So What Will Happen If The Baht Crashes?

[soundman]

With all the current economic & political un-certainty, fuel prices predicted to keep the steep upward trend for the forseeable future, inflation at its highest level in a decade (officially), hyper-inflation on many day to day consumables, what will happen if the Baht drastically slumps against the $USD?

Any of you guys with a good grasp on macro cause & effect care to look into the crystal ball?

Cheers,

Soundman.

[jimmyyy]

With all the current economic & political un-certainty, fuel prices predicted to keep the steep upward trend for the forseeable future, inflation at its highest level in a decade (officially), hyper-inflation on many day to day consumables, what will happen if the Baht drastically slumps against the $USD?

Cheers,

Soundman.

if the baht slumps against the dollar, i shall buy as much baht as i can, becouse it will just be temporary, i think market conditions will bring it back to the 34 range, when this will happen, i have no idea....

Edited May 3, 2008 by jimmyyy

[RY12]

It hasn't really drastically crashed since 1997 right? Seems unlikely to happen again. Looking at the charts (since I was in elementary school at the time), that was pretty crazy, it was like 25 baht to the dollar then jumped to 40 something by the end of the year. All I can say is that I hope to no end that it crashes again, for u that have businesses in thailand, i assume your hopes are the opposite

Man, 25 baht to the dollar in 97? Was thailand more expensive then or were prices cheaper?

Edited May 3, 2008 by RY12

[apetley]

The bht is bound to crash in the next week or so as I have just transferred a huge amount from the UK to finish my house here.

[Smithson]

Soundman, any reason for thinking it would crash? I could live with a high fuel prices and a low Baht because I export. I can't see it happening.

[soundman]

Soundman, any reason for thinking it would crash? I could live with a high fuel prices and a low Baht because I export. I can't see it happening.

Pure speculation.

A big "what if?"....

[BEENTHEREDONETHAT]

Seems like the Thai economy is in better shape than the US economy so don't see any big changes in the exchange rate any time soon. But it is just one big crap shoot as far as which way things will go. In the next couple of years you can count on it going up, down, and staying the same. The only question is how much and when?

[Smithson]

Soundman, any reason for thinking it would crash? I could live with a high fuel prices and a low Baht because I export. I can't see it happening.

Pure speculation.

A big "what if?"....

You don't have any secret info then? I remember when the Baht crashed in '97, there were that many rumors of a float/devaluation even the Bkk Post was reporting the possibility.

[jumnien]

God forbid, if the baht crashed even more Europeans would be invading these sacred shores! Enough is enough!

[idrankwhat]

I spoke with my father last night and he told me that the USA is saying that gas prices will go as high as 7 USD by the end of the year so I can't even imagine what that means for us here.

[LaoPo]

I spoke with my father last night and he told me that the USA is saying that gas prices will go as high as 7 USD by the end of the year so I can't even imagine what that means for us here.

People in the US shouldn't complain....we pay $ 9,28/US Gallon* today in my country in Europe. What are you talking about ?

* = € 5,98/US Gallon or € 1.58/liter

Now, if the US would stop driving these monster fuel slurping cars it would help a lot.

LaoPo

[chiang mai]

It's over USD$10 per gallon in the UK and will doubtless continue to be taxed further, er I mean, rise in price..

[Heng]

Would love a crash, but doubt one will happen. Probably couldn't have built my first business (first one that actually worked anyway) from near scratch if it weren't for the '97 Baht crash.

[VegasVic]

I spoke with my father last night and he told me that the USA is saying that gas prices will go as high as 7 USD by the end of the year so I can't even imagine what that means for us here.

Its really amazing the nonsense that gets posted on some of these forums. Gas just hit an all time high in the U.S. a couple of days ago and I paid the most I ever paid for a gallon ($3.35) here in Arizona, some other areas of the U.S. are paying slightly higher prices due to excessive state taxes but the most I have heard gas selling for was $3.71/gallon somewhere in California I think. The dollar has begun a strengthening cycle and that alone will bring down the price of oil (and thereby gas) and as oil falls much of the speculation (about 25% of the price of a barrel of oil is due to pure speculation) in the pits in Chicago and New York will abate and oil will fall to a natural supply and demand level around $70-$80/bbl later this year. Gas prices could indeed spike 20 or 30 cents short term in the U.S. this summer driving season as it usually does, but as we move into the fall I would imagine that gas will drop below $3/gallon and quite likely back to around the mid $2 range. Methinks your good old Dad might have recently invested in Exxon Mobil and is having a pipe dream about $7/gallon gas, even the prepetual doomsters that get interviewed occasionally on CNBC realize that if gas ever approached $5/gallon in the U.S. that consumption would decrease substantially. As far as the Thai baht is concerned, I can see no reason why it would be poised for a crash. The baht has indeed appreciated more than other currencies in the region, but not so much as to think that a crash would be coming, as the dollar continues to strengthen this year and next the baht -dollar will gradually gravitate back to the 41-42 level that it seems to have regularly done post 97. The coming downturn and economic hiccups in china and india could have an adverse effect on the Thai economy for a while, but I doubt it would cause a crash in the baht.

