US Dollar Soars To 21-Month High Against Thai Baht

[Jai Dee]

US dollar rises to new multi-month high against Thai baht

The US dollar edged higher to 35.42 against the Thai baht at 10:50 pm ET Wednesday.

This set the highest point for the pair since February 2007.

If the dollar-baht pair gains further, 35.8 is seen as the next target level. The pair closed yesterday's North American session at 35.27.

Source: Nasdaq - 27 November 2008

[bdenner]

It's not before time that the markets saw through the crap that is going on here at the moment. Or is it the BOT has finally run out of the USD it's been using to artificially prop up the Baht?

[Heng]

It's ALL good.

[Moonrakers]

It's ALL good.

I'll second that.

[rainman]

I bet Sonthi and the PAD are now wondering why their protests have affected the Thai Baht so much.

[chiang mai]

It's ALL good.

I'll second that.

Unless you happen to be a Thai that is!

[rainman]

Unless you happen to be a Thai that is!

Oh wait, nobody told the PAD that a sinking Thai Baht is bad for the Thai people.

[bKkRk]

It's ALL good.

Time to move my pesos back to baht

[peekint]

Unless you happen to be a Thai that is!

Oh wait, nobody told the PAD that a sinking Thai Baht is bad for the Thai people.

As a matter of fact, the sinking Thai Baht is a BOON for Thai people.

The government has been supporting the baht for some time now, to the detriment of exporters, job creation, and the tourism industry. When the USD strengthened as a result of the world financial crisis (as a safe haven currency, many investors in developing nations bought dollars), it made the baht phenomenally expensive against the Euro.

The reason for the support? A previous government was hellbent on paying off the IMF loan. What if it issued USD denominated bonds, available overseas, 30 years 10% interest only? The interest is paid in USD. If the baht weakens against the dollar, those 10% payments can quickly look like 15%, and it's not a small amount of money either. It's cheaper for the central bank to buy Baht to prop up the value rather than to have the outflow in USD interest payments (the volume is rather staggering compared to the normal foreign exchange flow if you remember the size of the IMF loans)

However, as the economy takes the export hit, the policy becomes unsustainable.

Once the political brouhaha has settled (and it will someday), Thailand will be much better positioned to resume its normal export activities if the baht is normalized against other Asian currrencies.

So, both we foreigners with overseas incomes and the average Thai person (who doesn't consume a lot of imported goods, but does rely on the export and tourism trades for income) have a lot to gain here. Thanks PAD.

[Nirvana]

Unless you happen to be a Thai that is!

Oh wait, nobody told the PAD that a sinking Thai Baht is bad for the Thai people.

As a matter of fact, the sinking Thai Baht is a BOON for Thai people.

The government has been supporting the baht for some time now, to the detriment of exporters, job creation, and the tourism industry. When the USD strengthened as a result of the world financial crisis (as a safe haven currency, many investors in developing nations bought dollars), it made the baht phenomenally expensive against the Euro.

The reason for the support? A previous government was hellbent on paying off the IMF loan. What if it issued USD denominated bonds, available overseas, 30 years 10% interest only? The interest is paid in USD. If the baht weakens against the dollar, those 10% payments can quickly look like 15%, and it's not a small amount of money either. It's cheaper for the central bank to buy Baht to prop up the value rather than to have the outflow in USD interest payments (the volume is rather staggering compared to the normal foreign exchange flow if you remember the size of the IMF loans)

However, as the economy takes the export hit, the policy becomes unsustainable.

Once the political brouhaha has settled (and it will someday), Thailand will be much better positioned to resume its normal export activities if the baht is normalized against other Asian currrencies.

So, both we foreigners with overseas incomes and the average Thai person (who doesn't consume a lot of imported goods, but does rely on the export and tourism trades for income) have a lot to gain here. Thanks PAD.

I agree with that fully, it cannot stay as it much longer. They must be spending a fortune. Was kinda hoping for 39 Baht by the end of the year, i think it is possible. What tourism is left will be hit by non favourable exchange rates for europeans now anyhow so it needs to change.

[Heng]

It's ALL good.

I'll second that.

Unless you happen to be a Thai that is!

Only for Thais (and foreigners) who haven't planned ahead.

[tijnebijn]

A crash of the Baht will teach them !

[jdinasia]

Strange that people are talking about a crash of the Thai Baht ---- but that other currencies are not gaining much if any against the Baht.

