£ Sterling Up Sh*t Creek?

[fletchsmile]

I think the 50 mark is extremely pessimistic! The UK economy would have to be in skid row and on the verge of breakdown for that to happen.

Why is the 70 mark such a lofty amount to some of you masters of the universe? Why could it not climb to 80 or even 90 baht to the pound?

We still don't know what's around the corner in LOS let along the UK.

Most things in life are possible. Check out the following on BoT's website for exchange rates from 1981 to present. A few statistics as to why there might be higher downside potential though

http://www.bot.or.th/bothomepage/databank/...nload/Tab89.xls

Only 1 month in the last 25+ years has GBP/THB closed the month-end over 80, (in Jan 1998). On the other hand, most of the 16 years prior to that (1981-1997) that rate was below 50.

Would you think it's more likely a return to the sustained growth Thailand experienced in the 80's and 90's, and the factors that drove that exchange rate under 50, or a return to the type of factors that drove the rate above 80 temporarily during the Asian crisis.

That's one reason I use 35-55-75 as a 25 year forecast. Another would be Thailand as a developing third world country has much more potential for growth, development, and strengthening, compared to the mature UK. Some people would joke the UK is becoming 3rd world tho' . Obviously a lot more factors at play, too.

Edited December 19, 2007 by fletchsmile

[longway]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

The BoE sets the rates, not the Golden Clown.

[jackr]

The b*stard's in free-fall now! XE were doing 60.5 to the baht when I checked earlier this morning and the pound is now worth less than $2. Marvelous

[cmsally]

If you are looking to do a TT transfer, it's 66.9 to the pound.

I think maybe sooner than later as I can't see it getting any better.

Actually it wasn't that much different in July this year at 67.3,

so it is just offloading the gains made, but the question is where does it go from here.

I guess the general opinion is down.

[fletchsmile]

...According to the doom mongers the £ is (apparently) going to tank big time.

An article in the Phuket Gazette has allegedly stated the £ is accurately forcast to dive down to the depths of the £1 = 50 baht.

...

Using your metaphors: the other way of looking at this of course, is to say that it was the THB that "tanked" back in 1997, and that the baht has been "up sh*t creek" for the last decade.

I think it's likely that the baht will find it's paddle

[ray23]

Well I know this is not about the dollar, but I have went through several years of that here now. Which included some rathre rasty comments from people who had the GBP for a currency. I will avoid that simply because unlike some I really don't enjoy somone eleses troubles.

We are in a world economy and what hurts one country will eventually effect the others.

It is very difficult to accurately predict anything on a long term basis and more so when it applies to the Thai Baht.

Currrency's would appear to eb avery unique field and require a good knwledge to invest them. I for on and I venture to say most are not even close to being qaulified to answer where things are really going.

So I have to keep thing very simple for me to grasp it and have some sort of plan. This is what I understand things will not go up forever. There will be downard corrections doesn't mean they will stay that way for ever but down they must go eventually.

My plan that ha worked so far w to live at a 40% level of my retirement income thats where things were set originally, today I'm running at about 60%. Not where I like but still a good buffer to absorb more if I have to.

The real wild card is the baht, which is the only one that concerns me. We have elections coming up with prediction of falilure for the next government coming from everywhere. Assured that no matter who win the otherside wants them to fail and will do thier best to make sure that happens. So we have many uncertain years ahead here. That will determine eventually what you get for whatever currency you are using here. Not a comparison to Euro's.

Having been in the middle of this for several years now I will say unless you are a real expert and I think there are few out there, not me for sure. This will eventually drive you nuts if you let it.

I have spent two years trying to understand the Baht, have been fortunate to have had some of those with great knowledge try to explain it as they understood and in the end come to he conclusion they don't understand it either.

So I would recommend finding that magic formula that will serves you well in good times and bad. I you live long enough you will see both.

Good luck sorry for your troubles.

[Naam]

The b*stard's in free-fall now! XE were doing 60.5 to the baht...

is it reasonable to assume you are using XE when "doing Baht" to get a sh*tty rate for the pound?

