Rising Baht Sparks Fears of Another 'Tom Yam Kung' Crisis

[webfact]

 

Thailand - Prachai Leophairat, CEO of TPI Polene Public Company Limited, expressed concern over the rising value of the Thai baht and its potential economic impact, drawing parallels to the 1997 "Tom Yam Kung" crisis.

 

Prachai outlined 11 key risks associated with the strong baht. He emphasized that if the U.S. dollar's interest rate falls while Thailand's baht interest rate rises, the baht will appreciate.

 

A 10% increase in the baht’s exchange rate combined with a 10% decrease in the dollar will raise production costs by 20%. This cost hike would make Thai products 20% more expensive than competitors, leading to a decline in primary goods and forcing secondary and tertiary industries to halt production.

The potential consequences include:

 

1. Factory closures
2. Rising unemployment
3. Reduced consumer spending
4. Halted industrial investments
5. Increased household and business debt
6. Higher bank loan costs due to rising bad debt reserves
7. Banks limiting loans to struggling businesses
8. Reduced government tax revenues and budget cuts
9. Lower government spending
10. A shrinking GDP
11. Declining foreign currency reserves
     

Prachai warned that if exports don't increase and factories continue to close, Thailand might face a shortage of foreign currency reserves. This could lead to a repeat of the 1997 crisis, leaving the country vulnerable to foreign exploitation of its assets, reported Naew Na.

 

Top: FILE photo

 

-- 2024-09-30

 

 

[timendres]

1 hour ago, webfact said:

leaving the country vulnerable to foreign exploitation of its assets

 

The US (and friends) formula at its core.

 

Thailand needs to capture as much of the manufacturing leaving China as possible.

This would help close some gaps.

[scubascuba3]

Importing from China even cheaper, 📉 Thai jobs down

[chrisbangkok]

1 hour ago, timendres said:

 

The US (and friends) formula at its core.

 

Thailand needs to capture as much of the manufacturing leaving China as possible.

This would help close some gaps.

It's consistently failed to capture that opportunity as the leader focus is only inward facing and reliant on tourism .

Vietnam has stolen the March on that and Thailand struggles to create meaningful strategy and conditions for manufacturing industries .

The Thai banking system is all about flooding easy loans and high debts thus ensuring it can repossess and sell on at 50% value and maintaining the rich elite

The baht value is set as they wish , it's not tied to any other currency rather a tool of that elite .

Forget manufacturing in Thailand. 

[chilli42]

2 hours ago, webfact said:

He emphasized that if the U.S. dollar's interest rate falls while Thailand's baht interest rate rises, the baht will appreciate.

Mystical insight to the unknowable fluctuations of currency. Truly a giant of economic thought.

[ChasingTheSun]

Nothing to see here folks.

 

Typical exporters cribbing when the baht is strong, but silent as they gorge on a weak baht.

 

The baht is just slightly stronger vs USD on a ten year average.

 

 

 

 

 

 

Edited Sunday at 10:02 PM by ChasingTheSun

[Danderman123]

2 hours ago, webfact said:

 

Thailand - Prachai Leophairat, CEO of TPI Polene Public Company Limited, expressed concern over the rising value of the Thai baht and its potential economic impact, drawing parallels to the 1997 "Tom Yam Kung" crisis.

 

Prachai outlined 11 key risks associated with the strong baht. He emphasized that if the U.S. dollar's interest rate falls while Thailand's baht interest rate rises, the baht will appreciate.

 

A 10% increase in the baht’s exchange rate combined with a 10% decrease in the dollar will raise production costs by 20%. This cost hike would make Thai products 20% more expensive than competitors, leading to a decline in primary goods and forcing secondary and tertiary industries to halt production.

 

The potential consequences include:

 

1. Factory closures
2. Rising unemployment
3. Reduced consumer spending
4. Halted industrial investments
5. Increased household and business debt
6. Higher bank loan costs due to rising bad debt reserves
7. Banks limiting loans to struggling businesses
8. Reduced government tax revenues and budget cuts
9. Lower government spending
10. A shrinking GDP
11. Declining foreign currency reserves
     

Prachai warned that if exports don't increase and factories continue to close, Thailand might face a shortage of foreign currency reserves. This could lead to a repeat of the 1997 crisis, leaving the country vulnerable to foreign exploitation of its assets, reported Naew Na.