[britmaveric]

I spoke with my father last night and he told me that the USA is saying that gas prices will go as high as 7 USD by the end of the year so I can't even imagine what that means for us here.

Think your dad has been drinking too much.

Edited May 3, 2008 by britmaveric

[pampal]

all this speculation has me thinking

[Lumock]

Its really amazing the nonsense that gets posted on some of these forums. Gas just hit an all time high in the U.S. a couple of days ago and I paid the most I ever paid for a gallon ($3.35) here in Arizona, some other areas of the U.S. are paying slightly higher prices due to excessive state taxes but the most I have heard gas selling for was $3.71/gallon somewhere in California I think. The dollar has begun a strengthening cycle and that alone will bring down the price of oil (and thereby gas) and as oil falls much of the speculation (about 25% of the price of a barrel of oil is due to pure speculation) in the pits in Chicago and New York will abate and oil will fall to a natural supply and demand level around $70-$80/bbl later this year. Gas prices could indeed spike 20 or 30 cents short term in the U.S. this summer driving season as it usually does, but as we move into the fall I would imagine that gas will drop below $3/gallon and quite likely back to around the mid $2 range. Methinks your good old Dad might have recently invested in Exxon Mobil and is having a pipe dream about $7/gallon gas, even the prepetual doomsters that get interviewed occasionally on CNBC realize that if gas ever approached $5/gallon in the U.S. that consumption would decrease substantially. As far as the Thai baht is concerned, I can see no reason why it would be poised for a crash. The baht has indeed appreciated more than other currencies in the region, but not so much as to think that a crash would be coming, as the dollar continues to strengthen this year and next the baht -dollar will gradually gravitate back to the 41-42 level that it seems to have regularly done post 97. The coming downturn and economic hiccups in china and india could have an adverse effect on the Thai economy for a while, but I doubt it would cause a crash in the baht.

'VegasVic' is dead-on!: There's a lot of nonsense posted on some of these forums. He's also correct about the gasoline situation in the US........In 'Las Vegas' jargon, I hope he hits the trifecta with the baht gravitating anywhere close to the 41-42 level! In the meantime, 2 out of 3 ain't bad!

Edited May 3, 2008 by Lumock

[LaoPo]

Gas prices in the US:

http://www.gasbuddy.com/

LaoPo

[Thanyaburi Mac]

The bht is bound to crash in the next week or so as I have just transferred a huge amount from the UK to finish my house here.

Apetley, yep, that's exactly what I did.  May 1996, transferred in a big batch of baht and bought the house out here at Klong 10.  Of course, it needed modification and additions, so August 1996 transferred in a 2nd BBB, all complete by December 1996.

Then 4th of July '97, oops!!  Semi happily, is sas semi broke at the time so didn't loose much in my SCB account.  High point for me was about 2 Feb 1998 when I made my monthly deposit to the SCB baht account from my U.S. account and got a rate of baht 52 = $1!!  Never see those days again.

And the prices locally didn't go up all that much, about 15% for the most part or the Thai would not have been able to buy anything themselves.

Mac

[naka]

It hasn't really drastically crashed since 1997 right? Seems unlikely to happen again. Looking at the charts (since I was in elementary school at the time), that was pretty crazy, it was like 25 baht to the dollar then jumped to 40 something by the end of the year. All I can say is that I hope to no end that it crashes again, for u that have businesses in thailand, i assume your hopes are the opposite

Man, 25 baht to the dollar in 97? Was thailand more expensive then or were prices cheaper?

I was a kid in Bangkok in the early seventies and my dad bitched endlessly that the price

of beer in Thailand was the highest in Asia. Only Singha and Amarit in those days

and ice cream was almost impossible to find. As for milk or cheese ... never to be found, so no Pizza.

