Central Bank Jumps In To Strengthen Falling Baht

[cclub75]

When the baht was very strong they wanted it to weaken. Now that the baht has weakened some, they want to strengthen it. What DO they want?

Times are totally different.

There is a black swan : the oil crisis / inflation.

Few people talked about it, but Thailand has -again- a trade deficit (and deficit of current account too). The last figures were for april... -1,8 billion USD.

http://www.bot.or.th/English/Statistics/Ec...Pages/menu.aspx

Since then oil exploded... so it's easy to forecast a serious problem for may, june etc.

The core of the problem now is inflation and energy prices.

Thailand is a net importer of oil, coal and natural gas. 580 000 barrels of crude oil per day (total import minus total exports) !

Chart here :

http://thaicrisis.wordpress.com/2008/06/09...as-net-imports/

[ray23]

Good Point but this is the part I don't get if they have massive reserves of dollars what difference should it make to them either way they are making money.

Anyone know what the Thai National Debt is compared to two years ago?

My understanding is they used a lot of gains to pay the World Bank Loan off early so are they really sitting on that cash?

Am I missing something here if they manipulate in that manner will they attract foriegn investors?

Wasn't giving investors freedom with money part of getting rid of the 30% rule?

Seems to be thought in the other direction again

[Ga-gai]

So some of you folks actually believe in "Free" markets. Do you still believe in the tooth fairy as well?

Yupp!

The free market died somewhere during the last big depression. Since that time, fewer and fewer families have been collecting more and more of the worlds capital. Never have all the world's companies and businesses had so few owners as they do today. It all comes down to the Scull and Bones guys. It's all an illusion, brought to you by the ones that benefits on your arrogant ignorance.

Edited June 9, 2008 by Ga-gai

[Heng]

It all comes down to the Scull and Bones guys. It's all an illusion, brought to you by the ones that benefits on your arrogant ignorance.

There is more than enough to go around for several hundred millions of people in the world even after the Bonesmen, Masons, Triads, Mafias, etc. etc. get their share. But yeah, I do agree that for approximately 5.5+ billion, life is probably rather crappy. Hardly a conspiracy though, anymore than sharks, alligators, or lions "conspire" to be towards the upper end of the food chain.

[plachon]

Can anyone figure this out?

Late 2006 when it gained to 35 they were panicking and trying to weaken it to keep it above 35, but now that it's weakened from about 31 to 33 they want to strengthen it again.

What?!? You think economics is some sort of science to be "figured" out? Have you not noticed that even Nobel laureates argue over basic assumptions? Ok, some physicists may argue over how many theoretical dimensions extrapolate from string theory, but you don't see them arguing too much over more fundamental basic issues involving Newtonian mechanics. Heilbroner got it right. economists are worldly philosophers and not scientists, philosophers who diddle with numbers.

Why not let the market itself regulate it. I was supposing it was a capitalist system. This way to act is not by anyway a capitalist one , but simply a way to protect the economical interest of a very small part of the population.

And you think that the capitalist system is not set up to protect the economical interest of a very small part of the population? Other than hunter gathering societies, is there any economic system that did not set out to protect an economic elite?

Yes, the bia kud chum! But unfortunately, the elite pretty soon axed it, while leaving vouchers in Central and other food malls. Funny old world, eh?

So some of you folks actually believe in "Free" markets. Do you still believe in the tooth fairy as well?

Oooh, you old cynic you Johpa. Don't spoil the illusion for some of 'em, who also think that the Yanks are really the good guys, Saddam was an evil monster and TV is a neutral technology.

[sotsira]

Bring it on...lets see 72 baht to the pound again..or more

With the dependence on tourism I have no doubt we will get to 70 at least!

Im also dependant on the GB-pound rate with the THB, but i dont share your optimism, the UK and US economies have taken a huge blow over the last 12 months and its their weakening that has made the pound so weak against all currencies not just the THB.

You only have to look at the Euro which has strengthened while the Pound and dollar has weakened against the THB to show that it has nothing to do with Thailand, but with UK and US economies.

The current rates would be over 75bt to the £1 if it weren't for the credit crunch knock on effect from the US to the UK.

