Mighty Thai Baht Again

[Tiger7Moth]

Yesterday, using x-rates.com, I reviewed the Euro, GBP and US $ vs the baht for 2007. The Euro is down about 5%, GBP about 8% and $ about 10%.

There continues to be political uncertainty in Thailand, for the last year measures have been taken that are not conducive to foreign investment, jobs are being lost to China and Vietnam but the mighty thai baht just keeps rolling alone.

Is there any explanation? Is there reason to believe this will continue? Or, will the negatives mentioned above have an impact and reverse the trend?

Residing in Thailand, I am quite unhappy seeing my savings and retirement income decrease in value. Many others must feel the same.

[britmaveric]

Mai Pen Rai.

[tracer5050]

i agree Mai Pen Rai suprised me it came up from 32

[ray23]

Yes there are many that feel uncomfortable a quick search under Baht will yield a ton of results. The short answer is no there is no logic to it. Biggest causation seems to be from Hedge funds. If Thailand can't do much about it, I doubt that we can except to worry. Hence Mai Pben Rai.

Edited September 4, 2007 by ray23

[cigar7]

Someone has suggested the Chinese are buying baht for their reserves. They are diversifying their reserves and buying a basket of Asian currencies. They have enough US$ and Euros now.

Secondary motivation could be to make Thai goods more expensive and Chinese good less expensive, comparitively, with the potential of putting some Thai manufacturers and exporters out of business in the long run.

[Carmine6]

There's no need to look for obscure reasons for a strong baht. In 2005 and 2006, Thailand was a net importer of goods. The amount of baht being exchanged for foreign currencies was greater than the amount of foreign currency being exchanged for baht.

The last quarter of 2006 and all of 2007, Thailand has been a net exporter again. This was mainly due to lower domestic consumption in Thailand. Coups are not great for consumer confidence.

The net export position has been so big the last 3 quarters that you have to go all the way back to 1999 and 1998 to find similar periods. Exporters are required by law to convert foreign currency to baht within a fairly short period. All that buying of baht strengthens the baht. There's just not enough importers needing foreign currencies to pay for imports.

On top of that, while it may be hard for small investors to invest in Thailand. None of the restrictions or visa issues bother any big investors. Thailand is still one of the cheaper stock markets in Asia due to the political uncertainties. But investors have been bringing money in which has added that extra kick to the baht. Since the dollar still looks to be declining, investors are trying to move money out of the US into foreign markets. Not just hedge funds, but mutual funds and pension plans as well.

[VegasVic]

Someone has suggested the Chinese are buying baht for their reserves. They are diversifying their reserves and buying a basket of Asian currencies. They have enough US$ and Euros now.

Secondary motivation could be to make Thai goods more expensive and Chinese good less expensive, comparitively, with the potential of putting some Thai manufacturers and exporters out of business in the long run.

I see the chinese have been studying the business prctices of John D. Rockefeller and Andrew Carnegie . Basically you undercut your competitors until they go out of business then you buy them out for pennies on the dollar .Of course in Chinas' case they use, industrial espionage, child and prison labor, factories that are not held to any particular polution standards, copyright and patent infringement, use inferior and dangerous raw materials and therby undercut other world producers and then convince those foriegn companies that the only way they can compete is if they come to China and build factories there. Then, as your trade surplus grows and grows you start to manipulate currencies and capital markets abroad. BRILLIANT!!! Mr. Rockefeller, Mr. Carnegie and the rest of the robber barrons would be so proud if they were around to see their business practices engaged in, in such a market free from regulation and any sort of fair business practices! Just imagine what Rockefeller and Carnegie could have accomplished in such an environment

[JimsKnight]

Lets just hope that 'export driven China' starts to lose some of her bite next year. This could mean the baht 'finally' starts to weaken and give everyone some more cash to play with

[Irene]

First is the trade surplus and rising foreign currency reserve. Second, Thailand's net export still appears formidable but only recent month there is a slow down. Third, inward fund from foreigners to the Thai bourse has been going on for the last few days after reducing impacts of subprime and liquidity problems in the West. Fourth, some of the carry trade in borrowing in Japan to invest in Australia for higher interest rate, part of the funds could have come to Thailand for capital and currency gains. Finally, weakening of the dollars strengthens the baht and this trend will go on for a year or two because of the imbalance of trade with US importing more from Asia than its export.