 

Top: FILE photo

 

-- 2024-09-30

 

 

It sounds like the problem of the rising baht will take of itself. The Thai economy will crater, and the baht will drop.

 

The invisible hand of the market at work.

[Brn2Trvl]

The rising Thai bhat, what the heck is being talked about here ?? every day I see the value of the bot go down for the last five months.

[smedly]

4 minutes ago, Robert Tyrrell said:

Good morning,

 

Stop the hanky panky manipulation of the Thai Baht, Follow the Global economic rules PERIOD !!!!!!

the hanky panky manipulation as you call it could could bite them hard as it did in 97, then again it's what 3rd world economies do until it all comes crashing down, you reap what you sow

[hotchilli]

1 hour ago, chrisbangkok said:

Forget manufacturing in Thailand. 

Thailand will become a sub-contracting hub, and have it's tourism..

Not much change from before.

[Zack61]

My first hand experience of exporting from Thailand is that the cost of shipping has amplified the problem. Shipping costs exploded during COVID and have not come down and now fewer shipping options are available leaving exporters at the mercy of these costs. I no longer bother engaging in exporting the products I was having manufactured here as I can’t compete with manufacturers of the same product in my home country. 

[bbi1]

What is a 'Tom Yam Kung' Crisis? Has it got to do with the elephant in the 'Tom Yum Kung' movie?

[metisdead]

A post with excessive usage of ALL CAPS has been removed as there is no need to shout. 

[chiang mai]

56 minutes ago, Robert Tyrrell said:

Good morning,

 

Stop the hanky panky manipulation of the Thai Baht, Follow the Global economic rules PERIOD !!!!!!

 

It seems to me the tourist who bring you your bread and butter you want to charge entree fees ,Retired expats you want to tax them on there pensions, You want dual prices for Thai and Foriegners, SO HOW THEY HELL !!!! DO YOU FIND ANYTHING TO ATTRACT AND OFFER DOING THESE THINGS !!! WAKE UP THAILAND !!

International Tourism is not Thailand's bread and butter, exports is, Tourism is nothing more than an additional course in the meal that helps with Consumer Spending at the grass roots level. International Tourism is 12% of GDP on a good day, exports is around 60%.

 

Also, can you show us how and where this manipulation of THB takes place, lots of people say it exists but nobody yet in over two decades on this forum has been able to say how and where! On the other hand, the map of USD/THB compared against DXY explains the THB rises and falls nicely.

[chiang mai]

4 minutes ago, bbi1 said:

What is a 'Tom Yam Kung' Crisis? Has it got to do with the elephant in the 'Tom Yum Kung' movie?

It's the nickname for the Asian Crash on 1997

[chiang mai]

6 minutes ago, Zack61 said:

My first hand experience of exporting from Thailand is that the cost of shipping has amplified the problem. Shipping costs exploded during COVID and have not come down and now fewer shipping options are available leaving exporters at the mercy of these costs. I no longer bother engaging in exporting the products I was having manufactured here as I can’t compete with manufacturers of the same product in my home country. 

Excellent point. During Covid, manufacturers were using shipping containers to store their product quay side, because it was cheaper to store it there than in warehouses. That led to a massive increase in container and shipping costs, as well as a shortage of supply.

[john donson]

thai people survived the 1997 crisis, no

 

they can always go back up country and go see the rice grow

 

speculators on the other hand, make and sell hot air, sold to other greedy people, producing nothing...

[chiang mai]

https://africa-container-shipping.com/en/some-reasons-behind-worldwide-container-shortage/#:~:text=Labour manpower in ports%2C trucking,less cargo to be shipped.

[Xonax]

1 hour ago, chiang mai said:

Excellent point. During Covid, manufacturers were using shipping containers to store their product quay side, because it was cheaper to store it there than in warehouses. That led to a massive increase in container and shipping costs, as well as a shortage of supply.

I can agree, that manufacturers were using shipping containers to store their products "quay" side, but not because it was cheaper to store it there than in warehouses. Container rental charges is deliberately set high, in order to avoid this scenario, but when warehouses are full, you will have no other options.