[the gent]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

The BoE sets the rates, not the Golden Clown.

Ahh, presumably you subscribe to the notion that Mervyn and his chums' decisions are made independently of the Scottish brute.

Oh well, each to their own I suppose

[jackr]

The b*stard's in free-fall now! XE were doing 60.5 to the baht...

is it reasonable to assume you are using XE when "doing Baht" to get a sh*tty rate for the pound?

... all pro-rata with the institutions and a natty uppy/downy indicator. Obviously one is making use of the favourable onshore rate when TT'ing

[longway]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

The BoE sets the rates, not the Golden Clown.

Ahh, presumably you subscribe to the notion that Mervyn and his chums' decisions are made independently of the Scottish brute.

Oh well, each to their own I suppose

Is your level of condescension always in inverse proportion to the amount hard facts you can provide?

I stated a fact, if you can disprove what I said then demonstrate your source. Put up or shut up.

[JetsetBkk]

If you are looking to do a TT transfer, it's 66.9 to the pound.

I think maybe sooner than later as I can't see it getting any better.

Actually it wasn't that much different in July this year at 67.3,

so it is just offloading the gains made, but the question is where does it go from here.

I guess the general opinion is down.

Pretty close Sally!

How about some facts instead of all the nonsense being spouted here? - I won't name names, of course

I just transferred £15,000 and got 67.4183. Compared to January's 70.8521, I lost 51,000 baht (5%). Pretty bad, but I can live with it. This rate was slightly worse that what I got in March 2006 - 67.5.

[fletchsmile]

If you are looking to do a TT transfer, it's 66.9 to the pound.

I think maybe sooner than later as I can't see it getting any better.

Actually it wasn't that much different in July this year at 67.3,

so it is just offloading the gains made, but the question is where does it go from here.

I guess the general opinion is down.

Pretty close Sally!

How about some facts instead of all the nonsense being spouted here? - I won't name names, of course

I just transferred £15,000 and got 67.4183. Compared to January's 70.8521, I lost 51,000 baht (5%). Pretty bad, but I can live with it. This rate was slightly worse that what I got in March 2006 - 67.5.

I got around 60 in Dec 1999

[cmsally]

I am counting on the fact that the pound might drift back towards 60Bt.

In my opinion it could hang around that level for a while once it gets there.

Its been there before and no reason why it shouldn't go back, 70bt seemed to reflect a period when the pound was overvalued.

Just my opinion, but that is what I am planning for, however I mostly live on Thai Baht so doesn't affect me that much.

[phutoie2]

Have to agree with most that sterling is in for a rough ride.

I sent over 40k GBP in first week of November with a rate of 70.55.

Yesterday,- Nationwides TT rate dropped to 66.77 baht to 1 GBP.

I always look at Bangkok Banks daily exchange rate, though the BBC's currency data is good too- nice graphs!

[the gent]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

The BoE sets the rates, not the Golden Clown.

Ahh, presumably you subscribe to the notion that Mervyn and his chums' decisions are made independently of the Scottish brute.

Oh well, each to their own I suppose

Is your level of condescension always in inverse proportion to the amount hard facts you can provide?

I stated a fact, if you can disprove what I said then demonstrate your source. Put up or shut up.

Quite how you construed condescension from that post is somewhat puzzling but one supposes you have your reasons.

Please don't be offended if I decline your challenge. It's not because I am unwilling but, akin to corruption, proving a negative is notoriously difficult and if one is only persuaded by " facts " then a consensus is unlikely.

Nevertheless, one should not overlook the "fact" that the MPC comprises in addition to the BoE staff four members appointed by the Chancellor. Given that the control of inflation is the primary concern of the MPC and the common knowledge that the rate is currently in the ascendant, it does seem odd to the interested observer that their last decision was in " fact " to reduce the interest rate, a mechanism not widely known for its efficacy in controlling rising inflation. The excuse for this decision was clearly a departure from their remit and evidently an attempt to increase liquidity to ease the consequences of profligate lending. The success of this remains to be seen but what is manifestly apparent is its effect upon the pound which fell.