Rainman what other currencies are moving against the Baht and how is the SET doing? Didn't the SET close UP yesterday even in the face of an airport takeover? Isn't it safe to assume at this oint what we are seeing is a strengthening of the USD against world currencies and not a devaluation of the THB?

[jdinasia]

BTW --- since a strong THB is BAD for exports and Thailand is a MAJOR exporter the weakening of the THB against the currencies of its major export partners is not a bad thing!

[bonobo]

As a matter of fact, the sinking Thai Baht is a BOON for Thai people.

The government has been supporting the baht for some time now, to the detriment of exporters, job creation, and the tourism industry. When the USD strengthened as a result of the world financial crisis (as a safe haven currency, many investors in developing nations bought dollars), it made the baht phenomenally expensive against the Euro.

Once the political brouhaha has settled (and it will someday), Thailand will be much better positioned to resume its normal export activities if the baht is normalized against other Asian currrencies.

So, both we foreigners with overseas incomes and the average Thai person (who doesn't consume a lot of imported goods, but does rely on the export and tourism trades for income) have a lot to gain here. Thanks PAD.

Our business employs about 700 Thais. So we are not huge, but still decent-sized. With the strong baht, our export sales have fallen even when demand for our product has risen. Customers have bought inferior products from Indian manufacturers.

Now that the baht is weakening, US customers, at least, are coming back, and our work force is getting back to working full time with the opportunity for overtime as well.

[animatic]

Unless you happen to be a Thai that is!

Oh wait, nobody told the PAD that a sinking Thai Baht is bad for the Thai people.

As a matter of fact, the sinking Thai Baht is a BOON for Thai people.

The government has been supporting the baht for some time now, to the detriment of exporters, job creation, and the tourism industry. When the USD strengthened as a result of the world financial crisis (as a safe haven currency, many investors in developing nations bought dollars), it made the baht phenomenally expensive against the Euro.

The reason for the support? A previous government was hellbent on paying off the IMF loan. What if it issued USD denominated bonds, available overseas, 30 years 10% interest only? The interest is paid in USD. If the baht weakens against the dollar, those 10% payments can quickly look like 15%, and it's not a small amount of money either. It's cheaper for the central bank to buy Baht to prop up the value rather than to have the outflow in USD interest payments (the volume is rather staggering compared to the normal foreign exchange flow if you remember the size of the IMF loans)

However, as the economy takes the export hit, the policy becomes unsustainable.

Once the political brouhaha has settled (and it will someday), Thailand will be much better positioned to resume its normal export activities if the baht is normalized against other Asian currrencies.

So, both we foreigners with overseas incomes and the average Thai person (who doesn't consume a lot of imported goods, but does rely on the export and tourism trades for income) have a lot to gain here. Thanks PAD.

Probably quite so.

[Kerryd]

This news is a bit misleading (to say the least).

I've been tracking the exchange rate over the last 5 weeks because of a (US $) cheque (wanting to see at what rate it will actually be credited at).

5 weeks ago the baht was between 34.2-34.5 to the US $.

It is now (as of a minute ago, according to xe.com) sitting at 35.2. I would hardly call .7 baht "soaring". Even a 1 baht/dollar jump isn't soaring (especially as it seemed to only be there momentarily).

That is one thing that surprised me when the coup happened, and during this most recent crisis. You would expect the baht to plummet, but it hasn't (against the US $ at least).

I've been hoping it would devalue vs the Cdn $ for some time now. When I exchanged a whack of cash in August, I was getting about 32/1. In October, it was down to 27.5/1 (but the US $ was still up there). Kind of p*ssing me off (especially when looking at transfers of 20k or more).

The good news is I don't have to transfer the money, so I can sit back and hope the exchange becomes more favourable in the near future.

[tropo]

5 weeks ago the baht was between 34.2-34.5 to the US $.

It is now (as of a minute ago, according to xe.com) sitting at 35.2. I would hardly call .7 baht "soaring". Even a 1 baht/dollar jump isn't soaring (especially as it seemed to only be there momentarily).

When I first read the title of this thread I thought there was something to get excited about, then I found out the baht has gained about 0.10 to the US dollar since yesterday.

It hasn't soared. It has hardly moved at all if you consider what's been going on in Thailand over the last few months.

The baht has barely moved a full point against the US dollar in 3 months.