Edited Monday at 12:56 AM by Xonax

[chiang mai]

4 minutes ago, Xonax said:

I can agree, that manufacturers were using shipping containers to store their products "quay" side, but not because it was cheaper to store it there than in warehouses. Container rental charges is deliberately set high, in order to avoid this scenario, but when warehouses are full, you will have no other options.

Yes, my explanation was poor and incomplete, which is why I posted a link subsequently but too late to edit my earlier post. Apologies.

[mdr224]

The bitcoin/thai baht exchange rate is always favorable, but thats because that bitcoin is always appreciating and the dollar always depreciating 

[Tropicalevo]

6 hours ago, webfact said:

• Factory closures
• Rising unemployment
• Reduced consumer spending
• Halted industrial investments
• Increased household and business debt
• Higher bank loan costs due to rising bad debt reserves
• Banks limiting loans to struggling businesses
• Reduced government tax revenues and budget cuts
• Lower government spending
• A shrinking GDP
• Declining foreign currency reserves

 

4 hours ago, scubascuba3 said:

Importing from China even cheaper, 📉 Thai jobs down

 

So, a perfect time to increase the minimum wage - not.

[NorthernRyland]

1 hour ago, bbi1 said:

What is a 'Tom Yam Kung' Crisis?

 

Spicy diarrhea.

[Andycoops]

The problem is the Muppets in charge are oblivious to anything happening outside of Thailand and will sleep walk into any looming crisis in their tiny, Thailand is the world's hub of everything, minds.

[RandolphGB]

5 hours ago, timendres said:

 

Thailand needs to capture as much of the manufacturing leaving China as possible.

 

 

The idea that Thailand could organize what little manufacturing industry they have to compete with China and now Vietnam is absurd. They can't even get a visa system right, and tourism is their one goal. Promoting Pad Thai and elephant pants is about as imaginative they've been in recent years. 

 

They're fundamentally a very lazy, backwards nation. 

 

 

 

[sammieuk1]

1. Factory closures
2. Rising unemployment
3. Reduced consumer spending
4. Halted industrial investments
5. Increased household and business debt
6. Higher bank loan costs due to rising bad debt reserves
7. Banks limiting loans to struggling businesses
8. Reduced government tax revenues and budget cuts
9. Lower government spending
10. A shrinking GDP
11. Declining foreign currency reserves
12. And with that news up goes the Baht
13. Impervious to bad news good news any news 🤔

[Moneyhonour]

This weekend I read in the bangkok post that India will sell  their overstock Basmati Rice in their full stocked warehouses to the world market for very low prices. As for Thailand with the upcoming Rice harvesting season this Will be a disaster. The crisis Will appear sooner than we think.

[Eric Loh]

6 hours ago, webfact said:

A 10% increase in the baht’s exchange rate combined with a 10% decrease in the dollar will raise production costs by 20%. This cost hike would make Thai products 20% more expensive than competitors, leading to a decline in primary goods and forcing secondary and tertiary industries to halt production.

Hard to understand the logic. 10% increase in Bath's exchange is due to the dollar depreciation by 10% against the Baht. Strange logic to compound both to 20%. Dollar depreciation is against all currencies; none spared. Other countries export will  faced the same increased in their local currencies. The baht appreciation will lower the cost of imports of raw materials and reduce the COP which they can deploy to leverage the Baht appreciation. Illogical comparison against TYK crisis which was due to excessive foreign debts and a small foreign reservce to defend the Baht. Not the situation now. 

[Robert Tyrrell]

2 hours ago, hotchilli said:

Thailand will become a sub-contracting hub, and have it's tourism..

Not much change from before.

Adding entree fees and taxing retired forigners pensions/Incomes certainly will not aasist in even tourism if the keep down this thought process !!!!

[chiang mai]

5 minutes ago, Eric Loh said:

Hard to understand the logic. 10% increase in Bath's exchange is due to the dollar depreciation by 10% against the Baht. Strange logic to compound both to 20%. Dollar depreciation is against all currencies; none spared. Other countries export will  faced the same increased in their local currencies. The baht appreciation will lower the cost of imports of raw materials and reduce the COP which they can deploy to leverage the Baht appreciation. Illogical comparison against TYK crisis which was due to excessive foreign debts and a small foreign reservce to defend the Baht. Not the situation now. 

100% agreed, the article tries to make connections that aren't there plus the math is totally screwy.