Mmmm. Now, which politician has most to gain from a prolonging of the debt driven consumer bubble?

Like they say, if you're not for me you're against me and poor old Merv is just beginning to find out what life is like under the cosh of the Caledonian crusher.

Independence? I don't think so but everyone is free to cling to whichever illusion conjured up as " fact " they may choose.

[longway]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

The BoE sets the rates, not the Golden Clown.

Ahh, presumably you subscribe to the notion that Mervyn and his chums' decisions are made independently of the Scottish brute.

Oh well, each to their own I suppose

Is your level of condescension always in inverse proportion to the amount hard facts you can provide?

I stated a fact, if you can disprove what I said then demonstrate your source. Put up or shut up.

Quite how you construed condescension from that post is somewhat puzzling but one supposes you have your reasons.

Please don't be offended if I decline your challenge. It's not because I am unwilling but, akin to corruption, proving a negative is notoriously difficult and if one is only persuaded by " facts " then a consensus is unlikely.

Nevertheless, one should not overlook the "fact" that the MPC comprises in addition to the BoE staff four members appointed by the Chancellor. Given that the control of inflation is the primary concern of the MPC and the common knowledge that the rate is currently in the ascendant, it does seem odd to the interested observer that their last decision was in " fact " to reduce the interest rate, a mechanism not widely known for its efficacy in controlling rising inflation. The excuse for this decision was clearly a departure from their remit and evidently an attempt to increase liquidity to ease the consequences of profligate lending. The success of this remains to be seen but what is manifestly apparent is its effect upon the pound which fell.

Mmmm. Now, which politician has most to gain from a prolonging of the debt driven consumer bubble?

Like they say, if you're not for me you're against me and poor old Merv is just beginning to find out what life is like under the cosh of the Caledonian crusher.

Independence? I don't think so but everyone is free to cling to whichever illusion conjured up as " fact " they may choose.

thanks for the answer you have cleared a number of issues up.

though i certainly dont agree with everything you have said

Edited December 21, 2007 by longway

[sonicdragon]

the gent made some perceptive comments, which I agree with on the whole. Although the BoE is technically independent (specifically, it has independence to implement monetary policy, but it must implement the policy of the government - this is known as instrument-independence but goal-dependence) it would be very naive to expect that there is no political element to its actions. By the way, I might be behind the times on this, but I thought that seven of the nine members of the MPC were appointed by the government ? The remit of the BoE is to control inflation, in particular to manage it towards a goal (currently 2%). To the extent that there are disinflationary or deflationary forces at work (ie the bursting of the credit bubble), the BoE could be justified to reduce rates even in the face of a current CPI above the target. Of course, only time will tell whether they are justified or not, but in the meantime it is certainly congruent with political expediency.

[longway]

Of course, only time will tell whether they are justified or not, but in the meantime it is certainly congruent with political expediency.

it was my impression that rate cuts were expected by the markets in 2008, and figures that came out recently justified starting these early (including a jump in the LIBOR). AFAIK its not as if the markets were not expecting a rate cut at this time.

its fine to be cynical, but is only presenting part of the picture.

the only thing that i care about right now, and what seems to be fairly certain is that the GBP will fall against the baht.

[sonicdragon]

Of course, only time will tell whether they are justified or not, but in the meantime it is certainly congruent with political expediency.

it was my impression that rate cuts were expected by the markets in 2008, and figures that came out recently justified starting these early (including a jump in the LIBOR). AFAIK its not as if the markets were not expecting a rate cut at this time.

The markets were expecting rate cuts in 2008 because the BoE signalled it's intention to do so in November, whereas in it's August inflation report it signalled that at least one further rate hike would be necessary - this is, in part, what had driven sterling to recent-time highs against the dollar, and the dramatic turnaround in the economic picture is what has caused sterling to sell off. These expectations (of the markets and also the BoE) are, obviously, forward looking, and so it should be obvious that only time will tell if rate cuts, and the magnitude of them, are the right thing.

its fine to be cynical, but is only presenting part of the picture.

