simple, and completely wrong.

All currencies fluctuate compared to all currencies. 

The USD and the EUR can both decrease in value while JPY and CHF increase. 

Here it is pretty well explained:

https://www.stonex.com/en/financial-glossary/currency-fluctuation/#:~:text=Exchange rates fluctuate due to,sentiment%2C and global economic conditions.

[Jerry777]

I don't think anyone commenting here understands what the hell is going on with this.

[FritsSikkink]

4 minutes ago, chiang mai said:

 

From the OP:

"Most often, it is changes in those underlying economic factors that cause the currency to be more or less heavily traded. Underlying economic factors include the current and forecast state of a country’s economy, government (or public) debt levels (not consumer debt), capital (in and out) flow, money supply, inflation levels and interest rates, amongst other things."

[Jerry777]

1 minute ago, Jerry777 said:

I don't think anyone commenting here understands what the hell is going on with this.

Added, if it keeps going this direction I will not be able to afford to be retired here much longer.

[chiang mai]

2 minutes ago, FritsSikkink said:

From the OP:

"Most often, it is changes in those underlying economic factors that cause the currency to be more or less heavily traded. Underlying economic factors include the current and forecast state of a country’s economy, government (or public) debt levels (not consumer debt), capital (in and out) flow, money supply, inflation levels and interest rates, amongst other things."

Also from the OP:

 

"THB is a very small boutique currency that represents less than 0.5% of daily FOREX volume, consequently, it doesn’t take much volume to change its value." 

 

Do you have a point you wish to make or not?

[Cameroni]

3 minutes ago, KhaoTakiab said:

The USD and the EUR can both decrease in value while JPY and CHF increase.

 

Lol, of course the JPY and CHF would increase in value if the USD decreases.

 

Good job, you're starting to understand how this works.

 

 

[John Drake]

Well, one thing. Now that the baht is stronger, imports of things like foreign food will be cheaper. That block of imported cheese that went from 169 baht before Covid to 239 baht today will drop significantly. Right? Right? Right?

[FritsSikkink]

1 minute ago, chiang mai said:

Also from the OP:

 

"THB is a very small boutique currency that represents less than 0.5% of daily FOREX volume, consequently, it doesn’t take much volume to change its value." 

 

Do you have a point you wish to make or not?

Yes, that you don't understand economics and only look at it as a FOREX trader between 2 currencies.

[chiang mai]

1 minute ago, FritsSikkink said:

Yes, that you don't understand economics and only look at it as a FOREX trader between 2 currencies.

I have never traded FOREX in my life.

[Cameroni]

Just now, FritsSikkink said:

Yes, that you don't understand economics and only look at it as a FOREX trader between 2 currencies.

 

If you want to know what people don't know about economics, you ask an economist. If you want to know how the economies of the world actually work you ask a FOREX trader. 

 

You can't trade Forex, unless you have an excedllent understanding of the fundamental underlying economic factors that affect currencies. 

 

 

[KhunLA]

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  ??

Uncertainty in USA economy & politics.   Has nothing to do with TH ... IMHO

 

 

 

 

 

[Cameroni]

The baht is expected to strengthen against the greenback this week.... This appreciation is largely driven by the weakening dollar, which has been impacted by the US Federal Reserve's signal of a potential rate cut next month.

 

https://www.bangkokpost.com/business/general/2854218/baht-set-to-rise-against-the-dollar

 

 

The weaker dollar played a role as well. U.S. Federal Reserve Chair Jerome Powell on Friday endorsed a September rate cut.

 

"This led investors to buy back a wide range of Asian currencies, including the baht," said Takahiro Hori at Mizuho Bank.