It is believed by some quarters that 30 to 32 could be the end result. Currently, most believe that the Bank of Thailand has been intervening in the currency market to weaken the baht, hence it has been above 34 for a few weeks already. But once fear of exchange loss enters into the mind of BOT, they would stop intervening, then the baht will strengthen again. Hedge funds must be waiting for that opportunity because further strengthening of the baht would help them to get hefty exchange gains.

[cclub75]

Currently, most believe that the Bank of Thailand has been intervening in the currency market to weaken the baht, hence it has been above 34 for a few weeks already.

Correction : the BOT does intervene. It's not a rumor. It's... official. Read here :

Excepted this point, I fully share your analysis.

[Nongwahyay]

Don´t you guys bore - or worry - yourselves silly over the Baht going up and down?????? Each reversal of movement initiates yet another new thread here. There are few constants in life.............. stop bloody worrying about it!!!!!!

[j_cheung]

Someone has suggested the Chinese are buying baht for their reserves. They are diversifying their reserves and buying a basket of Asian currencies. They have enough US$ and Euros now.

Secondary motivation could be to make Thai goods more expensive and Chinese good less expensive, comparitively, with the potential of putting some Thai manufacturers and exporters out of business in the long run.

I see the chinese have been studying the business prctices of John D. Rockefeller and Andrew Carnegie . Basically you undercut your competitors until they go out of business then you buy them out for pennies on the dollar .Of course in Chinas' case they use, industrial espionage, child and prison labor, factories that are not held to any particular polution standards, copyright and patent infringement, use inferior and dangerous raw materials and therby undercut other world producers and then convince those foriegn companies that the only way they can compete is if they come to China and build factories there. Then, as your trade surplus grows and grows you start to manipulate currencies and capital markets abroad. BRILLIANT!!! Mr. Rockefeller, Mr. Carnegie and the rest of the robber barrons would be so proud if they were around to see their business practices engaged in, in such a market free from regulation and any sort of fair business practices! Just imagine what Rockefeller and Carnegie could have accomplished in such an environment

As the old song says: "It takes two, baby ..." I'm sure those head honchos at Mattel et al. were totally "surprised" at million or more lead-painted toys for several months instead of diligently following up the problems at their state-of-the-art Q&A facilities in the Pearl Delta region and issuing an immediate recall.

http://www.marketwatch.com/news/story/matt...93259FE19BF9%7D

BTW, I do agree with you that China is undergoing the U.S.' robber baron days (or perhaps HBO's Deadwood). What can you do if you let loose any economic reigns to the provincial and county/municipal barons back in the early 90s, eh?

[VegasVic]

Someone has suggested the Chinese are buying baht for their reserves. They are diversifying their reserves and buying a basket of Asian currencies. They have enough US$ and Euros now.

Secondary motivation could be to make Thai goods more expensive and Chinese good less expensive, comparitively, with the potential of putting some Thai manufacturers and exporters out of business in the long run.

I see the chinese have been studying the business prctices of John D. Rockefeller and Andrew Carnegie . Basically you undercut your competitors until they go out of business then you buy them out for pennies on the dollar .Of course in Chinas' case they use, industrial espionage, child and prison labor, factories that are not held to any particular polution standards, copyright and patent infringement, use inferior and dangerous raw materials and therby undercut other world producers and then convince those foriegn companies that the only way they can compete is if they come to China and build factories there. Then, as your trade surplus grows and grows you start to manipulate currencies and capital markets abroad. BRILLIANT!!! Mr. Rockefeller, Mr. Carnegie and the rest of the robber barrons would be so proud if they were around to see their business practices engaged in, in such a market free from regulation and any sort of fair business practices! Just imagine what Rockefeller and Carnegie could have accomplished in such an environment

As the old song says: "It takes two, baby ..." I'm sure those head honchos at Mattel et al. were totally "surprised" at million or more lead-painted toys for several months instead of diligently following up the problems at their state-of-the-art Q&A facilities in the Pearl Delta region and issuing an immediate recall.

http://www.marketwatch.com/news/story/matt...93259FE19BF9%7D

BTW, I do agree with you that China is undergoing the U.S.' robber baron days (or perhaps HBO's Deadwood). What can you do if you let loose any economic reigns to the provincial and county/municipal barons back in the early 90s, eh?

j_Cheung, I do agree with you it does take two to tango (and many of those U.S. corporate heads and hedge funds care more about making billions for themselves than they do about what is happening to their country- the sad downside to capitalisim), and in a roundabout way I was making that point as well, however the U.S. is trying to compete with its hands tied ( federal regulations, an archaic tax code, and environmental and political corectness concerns, ect.). The playing field is far from level, and those multinationals and hedge funds who have been benefiting have also been buying political influence so there would be a "soft trade" policy with China and others, this is about to change with a new administration and congress

[Solosiam]

Obviously some people in the know have a very good feeling about Thailands future(s).