I didn't think I was being cynical. At least I wasn't intending to be.

the only thing that i care about right now, and what seems to be fairly certain is that the GBP will fall against the baht.

Understood, but the other side of the picture is that rate cuts are intended to ease the fallout from the credit bubble bursting, and to the extent that they are successful in doing so, could lead to the economy stabilising and resuming an uptrend in growth which would eventually lead to further strength in sterling. OK, that's a big oversimplification and ignores a lot of other problems not least the UK's current account deficit and the fact that much of the upward pressure on sterling over the last few years was due to the fact that the USD had to depreciate in general, and since the currencies against which USD depreciation was most needed, CNY in particular, could not occur due to a rigid exchange rate regime in China, the "steam" was let off through depreciation against other currencies which could adjust, GBP included.

[longway]

The markets were expecting rate cuts in 2008 because the BoE signalled it's intention to do so in November

what i am saying is that the figures justified the rate cut, not necassarily political expediancy. though as you say there is an election coming up. however the cut was characterised by the gent, as wild and irresponsible (my interpretation), i dont beleive this is the case.

I didn't think I was being cynical. At least I wasn't intending to be.

cynics always say they are realists. its not meant as a dig btw. i feel fairly safe in saying the gent is a cynic in this scenario. how founded this is in reality, we may find out or we may never know.

could lead to the economy stabilising and resuming an uptrend in growth which would eventually lead to further strength in sterling

certainly, in way thats my point, action needs to be taken, and i fall on the side that what they have done is ok FWIW

my chief concern is to decide whether to bring my money over monthly as i normally do, or thsi time bring over 6-8 months supply to insure me from any significant falls. this is what i have decided to do once i return to thailand early next year. i am ofcourse hopeful that in the medium to long term that sterling will hold its value against the baht. upto 60 is ok for me, after that i would have to think about what i need to do very carefully.

[sonicdragon]

The markets were expecting rate cuts in 2008 because the BoE signalled it's intention to do so in November

what i am saying is that the figures justified the rate cut, not necassarily political expediancy. though as you say there is an election coming up. however the cut was characterised by the gent, as wild and irresponsible (my interpretation), i dont beleive this is the case.

Well, not to be argumentative, but as mentioned already, the remit of the BoE is to manage inflation towards 2%. At the time of signalling the rate cut, inflation was above the target and there was no clear evidence that inflation would fall in the immediate future - which was borne out by the fact that CPI for November was still above 2%. So which statistics are you referring to that justified the cut ? The BoEs models indicate a slowing down of economic activity, but I'm not aware of statistics that show this, and it is not the BoEs remit to manage economic growth except the the extent that it affects inflation. My suspicion is that the weight of the argument for easing monetary came from the tight conditions in credit markets, and it's a long stretch to justify an inflation-targetted rate cut by helping out the financial sector. Even the forward-looking PMI survey such, while lower than previous months, indicate expansionary activity.

I didn't think I was being cynical. At least I wasn't intending to be.

cynics always say they are realists. its not meant as a dig btw. i feel fairly safe in saying the gent is a cynic in this scenario. how founded this is in reality, we may find out or we may never know.

I didn't say I was being a realist either. I'm just interpretting the facts as I know them.

could lead to the economy stabilising and resuming an uptrend in growth which would eventually lead to further strength in sterling

certainly, in way thats my point, action needs to be taken, and i fall on the side that what they have done is ok FWIW

my chief concern is to decide whether to bring my money over monthly as i normally do, or thsi time bring over 6-8 months supply to insure me from any significant falls. this is what i have decided to do once i return to thailand early next year. i am ofcourse hopeful that in the medium to long term that sterling will hold its value against the baht. upto 60 is ok for me, after that i would have to think about what i need to do very carefully.

