£ Sterling Up Sh*t Creek?

[pkrv]

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!

The FX market is too large to be affected by such small sums. something like 2,100 Billion (US eq) is transacted each day (though I haven't looked recently). Single deal sizes of 1 Billion (1 yrd or 1 yard) are common.

That said a prolonged mass migration of the baby boom generations could cause some issues.

[Mosha]

Just to note The quid has been rising v the Baht since my pension got paid in. I think it's a conspiracy.

Edited December 29, 2007 by Mosha

[Theboss]

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.

If that happens I know the PI, S. America etc will certainly see a wee flood of expats from LOS!

I know I'm not the only one reliant on the strength of the £ so wonder what some of the other expats have heard or feel about this.

Incidentally I reckon if it does tank then the $ will almost certainly be on it's tail as well so the ramafications are deep indeed....

Knowing how shy some of the posters are I've pasted a poll for easy responses.

Now I am a positive thinking Guy, but I personally am of the opinion 2008 is not going to a good year for the £ or UK economy, and many people who have over streched themselves are going under.

The housing market has peaked and the bubble has to burst ! Fact of history after every boom there is a bust, and we sure have had the boom ! Fuel prices as your aware are crippling.

Basicly there is nothing I and anyone on this forum can do about it, only hope you ain't got to far in/ under ! Having said that I wish everyone a prosperous new year

Edited December 29, 2007 by Theboss

[chiang mai]

Have to admit this is one of the more confusing and uncertain investment periods in my life thus far and judging from what the so called "experts" have to say about things I feel I am not alone. Take a look at the link below for year end forecasts from the UK's best and brightest and see what you think.

http://www.telegraph.co.uk/money/main.jhtm...C-mostviewedbox

What I managed to pick out from reading all of the commentaries was:

1) India is probably the best bet for emerging markets, and

2) Japanese equities seem sensible.

If you see something else, feel free to shout.

As for GBP/THB: the poll results already show that the supreme optimists have got it wrong and that the next tier down is at major risk. For me personally I reckon that 50 something in 2008 is easily achievable and the consensus view is that if you are not out of GBP now, you should be.

[Mosha]

There again, given todays sad news. Reports that the entertainment industry may close for 15 days. Should do wonders for tourism and ultimately the exchange rates.

[Naam]

UBS today:

GBP: No relieve is visible

With weaker than expected PMI data out of the UK and the outlook for falling

interest rates at the short end of the yield curve, GBP remains under

pressure. We advise to stay GBP short until momentum fades. GBPUSD is

expected to test support levels around 1.97 and 1.965.

[JimsKnight]

The boys grim predictions are taking fruit now!

I'm glad I shorted my coin early doors cause the writing looks to be on the wall now!

£ is now down to 65.88.

Edited January 9, 2008 by JimsKnight

[GuestHouse]

£ is now down to 65.88.

What you mean it's moved a couple of percent and you think that significant?

All these 'Money traders' talk the good talk but where are the figures on how much needs to be moved (or has been moved) to maitain the life style in the face of currency fluctuations?

The Bht exchange rate has been favourable to the £ for a couple of years and that has convinced people who are under capitalized that they can afford to live in Thailand - Now things move a couple of percent against them and the panic sets in.

I'm sticking with Sterling and a retirement plan based on being able to afford a comfortable retirement in the UK - Fluctuations in the Bht/£ there might be but their biggest impact will be in the level of luxuary I can afford.

Anyone who was in Thailand when the rate was Bht38 to the £ will undestand the fools paradise of the post ecconomic crash.

[JimsKnight]

Basically what I mean is the £s value against the baht has been steadily falling now!

We haven't seen the bottom yet either

[Naam]

Basically what I mean is the £s value against the baht has been steadily falling now! We haven't seen the bottom yet either

but some people ignore facts

[Prakanong]

Basically what I mean is the £s value against the baht has been steadily falling now! We haven't seen the bottom yet either

but some people ignore facts

So where do you see the bottom then - 60 - lower?

The GBP was 60 when I got paid in THB in 99 - anything else I considered a bonus in the 2 years since then I was paid in GBP - sincce then my salary was in Euro where I often got 50 which was nice but now in SGD which the SMA is allowing to rise right now.