The only winners at the moment are the europeans getting 52bt to the euro as they aren't affected as much by the credit crunch.

Remember when the pound was 75bt the euro was 48bt. Now its 65bt and 52bt respectively.

[scyriacus]

Has everybody missed the obvious conspiracy theory here??...a certain ex prime minister, with huge wads of cash, leaves the country, along with all of the millions that werent frozen, and converts in to dollars, at a time when the dollar is weak against the baht...Same ex PM, is the root cause of political unrest and instability, and pulls the strings that in turn contribute to the baht going on the slide..in the meantime he buys a high profile football club to raise his profile worldwide, and more or less guarantees his untouchable status (As perfected by a certain Chelsea owner)....hey presto, baht goes in to freefall, government look like they cant handle it, more political protests, country goes in to turmoil, and in rides a certain former PM on his white horse, offering stability and lines like 'Things were better on my watch'...new elections called, the Thai people look to their saviour, all the protests stop, he regains office, the baht strengthens as a result, and he converts all his dollars back in to baht at a huge profit....and we all lived happily ever after, until the next coup

congratuations oliver reed! you're the one (the only one?) to really understand thai economics. here TAX-SIN is a virtue, not a curse!! what a splendid anaysis of thailand..............

[luangtom]

Wasn't this same ploy attempted to slow the baht's fall in '97 & '98??? Are the same people in charge? I thought they were going to "let it go where it may due to market sense." Well, so much for that philosophy. TIT.....

[scyriacus]

When the baht was very strong they wanted it to weaken. Now that the baht has weakened some, they want to strengthen it. What DO they want?

gary my dear, when oil went up from 50 to 52, all the airlines lost, but when oil goes down from 120 to 118, all the airlines win. get the message???

[Johpa]

Oooh, you old cynic you Johpa. Don't spoil the illusion for some of 'em, who also think that the Yanks are really the good guys, Saddam was an evil monster and TV is a neutral technology.

What happens to their brave new world when they are forced to realize, although they may all be too far gone for reality, that the Internet is the virus. Perhaps it is best we maintain their illusions so they won't go home and beat their wives and kids in frustration.

[plachon]

Oooh, you old cynic you Johpa. Don't spoil the illusion for some of 'em, who also think that the Yanks are really the good guys, Saddam was an evil monster and TV is a neutral technology.

What happens to their brave new world when they are forced to realize, although they may all be too far gone for reality, that the Internet is the virus. Perhaps it is best we maintain their illusions so they won't go home and beat their wives and kids in frustration.

Or go on a stabbing frenzy in downtown Tokyo?

That virus you refer to is getting mighty virulent in these parts. But crack cocaine or heroin might be a better metaphor for the www.

By the way, you ever read Jerry Mander? And did you spot my Yasothon located exception to the norms of economical systems in previous post? Bia kud chum was the local LETS for a while, but is rarely referred to these days, more's the pity.

[bkk_mike]

Isn't this simply a case of the dollar strengthening a little due to Bernanke (Fed Chairman) FINALLY saying he believes in a strong dollar, and better than expected housing sales figures from the US.

The OP stated that Asian currencies as a whole dropped against the dollar. This isn't a specifically Thai problem. (although the central bank reaction may turn into one.)

[Canadianvisitor]

I think, and I am by no means an economist, the strength of the baht will be effected by the undoubted drop in tourism that will follow the rise in airfares that will be coming to offset the oil price issue. In a country that relies so much on foreign influx of money to produce the GDP it is inevitable.

[sfokevin]

When will the BOT institute a 30% rebate for funds transfered in and held in the country for 1 year!...

[LaoPo]

Bring it on...lets see 72 baht to the pound again..or more

With the dependence on tourism I have no doubt we will get to 70 at least!

or THB 163.85 for one GBP... WIFE! why did you take that bottle of Port away?

Give Naam his bottle of port back and take away his computer please!

that's okay with me. got four of them, but only three running at a time.

Correct, the 4th one doesn't show in the pic; it's around the corner:

member Naam busy, checking his investments....

LaoPo

[tartempion]

Just remember what goes up eventually comes down, ask all the housing speculators in the US.