I think there is going to be a grinding upward pressure on the baht vs the USD, as a result of a continued slow appreciation of the CNY. Thus, even if sterling can hold it's own against the USD, this will result in a loss against the baht. But it also seems likely that sterling will also be under pressure against the US$ (but more so against the EUR due to the large trade deficit with the euro-zone). On balance therefore I would be a seller of sterling against the baht at the moment. For the medium to long term I have been advocating a move into CNY, SGD and CHF for some time already.

[sonicdragon]

I should add that, looking at the exit poll data, the political outlook in thailand does not look good in the short term so that should weaken the baht........

[longway]

At the time of signalling the rate cut, inflation was above the target and there was no clear evidence that inflation would fall in the immediate future - which was borne out by the fact that CPI for November was still above 2%. So which statistics are you referring to that justified the cut ?[

you clearly understand these things at a deeper level than me. it is in part the tight credit market. the BoE rate has been steady since July, but the inter-bank lending rate has been steadily increasing. in addition to that there were clear indications that economic activity is deteriorating rapidly (sharp slowdown in the service sector, falling house prices, slump in consumer confidence). the BoE remit is to maintain inflation at 2% and also, subject to that target, manage economic growth. you can certainly argue that BoE should have maintained its rates. however i still stand by my feeling, and thats what it amounts to, that the BoE made the right move at this very difficult time for the uk economy. whats better 2.1% inflation with the economy somehow trundling along, or 1.8% inflation while we head into a recesssion?

perhaps you are right in your analysis, but i still dont see how this rate cut can be considered wild and irresponsible. you must remember i disagreed with 'the gents' characterisation of the rate cut as merely politically motivated that willl have dire consequences for the uk in the longer term. thats not to say i didnt learn a thing or two.

Edited December 23, 2007 by longway

[sonicdragon]

At the time of signalling the rate cut, inflation was above the target and there was no clear evidence that inflation would fall in the immediate future - which was borne out by the fact that CPI for November was still above 2%. So which statistics are you referring to that justified the cut ?[

you clearly understand these things at a deeper level than me. it is in part the tight credit market. the BoE rate has been steady since July, but the inter-bank lending rate has been steadily increasing. in addition to that there were clear indications that economic activity is deteriorating rapidly (sharp slowdown in the service sector, falling house prices, slump in consumer confidence). the BoE remit is to maintain inflation at 2% and also, subject to that target, manage economic growth. you can certainly argue that BoE should have maintained its rates. however i still stand by my feeling, and thats what it amounts to, that the BoE made the right move at this very difficult time for the uk economy. whats better 2.1% inflation with the economy somehow trundling along, or 1.8% inflation while we head into a recesssion?

perhaps you are right in your analysis, but i still dont see how this rate cut can be considered wild and irresponsible. you must remember i disagreed with 'the gents' characterisation of the rate cut as merely politically motivated that willl have dire consequences for the uk in the longer term. thats not to say i didnt learn a thing or two.

I'm not saying that the cut was wild and irresponsible - I'm just trying to give a balanced view. I do think that the BoEs actions are politically motivated to some extent - it should really go without saying. The situation is obviously much better than it was 10 years ago - and studies have concluded that the independence of the BoE has had a beneficial effect on inflation expectations.

[the gent]

The success of the perceived independence of the BoE reflects the fiscal strength of the economy inherited by Brown in 1997. Lawson had engineered a recovery from the mid 90s doldrums and departed office leaving the Brute with a 20 billion current account surplus which was further enhanced by a comprehensive spending review of public expenditure, a review which Brown continued and earned him his reputation for prudence which in reality was simply a case of borrowed robes previously worn by Lawson. To a certain extent this ' drag act ' masked his innate incompetence, as manifested by the catastrophic raid on pension funds and sale of gold reserves at firesale prices, and he still manages to engender confidence because of it although most pundits now finally see him for the buffoon he actually is.