I got 34 THB to the GBP in the UK before my first Thai visit and 37/38 in country.

What about the USD - will that fall much - will the USA have a hard or soft landing regarding the economy?

[cmsally]

When I first moved to Thailand rate was around 38Bt/1 pound so psychologically the 60's look pretty good to me.

I was talking about this with my husband and he remembers being in the bank after school where his uncle worked and looking at the exchange rates board and he says most of the time rate was in the 60's -70's for the pound.

So as far as I can see tricky business , earning in one currency and spending in another. Nothing is for sure.

[Prakanong]

When I first moved to Thailand rate was around 38Bt/1 pound so psychologically the 60's look pretty good to me.

I was talking about this with my husband and he remembers being in the bank after school where his uncle worked and looking at the exchange rates board and he says most of the time rate was in the 60's -70's for the pound.

So as far as I can see tricky business , earning in one currency and spending in another. Nothing is for sure.

Same for me - 60 is a psychological point even though I do not earn in GBP currently.

It was 45 when earning Euro's and its now 22 for SGD

[Naam]

Basically what I mean is the £s value against the baht has been steadily falling now! We haven't seen the bottom yet either

but some people ignore facts

So where do you see the bottom then - 60 - lower? The GBP was 60 when I got paid in THB in 99 - anything else I considered a bonus in the 2 years since then I was paid in GBP - sincce then my salary was in Euro where I often got 50 which was nice but now in SGD which the SMA is allowing to rise right now. I got 34 THB to the GBP in the UK before my first Thai visit and 37/38 in country. What about the USD - will that fall much - will the USA have a hard or soft landing regarding the economy?

i apologize for not being a prophet and can comment only on the past. therefore i can't answer your questions. but i suggest you scroll through and read the various threads in TV-Forum on currencies, economies, commodities, stock markets and the like and you will find a wealth of expertise from qualified financial gurus/prophets with relevant details and facts

[ray23]

Dollar today ar SCB atm 33.03 so I would think we will be in the 32 range pretty soon.

I hear lot of dollar guys talk about the good old days when it was 26 to one. Sounds great but they are not taking into account inflation and what they could purchased for 1K baht when it was at those levels.

I purchased my home, for 1.4 three years ago, they are now selling in the same complex same size for 2.2 and up. People are looking and thats Udon.

Five years ago I filled the tank on my bike for 150 Baht today 350

The good old days wouldn't bother me one bit if I had the same purchasing power as was available at that time. I really don't care what number they put on it, what I care about is what can I do with what I have and that is becoming les and less.

Might be tough year predictions are that inflation is going to rise this year, so costs up and income down

[Prakanong]

Basically what I mean is the £s value against the baht has been steadily falling now! We haven't seen the bottom yet either

but some people ignore facts

So where do you see the bottom then - 60 - lower? The GBP was 60 when I got paid in THB in 99 - anything else I considered a bonus in the 2 years since then I was paid in GBP - sincce then my salary was in Euro where I often got 50 which was nice but now in SGD which the SMA is allowing to rise right now. I got 34 THB to the GBP in the UK before my first Thai visit and 37/38 in country. What about the USD - will that fall much - will the USA have a hard or soft landing regarding the economy?

i apologize for not being a prophet and can comment only on the past. therefore i can't answer your questions. but i suggest you scroll through and read the various threads in TV-Forum on currencies, economies, commodities, stock markets and the like and you will find a wealth of expertise from qualified financial gurus/prophets with relevant details and facts

Hmmm I do not know the qualifications or skill sets of TV prophets so will stick with people I know who work in money markets, who I am on my MBA with and the financial press then make my own mind up

[Prakanong]

Dollar today ar SCB atm 33.03 so I would think we will be in the 32 range pretty soon.

I hear lot of dollar guys talk about the good old days when it was 26 to one. Sounds great but they are not taking into account inflation and what they could purchased for 1K baht when it was at those levels.

I purchased my home, for 1.4 three years ago, they are now selling in the same complex same size for 2.2 and up. People are looking and thats Udon.