So will this oil bubble

[gadinaz]

Im also dependant on the GB-pound rate with the THB, but i dont share your optimism, the UK and US economies have taken a huge blow over the last 12 months and its their weakening that has made the pound so weak against all currencies not just the THB.

You only have to look at the Euro which has strengthened while the Pound and dollar has weakened against the THB to show that it has nothing to do with Thailand, but with UK and US economies.

The current rates would be over 75bt to the £1 if it weren't for the credit crunch knock on effect from the US to the UK.

The only winners at the moment are the europeans getting 52bt to the euro as they aren't affected as much by the credit crunch.

Remember when the pound was 75bt the euro was 48bt. Now its 65bt and 52bt respectively.

Good post.

Edited June 10, 2008 by gadinaz

[Naam]

Bring it on...lets see 72 baht to the pound again..or more

With the dependence on tourism I have no doubt we will get to 70 at least!

or THB 163.85 for one GBP... WIFE! why did you take that bottle of Port away?

Give Naam his bottle of port back and take away his computer please!

that's okay with me. got four of them, but only three running at a time.

Correct, the 4th one doesn't show in the pic; it's around the corner:

member Naam busy, checking his investments....

LaoPo

coke cans should be replaced by Port or Sherry bottles

[VegasVic]

Interesting home sale in april in the US up 6.3%

Dollar up 106.29 to the Yen

I think we will see baht at 34 soon.

How in the world can the BOT stop that, it's not just Thailand

Ray, the BOT's efforts to stop the rapid rise of the baht last year was largely unsuccessful just as any efforts on their part to stop the decline currently will be. I think that the BOT's main concern is not in stopping the bahts decline, but rather to insure that the bahts decline is a slow and measured one and not a replay of 1997. A weaker baht is actually a win-win scenario for Thailand, as long as the decline is an orderly one.

[Seneque]

Sorry for the brits but the pound is heading the same way as the dollar ... down ....

The vietnamese dong is the currency that will trigger trouble for all south-east asian currencies ... their only salvation is to get together and create a euro of their own (yen?)... but this is a 'very' long shot.

The more the bank of thailand intervene the more mess they will create ... was not the devaluation a result of central bank intervention?

People who think they will get more baht for their currency is true but it will not offset the rising costs of most products ... don't have debt and be happy !

[ray23]

Vic, I think your right at least I hope so. Although I would like more money don't know anyone who doesn't. Thailand is my home and I wish it no harm. Especially something like 97.

Had to have a laugh myself after an evening thinking this through, when they supported the dollar, I wa all for it. So my reaction to the current situation was a complete 180 for me not just Thialand

[ray23]

Well the BOT certianly seem to be succesful today, dollar is up pretty much across the board, but the baht is gaining.

[Thighlander]

This is a bit gut wrenching for me. I just sold my house for about a million. The difference between 33 and 34 is about 900 usd to me. Yesterday's BKK Post reported that there was a key resistance level at 33.20, but it appeared to be headed to 35. It barely broke through thte 33.20 barrier, but did indeed retreat to 32.98. I would love to see it at 31.50, while I'm waiting on the bankers and lawyers to complete my transaction.

BTW, my first trip to LOS was in January 1998--was getting close to 60. My room on Sukhumvit was 500 per night. Now, that same room (with the same mattress, a/c, and carpet) is 800 and I'm only getting 32.80. Ouch!

I'm going to be sending most of my proceeds back to the USA. Is there a 700K limit per year or any other ridiculous rules that I should know about?

[Seizhin]

It's good for me, but bad in the other way around.

Thailand's economy is just in a very screwed condition now.

[Old Man River]

Interesting home sale in april in the US up 6.3%

Dollar up 106.29 to the Yen

I think we will see baht at 34 soon.

How in the world can the BOT stop that, it's not just Thailand

Ray, the BOT's efforts to stop the rapid rise of the baht last year was largely unsuccessful just as any efforts on their part to stop the decline currently will be. I think that the BOT's main concern is not in stopping the bahts decline, but rather to insure that the bahts decline is a slow and measured one and not a replay of 1997. A weaker baht is actually a win-win scenario for Thailand, as long as the decline is an orderly one.

Normally, the BOT does want relative stability, but these days with oil prices through the roof a stronger THB/USD exchange rate is preferable (albeit beyond their control).