The problem is we now have a deficit of 20 billion, an inflation rate of over 4% >, a collapse of the banking system, an economy entirely supported by the illusion one's property is one's own personal bank and an imminent recession threatening the US. The recipe could hardly be more exciting in terms of currency trading and my own view is that the heralded move to increasingly lower interest rates will consign the pound in the long term to parity with the Euro. Avoiding recession is held to be paramount but the devaluing of the pound at this stage can only be a quick fix equivalent to protecting an alcoholic from the DTs by giving him a shot of brandy. Still, in the post monetarist world such solutions are evidently de rigeur although it is interesting to note that good old steady Eddie George now regrets that he did the very same thing in 2003.

I do sympathise with you Longway given your plans but inflation is the way to go it seems and the pound has to go south. Nevertheless, the Thai export based economy will also suffer in the forthcoming world recession and so the pound's fall may well be cushioned to prevent retirement penury.

Still, as long as Gordo wins his election I'm sure it will all be worth it.

[ray23]

Weaking of the Baht one would think so, but that baht defies logic, that would help us all.

[bkk_mike]

Personally, I think the Thai central bank took too much of a hit this year trying to keep the baht down, and will let it continue to edge upwards against the dollar.

I also think, quite separately, that the pound is likely to drop back down towards $1.85 or so...

Both of those things are likely to lower the GBP/THB exchange rate down yowards 60.

However, I always take anything above 60 as a bonus. (I get paid in GBP)...

This is just my take on the most likely course,

- assumes Thailand doesn't do anything really dumb. (like an even more xenophobic foreign business act, or another out-of-the-blue act of stupidity like the foreign currency controls).

Also, I think it's most likely that the dollar won't drop much further against the usual basket of currencies and may even start to strengthen a little. I don't see it strengthening against the baht, but maybe against GBP/CAD/AUD/CHF, maybe even the EUR if Italy has big problems.

Edit: Another coup would come under dumb...

Edited December 24, 2007 by bkk_mike

[pkrv]

Have to agree with most that sterling is in for a rough ride.

I sent over 40k GBP in first week of November with a rate of 70.55.

Yesterday,- Nationwides TT rate dropped to 66.77 baht to 1 GBP.

I always look at Bangkok Banks daily exchange rate, though the BBC's currency data is good too- nice graphs!

Interesting Nationwide no longer tansfer THB. However I used them on Friday the 14th to transfer 163,000 GBP via a SWIFT sterling transfer to Krung Thai bank. The random mount of 11,051,400 arrived in the developers account on Monday the 17th (after fees etc) giving a rate of 67.8. I had no control over the rates I could get at the time by choosing the Thai bank etc (and do not have a Thai bank account just yet).

All this on future rates is very interesting but to be honest if you are planning to retire in Thailand you should really have some substanital assets (condo(s)) etc in Thailand, this sort of protects you from many of the issues surrounding such fluctuations, which can go up as well as down.

[maxcrc]

UK pound will lose part of its value against the US$ during 2008.

It will probably reach 1.75$ for 1 uk Pound in a year or two and 1.33 euros for 1 UK pound.

Thai baht will appreciate further against the buck in the next months till April at elast so pound will be weaker definitely.

After Olympic Games we will need to see what will happen with asian currencies.

It is possible they will also reach a peak and than stabilize.

Edited December 26, 2007 by maxcrc

[bbkkandrew]

3 different pressures will influence value:

1. This time of the year the new arrivals in UK (Poles/Romanians/Latvians etc.), who are of Catholic origin traditionally either remit funds home or travel back with them. Given that there are an estimated 2 million of them working in the UK by late 2007, a conservative estimate, based on 4k GBP per person, would equate to 8BN GBP trades over and aboove the historical precicent. NB this does not include increased volumes of funds from immegrant work outside of accession countries.

2. The USD will fall a further 10-30% against the worldwide basket of currencies, due to the well documented woes of the US economy. As the THB (amongst others) seeks to benchmark against USD above all else, a relative fall against YEN, EURO and GBP is inevitable.

3. Oil is the elephant in the room, with political uncertainty all over (latest excitement being in Pakistan and Northern Iraq), dividing countries into oil dependents and oil producers. Sterling straddles this divide, so essentially is a hedge.

Happy days and Happy New Year!