Five years ago I filled the tank on my bike for 150 Baht today 350

The good old days wouldn't bother me one bit if I had the same purchasing power as was available at that time. I really don't care what number they put on it, what I care about is what can I do with what I have and that is becoming les and less.

Might be tough year predictions are that inflation is going to rise this year, so costs up and income down

I do not really notice inflation in Thailand as its only food, beer and hotels for me now - these have gone up but its still cheaper there than other places I visit so psychologically adjust.

Singapore is predicting 5-6% inflation this year - this is not taking into account Expat housing though which is rising anywhere from 30% to 200% from what I can see and hear talking others.

I will take the hit on my rent at 50% - any higher then its a new place.

My spending patterns have changed, I will be taking only long weekend vacations this year till next chritstmas as I concentrate on career and MBA

I do have a target salary in mind for the end of 2009 - I have alway hit my target income for the last 18 years or so and hope to keep up the record - it will certainly mean changing jobs and probably location.

[mikethevigoman]

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.

If that happens I know the PI, S. America etc will certainly see a wee flood of expats from LOS!

I know I'm not the only one reliant on the strength of the £ so wonder what some of the other expats have heard or feel about this.

Incidentally I reckon if it does tank then the $ will almost certainly be on it's tail as well so the ramafications are deep indeed....

Knowing how shy some of the posters are I've pasted a poll for easy responses.

Mods, I've started this in the general forum as a similar subject on this matter was getting minimal viewing in the business and economy section. This concerns more the everyday forum user, as opposed to just the masters of the universe in there

It would seem there might be something in it, i just got 64.5

[sonicdragon]

Dollar today ar SCB atm 33.03 so I would think we will be in the 32 range pretty soon.

I hear lot of dollar guys talk about the good old days when it was 26 to one. Sounds great but they are not taking into account inflation and what they could purchased for 1K baht when it was at those levels.

I purchased my home, for 1.4 three years ago, they are now selling in the same complex same size for 2.2 and up. People are looking and thats Udon.

Five years ago I filled the tank on my bike for 150 Baht today 350

The good old days wouldn't bother me one bit if I had the same purchasing power as was available at that time. I really don't care what number they put on it, what I care about is what can I do with what I have and that is becoming les and less.

Might be tough year predictions are that inflation is going to rise this year, so costs up and income down

I agree. Over the long term, inflation can really take a big bite out of personal wealth and standards of living. Reported inflation numbers are fairly meaningless. It should be obvious to most people that their "personal inflation" rates are much higher than the numbers their governments happens to publish.

Anecdotally, I just asked my wife and she said that a whole bunch of regular grocery items that we buy have increased by 10%+ in the last few weeks.

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

[GuestHouse]

I agree. Over the long term, inflation can really take a big bite out of personal wealth and standards of living. Reported inflation numbers are fairly meaningless. It should be obvious to most people that their "personal inflation" rates are much higher than the numbers their governments happens to publish.

Anecdotally, I just asked my wife and she said that a whole bunch of regular grocery items that we buy have increased by 10%+ in the last few weeks.

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

I've been arguing that point for at least as long as I have been a member of ThaiVisa.

This re-adjustment of currency exchange rates is only serving to weed out people who got their financial planning wrong, retiring to Thailand when exchange rates where at a historical high in the aftermath of an economic crash. Only an idiot would believe that getting by in Thailand on such a shaky basis was the foundation of a long term plan.

Inflation however will hit everyone's plans and everyone's lifestyles. And as I have demonstrated in other posts on the subject of Inflation - The Farang Inflation is way way above that faced by Thais, even as that is under reported.

Inflation in health care perhaps being the single most significant inflation issue faced by foreigners living on fixed incomes in Thailand.

[Naam]

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

a puzzling fact for me (when i did my "balance sheet" 2007 ten days ago) was that we have not spent one Satang more in 2007 than in 2006 for general living cost (four people; wife, me and two live-in domestic staff). another surprise was that in 2007 we had the lowest cost in more than two decades. last time we spent the same amount of dough was 1985. but that's beside the point.