[epicstuff]

Bring it on...lets see 72 baht to the pound again..or more

Bugger off,, I want to see the Baht strengthn to 60 or better to the pound. Atleast that way I might be able to compensate for some real bad investments over here when cashing in my chips.

[ray23]

I can understand that but with the dollar reserves they have can't they just use that to purchase oil? It would seem to me that woudl cushion the blow a bit, since it would have a higher value.

If they infact purchased all those dollar this would be time to cash in, for profits. I always believed they would shielded by that action wehn the baht wekened. But this wouldn't be the first tiem i have been wrong.

The dollar strenthening should help with the cost of oil and send speculators where the better money is. Both of which will help until the supply side of thing betters or the demand lessens

[papajohn]

Naam you are a gas, I'm switching to Sherry. Now my 2 baht. All the talk about the dollar/pound/euro/yen/yuan/baht is missing the big picture. What is the root cause of the economic slide

in all these countries ? THE PRICE OF OIL !! Now who controls the price of oil? "OPEC". This week the leading countries of economic growth for most of the world asked " OPEC" to increase production to help

offset the coming economic slowdown. What was their answer " screw you" we are really enjoying all the wealth that is coming our way from you.$ 139.00 usd a barrel We stick a staff in the earth and up pops oil. It is the will of whats his name !! WE will rule the world! My question is what scientific, medical, or humanitarian contributions have we seen from these countries. Everybody here seems to forget the target of 9/11. " The World Trade Center" , This attack on the USA was not a spur of the moment plan. It took 4 years to plan and impliment ! It was not the plan of 17 deranged men. Most were well educated. It took a lot of planning and training. This kind of operation takes support from major sponsers with unlimited bankrolls. It was just the start ! Think about it folks, what you are talking about is peanuts to those that control the real money ( oil ) = Economic Power and they showed their real face to us this week. Personally if the baht is 30 or 40 to the dollar will not affect my enjoyment of this interesting country and its culture and people. Lets just enjoy the hospitality of the Thais and their lovely country. While we can!. Sawadee Kup.

[wintermute]

I am So praying that it drops, and drops hard, I really don't even care how hard either just so long as it dosn't stop my condo from being built like in 97 I'm cool.

i am hoping to see many many Thais fired and in debt, bankrupt, homeless, etc. Then I can snatch up all the cheap real estate.

If you even believe for a second that any of that discounting will be passed on to you, you are seriously mistaken. The property market here is manipulated big time. They would rather sit on it than sell it. It's easier to lose paper value than to allow the market to deflate through normal market supply/demand conditions.

[ray23]

Not in any defence of big oil but you asked the question the Kuwait fund is very active and unfrotunately the only one to drop the dollar for purchase. So I find a bit ungrateful considering what the US did for them. I was there for a short stint of three months, for some work. If I actually met a anyone who was actually a citizen of Kuwait it had to have been in immigrations. As general rule they don't work and hire foriegners fro the drudge jobs. They simply don't need to work

By the way it is no an area I would car to viti again in any form.

As to the other Opec nations they are very active in funding politics in the region not always in the best interest of the west. In short term got me but, long term tjhe only answer is alternative energy or be held captive. Thats the big band wagon now, not the first time. If the oil price drops we will continue on our merry way and forget about this just as we have in the past.

sorry for going off the topic just trying to answer a qauestion.

Having now watch this subject for some two years now I do remember predictions that the dollar would gain in the second half of this year. Is that hapeening maybe, only time will tell.

The other thing that has been interesting is how news presents things. Today the gains by America in the foriegn trade deficits erased by the cost of oil. Nothing about what would have happened if those gains had not been there. surely it would have been a much worse position wihtout those gains. Only the negatives seem to be stressed.

The othre prediction tha seem to be off a bit was that Asia would be bullet proof through this. I woudld imagine there are few investors around these days that ran to Vietnam and may not agree.

Anyone else noticing that is no follow up news on this, only that they intervened and then nothing.

Are we already back to a two system Baht? I notioced that I see 33.10 and above on the bloon mberg, but the local bank is goign the other direction in baht exchange.

Oh well to much thinking for me