What an awful place to take a kid, Bad Dad.

The only bright spot was when he was able to (teary eyed and begging) get us in to one of the US militay owned R&R hotels

where we could get a huge US prime rib dinner for the amazing (subsidized) price of twenty five cents US and

babana split for dessert. Hey ... I even got to see the in house gogo dancers

But can't complain, it was better than Tanzania where the local kids taught me to make a

car out of a sardine can and four coke bottle caps, or a guitar from a cooking oil can.

Oh ! the Baht ... forgot about that.

Naka.

Edited May 4, 2008 by naka

[Chang_paarp]

I would start to worry when the oil contracts stop being in $US then the $US will get a little nervous. A little like French being the "international" language I think the $US will slowly fade as they become less dominant in the world economy.

As to the Baht, what is it doing against the other major currencies? That will be the true test over time.

[Misty]

Hey Soundman,

From what I've seen, accurately predicting currency movements in the short term with any consistency is very difficult.

That said, some of the things that influence the valuation of a currency can include a country's current account and/or trade balance, direction of capital movement, relative interest rates, and size of foreign reserves (particularly if the currency is fixed).

Without going into detail, Thailand's position in these areas today is very different than it was in 1997. I think the chances of a significant fall in the THB agains the US$ in the near term are pretty slim.

Maybe on a long term view you would see the US$ appreciate against the THB and other currencies. But my guess is first many of the US's imbalances in these same areas will need to be worked through first. Unless of course huge amounts of foreign money (say, petro dollars) pour into cheap US assets.

That's my two baht's worth. Misty

With all the current economic & political un-certainty, fuel prices predicted to keep the steep upward trend for the forseeable future, inflation at its highest level in a decade (officially), hyper-inflation on many day to day consumables, what will happen if the Baht drastically slumps against the $USD?

Any of you guys with a good grasp on macro cause & effect care to look into the crystal ball?

Cheers,

Soundman.

[backflip]

"Would love a crash..."

Why?

[bino]

"Would love a crash..."

Why?

Because if you have foreign income, you get a lot more baht for it. I liked getting 40,45 or more baht instead of the current 30something that I get now for every dollar that I have spent in Thailand.

It's not a great thing for Thailand and Thai people who hold baht, but it is a good thing for those with foreign currency, tourists included.

[ytivarg]

I just want to say that there are a couple of reasons we could see the baht rapidly fall in value. Number one worry for me is the king's eventual death and the years of political chaos that follow. Also up there are another coup due to the PPP rewrite of the constitution and social unrest from skyrocketing food and fuel costs.

[digitele]

I just want to say that there are a couple of reasons we could see the baht rapidly fall in value. Number one worry for me is the king's eventual death and the years of political chaos that follow. Also up there are another coup due to the PPP rewrite of the constitution and social unrest from skyrocketing food and fuel costs.

Agree.

On the fuel price side OPEC will start selling in Euros, not USD. That will make things interesting...

[Heng]

"Would love a crash..."

Why?

Mostly because much of my export revenue is denominated in US$, Euros, and Yen.

Edited May 5, 2008 by Heng

[soundman]

Lets just paint a scenario where the Baht slumps 15% against the dollar & the yuan - back to around 35/36 - 1.

USD remains where it is, oil stays about the same, oil stays traded in $$.

Wouldn't that mean that the oil price would increase 15% & therefore pump price go up the same, & the flow on effect to all local business starting with increased transportation costs, ending in wage rises?

Wouldn't all consumer goods, especially electronics from China, increase as well?

Nett result - massive, on top of allready high, inflation within Thailand?

Not inconceivable if the current bunch of bufoons in charge start sliding the country back into debt by increasing the fuel subsidy from about the current four baht+ per litre to say 10 baht & also start "influencing" the BOT & go overboard putting the screws into foreign invest with a heavy handed FBA.

[simcity]

The baht is loosing steam...

Currencies I hold are stable against the dollar, the baht did go down 3% in few days

Edited May 13, 2008 by simcity

[chrislarsson]

It seems like predicting future exchange rates are quite difficult.

Looking at Thailand's foreign reserve it is more than 110 billion US $ at the moment. That's a huge number, and it is one of the largest reserves in the world. Putting it into context, it means that Thailand can keep up its imports for almost a year without having to export anything.

That is quite a large stock of ammunition to protect your currency. It's surely enough to protect Thailand from IMF imposed policies the next time there is a crisis.