[sonicdragon]

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

a puzzling fact for me (when i did my "balance sheet" 2007 ten days ago) was that we have not spent one Satang more in 2007 than in 2006 for general living cost (four people; wife, me and two live-in domestic staff). another surprise was that in 2007 we had the lowest cost in more than two decades. last time we spent the same amount of dough was 1985. but that's beside the point.

Well done But I'm sure you are not in the majority. Let's also not forget, and I'm sure you are not forgetting, but it's not the amount of money you spend - but the cost of the things you buy. Buying a smaller quantity of more expensive goods can even lead to cost savings, but it doesn't mean that there is disinflation.

Edit: Let's also not forget that you can't really just take "general living expenses" and ignore other important costs such as healthcare and housing. And, finally, during the last 10 years there have been significant global disinflationary forces at work, which have put the brakes in inflation; the benefits of those forces (globalisation) are beginning to come to an end....thus, inflation over the last 10 years is probably not a good indicator of inflation of the next 10 and longer.

Edited January 10, 2008 by sonicdragon

[Naam]

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

a puzzling fact for me (when i did my "balance sheet" 2007 ten days ago) was that we have not spent one Satang more in 2007 than in 2006 for general living cost (four people; wife, me and two live-in domestic staff). another surprise was that in 2007 we had the lowest cost in more than two decades. last time we spent the same amount of dough was 1985. but that's beside the point.

Well done But I'm sure you are not in the majority. Let's also not forget, and I'm sure you are not forgetting, but it's not the amount of money you spend - but the cost of the things you buy. Buying a smaller quantity of more expensive goods can even lead to cost savings, but it doesn't mean that there is disinflation.

Edit: Let's also not forget that you can't really just take "general living expenses" and ignore other important costs such as healthcare and housing.

in our case both irrelevant cost factors having first class internationally valid health insurance and owning the roof over our heads. without health insurance our living cost would have more than doubled in 2007. the total cost of an extremely complicated jawbone operation last january in Singapore including three days in the hospital was SGD 18,500 (at that time ~THB 420,000). health care cost for one of our staff in 2007 was 12,000 Baht plus another 3,000 Baht for both of them (annual general checkup).

[Naam]

GBP: setting new lows

EURGBP set a new high at almost 0.75, and GBPUSD reached levels not

seen since the beginning of 2007, breaking below the critical technical support

at 1.9654. A major retailer announced dropping sales, after weak retail

sales data on Tuesday, supporting markets' expectations for a BoE cut

Thursday.

UBS jan 10, 2008

[sonicdragon]

Expats living in Thailand should be just as, if not more, concerned about inflation as they are about exchange rates.

a puzzling fact for me (when i did my "balance sheet" 2007 ten days ago) was that we have not spent one Satang more in 2007 than in 2006 for general living cost (four people; wife, me and two live-in domestic staff). another surprise was that in 2007 we had the lowest cost in more than two decades. last time we spent the same amount of dough was 1985. but that's beside the point.

Well done But I'm sure you are not in the majority. Let's also not forget, and I'm sure you are not forgetting, but it's not the amount of money you spend - but the cost of the things you buy. Buying a smaller quantity of more expensive goods can even lead to cost savings, but it doesn't mean that there is disinflation.

Edit: Let's also not forget that you can't really just take "general living expenses" and ignore other important costs such as healthcare and housing.

in our case both irrelevant cost factors having first class internationally valid health insurance and owning the roof over our heads. without health insurance our living cost would have more than doubled in 2007. the total cost of an extremely complicated jawbone operation last january in Singapore including three days in the hospital was SGD 18,500 (at that time ~THB 420,000). health care cost for one of our staff in 2007 was 12,000 Baht plus another 3,000 Baht for both of them (annual general checkup).

Again, it's not the past that matters - it's the future. I would have thought that there would be *some* exclusions and/or excesses in your healthcare insurance ? And although you own the roof over your heads, you would surely have maintenance costs - which are subject to inflation. Anyway, I started out by saying "most" expats, so it's not really beneficial to the discussion to have this detour. If you feel that inflation is of no importance to you, and that might very well be the case given the limited knowlegde I have about your circumstances, that's good for you; but for the majority of other expats I believe that inflation should be a concern.