 

https://asia.nikkei.com/Business/Markets/Currencies/Thai-baht-hits-13-month-high-against-dollar-on-economic-hopes

Edited September 6 by Cameroni

[chiang mai]

1 minute ago, KhunLA said:

Uncertainty in USA economy & politics.   Has nothing to do with TH ... IMHO

 

 

 

 

 

The world awaits the US jobs report, due out today. That will point towards the size of the cut the Fed is likely to make to US interest rates. If it is larger and sooner than previously thought, USD will weaken further and the value of THB will rise. Markets are currently factoring a bigger rate cut sooner.

[Cameroni]

Bank of Thailand Governor Sethaput Suthiwartnarueput said on Wednesday that the baht was appreciating fast due to the depreciating US dollar and the rising price of gold.

 

https://www.nationthailand.com/business/economy/40040983

 

So the Governor of the Bank of Thailand knows nothing about economics, Frits? Perhaps you want to call him up and enlighten him on economics, Frits?

 

[jas007]

Multiple factors involved.  There’s not much sense worrying too much about it, other than to note typical trading ranges.  I get US dollars, so that alone is enough to concern me somewhat.  We’re looking at lower interest rates a weaker dollar and continued fiscal irresponsibility.  And to top it all off, some, people are looking for a less than peaceful change of power. The country has been flooded with millions of so-called asylum seekers, and National Guard troops are now policing the NYC subway system, or at least that’s the official seas to why they’re there.

 

Supposedly, if there’s to be a decline in the value of the dollar, that decline will be gradual. It’s still the world reserve currency and for now, there’s no replacement in sight.  

 

[KhunLA]

USD-THB has been 30 to 35 for the past 19 years.  Rarely does it dip below 30 or above 35 and it doesn't last long.

Edited September 6 by KhunLA

[Etaoin Shrdlu]

The Federal Reserve manages interest rates to influence the US domestic economy. When inflation is high, the Fed tends to increase interest rates. If economic stimulus is needed, it cuts them. These changes affect the rate at which the dollar trades against other currencies as capital will flow towards the higher returns provided by the higher interest rate. Central banks in other countries do the same. The comparative changes/differences between interest rates drive foreign exchange fluctuations.

 

In other words, certain economic situations drive central bank decisions on interest rates, which in turn drive exchange rates. Yes, this is a bit of a simplification as there can be other factors involved as well, but this is usually the main driver.

[FritsSikkink]

41 minutes ago, Cameroni said:

Bank of Thailand Governor Sethaput Suthiwartnarueput said on Wednesday that the baht was appreciating fast due to the depreciating US dollar and the rising price of gold.

 

https://www.nationthailand.com/business/economy/40040983

 

So the Governor of the Bank of Thailand knows nothing about economics, Frits? Perhaps you want to call him up and enlighten him on economics, Frits?

 

Compare the stats of THB against 10 different currencies and you don't see the same graphs.

You can help yourself to keep comparing only 2 currencies. 

[chiang mai]

Of course there are currency exceptions. AUD for example is a proxy for the Chinese economy because China is Australia's biggest export market hence AUD doesn't track USD.  Similarly, CAD depends on the US for oil which it pays for in dollars, for that reason CAD doesn't fall just because USD did, in some instances it rises. When you compare THB against those currencies you see a different profile than you do against USD.

[Cameroni]

1 hour ago, John Drake said:

Well, one thing. Now that the baht is stronger, imports of things like foreign food will be cheaper. That block of imported cheese that went from 169 baht before Covid to 239 baht today will drop significantly. Right? Right? Right?

 

It could be, though potentially the supermarket may pocket the difference. If you come across anything related to Boursin let me know.

[Cameroni]

18 minutes ago, chiang mai said:

Of course there are currency exceptions. AUD for example is a proxy for the Chinese economy because China is Australia's biggest export market hence AUD doesn't track USD.  Similarly, CAD depends on the US for oil which it pays for in dollars, for that reason CAD doesn't fall just because USD did, in some instances it rises. When you compare THB against those currencies you see a different profile than you do against USD.

 

Yes, hence USD/CAD is known as the "loony" the currency pair that does what it wants.