[Irene]

Currently, most believe that the Bank of Thailand has been intervening in the currency market to weaken the baht, hence it has been above 34 for a few weeks already.

Correction : the BOT does intervene. It's not a rumor. It's... official. Read here :

Excepted this point, I fully share your analysis.

Thanks. Your referred article covered the admission of intervention during January to June but not on Sept 4. See below

“The Bank of Thailand bought about $8 billion during the first half of the year to help stem the gains in the baht, according to deputy governor Atchana Waiquamdee

[Irene]

Don´t you guys bore - or worry - yourselves silly over the Baht going up and down?????? Each reversal of movement initiates yet another new thread here. There are few constants in life.............. stop bloody worrying about it!!!!!!

Wow! You must be a guy who is most contented in life and has no curiosity on matters affecting your life.

[tracer5050]

I am waiting for it to go UP again. I always look for the glass haft full

[cclub75]

Thanks. Your referred article covered the admission of intervention during January to June but not on Sept 4. See below

“The Bank of Thailand bought about $8 billion during the first half of the year to help stem the gains in the baht, according to deputy governor Atchana Waiquamdee

Well... the admission should be enough. BOT did it. And will do it again. Now regarding september 4... we can't know.

It's interesting to note that meanwhile, thai authorities are pushing for a Currency Act (see Nation)

One of their ideas : " Under the new draft, Bank of Thailand would not be able to resort to special reserves account to back up money supplies. The movement of exchange rate would not be taken into account when the bank calculate loss and gains of its operation."

Now, that's convenient for interventions and buying USD, isn't it ? ! They'll escape the shame of posting losses ;-)

Edited September 4, 2007 by cclub75

[Irene]

Thanks. Your referred article covered the admission of intervention during January to June but not on Sept 4. See below

"The Bank of Thailand bought about $8 billion during the first half of the year to help stem the gains in the baht, according to deputy governor Atchana Waiquamdee

Well... the admission should be enough. BOT did it. And will do it again. Now regarding september 4... we can't know.

It's interesting to note that meanwhile, thai authorities are pushing for a Currency Act (see Nation)

One of their ideas : " Under the new draft, Bank of Thailand would not be able to resort to special reserves account to back up money supplies. The movement of exchange rate would not be taken into account when the bank calculate loss and gains of its operation."

Now, that's convenient for interventions and buying USD, isn't it ? ! They'll escape the shame of posting losses ;-)

Yes, that would be convenient to intervene in future. The proposed legislation is indicative of the necessity in intervening. However, they would be fighting against the impossible. Anyhow, the draft was withdrawn from the Assembly by the Minister of Finance who seems to sense that the NLA is unlikely to pass this law which is tantamount to accepting any exchange losses that may arise from the BOT's intervention.

[Jimjim]

I think the baht weakened back to 34 a few weeks back because of the stock market tumble, or at least that's what many theorized, so now it's continuing the strong trend.

[Naam]

I think the baht weakened back to 34 a few weeks back because of the stock market tumble, or at least that's what many theorized, so now it's continuing the strong trend.

what strong trend?

[tracer5050]

hope it gets better

[Jimjim]

Dr., I mean the trend of it getting stronger over the last couple years from 40 to now 34 to the dollar. It is a volatile, up and down trend at that for sure. And, thinking short term, it went quickly to 33 a month or so ago and after going back up to 34.6 or so, seems to be headed back to high 33s.

[Nongwahyay]

Don´t you guys bore - or worry - yourselves silly over the Baht going up and down?????? Each reversal of movement initiates yet another new thread here. There are few constants in life.............. stop bloody worrying about it!!!!!!

Wow! You must be a guy who is most contented in life and has no curiosity on matters affecting your life.

Not really............. I just find it laughable how one group of people expresses great concern when the Baht rises, another then expresses great concern when the Baht slips again......... and many seem to be soooooooo concerned and foresee doom and gloom. Of course I want the best rate for my Euros............but I´ve stopped wetting my pants at every change in direction.....................