[ray23]

Ok guys eventually it sunk in as to why the dollar was doing is doing and has been for some time. Eventually I suppose I will understand the GPB as well.

What I have never understood is why a country in such turmoil has a appreciating currency.

There was a time when I saw outside investments in the currency driving it up. But. I'm now under the impression that has been controlled. So what is driving it now Exports? I thought those were in trouble because of the exchange rates.

The account surplus? Thats a good thing but that is only because money is really not being spent and sent into the system yet.

The amount of tourist coming to the country?

[cmsally]

I don't think it is a case of an appreciating Baht. In the pounds case it is a depreciating currency and has been overvalued for last couple of years at least. The UK economy has been overheating and Blair has made a timely and probably well thought out departure. He wants to go down well in the history books.

Just a feeling I get, Blair is the kind of person that wants to be liked by everyone.

[sonicdragon]

Yes, it's the current account surplus, mainly driven by exports, that is the force behind the appreciating baht. Bear in mind that the appreciation that we have seen over the last, say, 2 years, against the USD is actually rather mild in comparison to the appreciation of other currencies against the USD. Now that sterling is losing ground against the USD, while the USD current account surplus remains huge, and also bearing in mind that it takes quite a large *and* fast appreciation in the exchange rate to significantly affect exports, futher upward pressure on the baht vs the pound should be expected. Further local political, and global financial/geopolitical, turmoil obviously would ease the pressure.

[Naam]

Again, it's not the past that matters - it's the future. I would have thought that there would be *some* exclusions and/or excesses in your healthcare insurance ? And although you own the roof over your heads, you would surely have maintenance costs - which are subject to inflation. Anyway, I started out by saying "most" expats, so it's not really beneficial to the discussion to have this detour. If you feel that inflation is of no importance to you, and that might very well be the case given the limited knowlegde I have about your circumstances, that's good for you; but for the majority of other expats I believe that inflation should be a concern.

-no exclusions, no limits as far as our health insurance is concerned

-inflationary aspects maintenance cost of home impossible to determine or estimate

-by stating facts (which -i agree- might not be applicable to other expats) my intention was not to detour

-inflation is indeed no worry for me when looking at my income/expenditure ratio. i would like to be in a position to worry about inflation and thus forget about my remaining statistical life expectancy.

-i fully agree that inflation should be a major concern for most of my fellow expats, especially those who focus on exchange rates and forget everything else.

[BalthazarBeefheart]

Yes, it's the current account surplus, mainly driven by exports, that is the force behind the appreciating baht. Bear in mind that the appreciation that we have seen over the last, say, 2 years, against the USD is actually rather mild in comparison to the appreciation of other currencies against the USD. Now that sterling is losing ground against the USD, while the USD current account surplus remains huge, and also bearing in mind that it takes quite a large *and* fast appreciation in the exchange rate to significantly affect exports, futher upward pressure on the baht vs the pound should be expected. Further local political, and global financial/geopolitical, turmoil obviously would ease the pressure.

don't you mean US current account deficit ? Also here is the reason for recent Baht strength

Thai Ctrl Bank: Recent Baht Strength Due To Exporter Selling

BANGKOK (Dow Jones)--The Bank of Thailand said Tuesday that the recent appreciation of the baht is mainly due to dollar selling by exporters, but the local currency has moved in line with regional peers since the beginning of the year.

The central bank recently intervened in the foreign exchange market to slow the baht's rise and to minimize the impacts on exporters, Assistant Governor of the Thai central bank Suchada Kirakul told reporters.

"We need to take care of the baht for exporters to remain competitive," said Suchada.

However, the baht's strength has helped defer an increase in domestic fuel prices amid rising global oil prices, she added.

In the onshore market, the baht was quoted at THB33.29 a dollar late in Asia Tuesday, compared with THB33.33-THB33.335 late Monday.

Meanwhile, the baht was quoted at THB29.70-THB29.85 a dollar in the offshore market, compared with THB29.73-THB29.83 a dollar late Monday in Asia.

-By Bangkok bureau, Dow Jones Newswires; 66 2266 0744; [email protected]

(END) Dow Jones Newswires