[Seneque]

US dollar soars against the Baht ..... !!! what a joke.

Against the AUD (australian) yes i agree (from .96 down to .64) thats what i call the USD soaring...

The Baht has not moved (barely) against the USD (therefore firming against all other currencies except the yen) despite all the turmoil of these last 2 years and obviously escalating these last few weeks ans days... it sure looks real questionnable.

[CPH]

The Thai Baht was also very strong against USD in 1998 during the Asian crisis until the Central bank ran out of USD. Then the Thai Baht slid from 25 to 56 to the USD over a very short period.

It will maybe not hit 56 but 40-43 to the USD could very well be the case. This will also be much better for the Thai society, exports etc.

[HYENA]

It's ALL good.

I'll second that.

Unless you happen to be a Thai that is!

Not true! My adopted Thai family will benefit...every hundred I give them gets 400 more baht than just a couple months ago! I hope it climbs back where it was 4 years ago! No, I want 100....right now (I'm impatient). I check it daily smiling more every day! I can't wait to see what it is in Feb when I get there!

[HYENA]

If you click on the 10 year, you'll see overall, it very well may keep going up if the case of the past 2 years was a slow economical/political slowdown. I'm hoping this continues. It was 31 when I first went there in march-April and has been climbing since. You're talking a 10%+ rise here...I'm loving this!

Edited November 27, 2008 by HYENA

[sendbaht]

It's ALL good.

I'll second that.

Unless you happen to be a Thai that is!

Well, my wife is Thai and she likes it, but I know what you meant.

[Leethom]

The week before (over the weekend) the baht hit 35.83 against the dollar. Then on Monday it was quickly dragged back down.

[britmaveric]

Onward and upward to 40bht per $

[NickDawes]

In January 2007 I remember getting 70 Baht-ish to the British Pound. Now it's bouncing around 54.4-54.7 on XE over the last few days. I've been keeping my eye on the exchange, I fly out in January and selfishly hoped current events might turn around but nothing drastic seems to be happening! If something were to change, would it take place in a matter of days, weeks or months? I'm clueless when it comes to the economics!

[DegenFarang]

USD is gaining on all currencies.

This has very little to do with Thailand and a whole lot to do with the USA and the global financial crisis. The more uncertain the future looks the more people sell assets and put them in other dollar denominated assets...creating two transactions where dollars are needed (the selling and the buying) increasing the demand for dollars.

One very odd consequence of Wall Street screwing the world over has been they have made the USD surge.

[LaoPo]

When the USD strengthened as a result of the world financial crisis (as a safe haven currency, many investors in developing nations bought dollars),

That's a misconception.

The USD strengthened because the dollar was in urgent need to pay off debts by Banks/Hedge Funds/Countries (hundreds an hundreds of Billions) as a result of the subprime crisis. The dollar became kind of an expensive ''commodity'' hence the rising dollar. There was NOTHING fundamental, explaining the rise of the greenback, other than the debts to be paid off.

If some developing investors/countries bought dollars is was only as a drop in an ocean but that part certainly didn't influence the strength of the USD very much; just minor.

LaoPo

[bdenner]

USD is gaining on all currencies.

This has very little to do with Thailand and a whole lot to do with the USA and the global financial crisis. The more uncertain the future looks the more people sell assets and put them in other dollar denominated assets...creating two transactions where dollars are needed (the selling and the buying) increasing the demand for dollars.

One very odd consequence of Wall Street screwing the world over has been they have made the USD surge.

Notwithstanding the US people will be the loosers with a very strong dollar. eg. The cost of exported vehicles will be another nail in the coffin of an already troubled industry. The Europeans, Airbus Industries and the like must be laughing from the roof tops.

[Groongthep]

USD is gaining on all currencies.

This has very little to do with Thailand and a whole lot to do with the USA and the global financial crisis. The more uncertain the future looks the more people sell assets and put them in other dollar denominated assets...creating two transactions where dollars are needed (the selling and the buying) increasing the demand for dollars.

One very odd consequence of Wall Street screwing the world over has been they have made the USD surge.

Notwithstanding the US people will be the loosers with a very strong dollar. eg. The cost of exported vehicles will be another nail in the coffin of an already troubled industry. The Europeans, Airbus Industries and the like must be laughing from the roof tops.

Exported vehicles? With the exception of Jeeps and Corvettes the US hasn't exported consumer vehicles in any significant quantity in decades.