[sleepyjohn]

The last quarter of 2006 and all of 2007, Thailand has been a net exporter again. Exporters are required by law to convert foreign currency to baht within a fairly short period. All that buying of baht strengthens the baht. There's just not enough importers needing foreign currencies to pay for imports.

Carmine I believe I'm right in saying Thais have just recently been allowed to open foreign currency accounts. Whether this applies to imported foreign funds I wouldn't know but it wouldn't seem to much of a stretch. In fact it wouldn't be too much of a stretch for this to be discreet intervention in favour of a lower baht.

[sleepyjohn]

The last quarter of 2006 and all of 2007, Thailand has been a net exporter again. Exporters are required by law to convert foreign currency to baht within a fairly short period. All that buying of baht strengthens the baht. There's just not enough importers needing foreign currencies to pay for imports.

Carmine I believe I'm right in saying Thais have just recently been allowed to open foreign currency accounts. Whether this applies to imported foreign funds I wouldn't know but it would seem reasonable. In fact it wouldn't be too much of a stretch for this to be discreet intervention in favour of a lower baht.

[Carmine6]

The last quarter of 2006 and all of 2007, Thailand has been a net exporter again. Exporters are required by law to convert foreign currency to baht within a fairly short period. All that buying of baht strengthens the baht. There's just not enough importers needing foreign currencies to pay for imports.

Carmine I believe I'm right in saying Thais have just recently been allowed to open foreign currency accounts. Whether this applies to imported foreign funds I wouldn't know but it wouldn't seem to much of a stretch. In fact it wouldn't be too much of a stretch for this to be discreet intervention in favour of a lower baht.

By lower, you mean weaker, right? That sounds familiar, along with the call on Thai businesses to invest overseas. The question is, why would anyone hold the dollar unless they thought it was going to get stronger? Last year maybe people would have done that, but this year? Euro, Sterling, Yen? Maybe, but even those aren't a slam dunk. Coming out of the election which way are rates going to go?

What the government should be doing is using the strong baht to buy technology and expertise from overseas. That way, instead of just maintaining the exchange rate, they're getting something in return. That'd help weaken the baht and they'd get some technology. Should be a better return than the bonds or whatever they used the $8 billion on.

I don't know what would help the most, but it has to something quick, so things like big construction projects aren't fast enough. I'd be talking to Brazil about their ethanol infrastructure and buying some off the shelf equipment from somewhere. Germany maybe, Japan, the US. Not that much investment to get some small ethanol plants up and running. Then some tanker trucks. And some heavy equipment like road paving equipment. The whole idea being to increase demand for sugar and rice and build up the infrastructure in rural areas. There has to be some way to help manufacturers as well, outside of trying to control the currency. Maybe low interest loans for equipment purchased overseas.

Also get some newer long haul buses, LPG powered where possible. Find some used ones to buy today and then start getting new ones over time. All this spending, and it still wouldn't put a dent into $8 billion, but it'll increase domestic economic activity.

[Naam]

Dr., I mean the trend of it getting stronger over the last couple years from 40 to now 34 to the dollar.

that explains it Jim.

[LaoPo]

What the government should be doing is using the strong baht to buy technology and expertise from overseas.

I would like to add a massive English study program to be set up, nationwide. (They should have done that 30 years ago....)

Children should, as an obligation, study English from first grade on -or earlier- and continue to do so whilst attending schools and universities.

You need native English teachers for that, but instead the government makes it difficult since they 'protect' their own teachers...and stupid laws.

Any youngster would benefit enormously when they would speak/write and read fluent English for their own future and the future of Thailand.

But, sadly enough, the rulers of this country just think about their own power, money, greed and protection of their own circles.

LaoPo

[Irene]

Don´t you guys bore - or worry - yourselves silly over the Baht going up and down?????? Each reversal of movement initiates yet another new thread here. There are few constants in life.............. stop bloody worrying about it!!!!!!

Wow! You must be a guy who is most contented in life and has no curiosity on matters affecting your life.

Not really............. I just find it laughable how one group of people expresses great concern when the Baht rises, another then expresses great concern when the Baht slips again......... and many seem to be soooooooo concerned and foresee doom and gloom. Of course I want the best rate for my Euros............but I´ve stopped wetting my pants at every change in direction.....................

Got you! But, may be I am mistaken, I have yet to read anyone in this forum had any concern when the Baht slips. I agree with you, I also dislike those doom and gloom cries. But this thread was started with curiosities of the Baht rises, i.e. seeking for knowledge as to why.