Naam Posted January 6, 2009 Share Posted January 6, 2009 When the ammount of reserves will start to drop faster (now they are about 20% down from their peak some months ago) it will be very hard for the BOT to keep the baht at its artificial value. Please enlighten me. As of 26 December last year the foreign reserves stood at 110,891.81 million US$. Exactly 1 year earlier they stood at 89,297.41 million Baht. So they grew foreign reserves by 24%! one explanation is that JDrake is using creative percentage calculation Link to comment Share on other sites More sharing options...
Ricardo Posted January 6, 2009 Share Posted January 6, 2009 I dont know much about economics, but an American friend has been telling me for a couple of months now. That the rich thai are supporting the baht to keep it strong so that they can get their money out of the country. That in the new year they will stop doing so in order for the baht to crash. Then they can buy back in again making huge profits. He says his source is in the State Department. And are the US-Government noted, for their understanding of economic-issues & management, their recent track-record with their own economy might suggest not but I still hope your friend's theory turns out to be right ! Link to comment Share on other sites More sharing options...
cclub75 Posted January 6, 2009 Share Posted January 6, 2009 (edited) From the link Naam provided:http://www.fxstreet.com/news/forex-news/ar...04-d47b68ed21c8 The problem is that Foreign reserves are provided for Q3 2008 but for Foreign debt the last available number is Q1 2008. LaoPo Why bother with outside reports ? Go at the source instead : The Bank Of Thailand. Foreign reserves + forward positions, per week. http://www.bot.or.th/English/Statistics/Ec...lReserves.aspx# And, if you're interested, the IMF gives the maturity for the forward positions : http://www.imf.org/external/np/sta/ir/tha/eng/curtha.htm Long term (CSV file) http://www.imf.org/external/np/sta/ir/tha/eng/hsttha.csv Last point : we should be careful... Officially (Tarisa in may 2008), the reserves are made of "60 % of USD"... if we assume that the other 40 % are in Euro, the exchange rate EURUSD can have an influence on the total BOT's reserves (always converted in USD, and marked to market). Edited January 6, 2009 by cclub75 Link to comment Share on other sites More sharing options...
LaoPo Posted January 6, 2009 Share Posted January 6, 2009 From the link Naam provided:http://www.fxstreet.com/news/forex-news/ar...04-d47b68ed21c8 The problem is that Foreign reserves are provided for Q3 2008 but for Foreign debt the last available number is Q1 2008. LaoPo Why bother with outside reports ? Go at the source instead : The Bank Of Thailand. Foreign reserves + forward positions, per week. http://www.bot.or.th/English/Statistics/Ec...lReserves.aspx# And, if you're interested, the IMF gives the maturity for the forward positions : http://www.imf.org/external/np/sta/ir/tha/eng/curtha.htm Long term (CSV file) http://www.imf.org/external/np/sta/ir/tha/eng/hsttha.csv Last point : we should be careful... Officially (Tarisa in may 2008), the reserves are made of "60 % of USD"... if we assume that the other 40 % are in Euro, the exchange rate EURUSD can have an influence on the total BOT's reserves (always converted in USD, and marked to market). Thanks but the first link provides data from 1999 ? Also, I hate the complicated websites provided by any Thai ministry or other source (tourism for instance) terrible to read. Maybe it's me. LaoPo Link to comment Share on other sites More sharing options...
bonzor Posted January 6, 2009 Share Posted January 6, 2009 Quite simply if the relationship between the baht and other regional currencies prior to their devaluation was in any way reflective of respective fundamentals then the baht is unsustainably high and will fall. Whether it has a hard or soft landing is up to luck, the central bank and the politicians. Unless you believe that Thailand is somehow immune to the virus of world wide contraction then in the face of what are competitive devaluations it has to fall simply because the market will expect it and it becomes a self fulfilling prophecy. Link to comment Share on other sites More sharing options...
Naam Posted January 6, 2009 Share Posted January 6, 2009 Quite simply if the relationship between the baht and other regional currencies prior to their devaluation was in any way reflective of respective fundamentals then the baht is unsustainably high and will fall. Whether it has a hard or soft landing is up to luck, the central bank and the politicians. Unless you believe that Thailand is somehow immune to the virus of world wide contraction then in the face of what are competitive devaluations it has to fall simply because the market will expect it and it becomes a self fulfilling prophecy. what market expects THB to fall? the only expectations i see is the (presently) wishful thinking of disgruntled expatriates living in Thailand who derive their income in other currencies than THB. global economic contractions affect other currencies too and level the playing field. having said so... i have no idea whether the Baht will fall or not and i don't participate in prophecies. nevertheless i too would appreciate a weaker Baht because the lion share of my expenses is in THB. Link to comment Share on other sites More sharing options...
Heng Posted January 7, 2009 Share Posted January 7, 2009 (edited) 35.57 this morning is hella fat compared to the 29-30 we had to deal with for part of last year. three corrections. 1-The BUYING rate is at 34.3 today and 2- the strongest point of the baht it was around 31 (not 29) in the onshore trading, the one we got from Thailand. 3- prices have rising (and still rising) at very strong pace (much much much more than the declared ridicolous official inflation rate) so definitely the country is much more costly in US$, not to mention in euros term or pound terms. When the baht was between 38 and 46 (not to mention in the 50-56) prices in baht were half of today's. Just see the difference .... Yeah, that's always been the case, but it's easier for me to go by the published offshore rates (with which the onshore rate moves in tandem anyway). Yesterday's offshore rates were 35.23 and I was getting 34.45 with yesterday's withdrawals. My overhead costs though have roughly remained the same (with labor costs "jumping" from 166 Baht a day to 180+; big deal) over the past decade or so, not to mention that my interest and rental income has grown substantially as well... certainly well ahead of inflation, thus still hella fat. Sucks for many, no doubt though. Edited January 7, 2009 by Heng Link to comment Share on other sites More sharing options...
Heng Posted January 7, 2009 Share Posted January 7, 2009 35.57 this morning is hella fat compared to the 29-30 we had to deal with for part of last year. is the stuff legal that you ingest Sometimes yes, sometimes no. Link to comment Share on other sites More sharing options...
jdrake72 Posted January 7, 2009 Share Posted January 7, 2009 When the ammount of reserves will start to drop faster (now they are about 20% down from their peak some months ago) it will be very hard for the BOT to keep the baht at its artificial value. Please enlighten me. As of 26 December last year the foreign reserves stood at 110,891.81 million US$. Exactly 1 year earlier they stood at 89,297.41 million Baht. So they grew foreign reserves by 24%! one explanation is that JDrake is using creative percentage calculation I am not. It is not my theory in fact. I have just read about it by some economists and they are all saying the same thing and explained with charts.It doesn t mean it is bible: in fact we don t know what to believe amindst this jungle of "experts" , "economists", "analysts", etc.Nevertheless I really fear something can happen to the baht, otherwise BOT wouldn t be so ossesively keep its value at a virtual peg or managed peg. What do you think they fear about in a floating market ? Too sharp rising of the Baht or the opposite ? If they fear nothing, so why doesn t allow the baht to float ? I am also enjoying all these threads, actually there is a new one, maybe the5th or the 6th about the same topic: baht crash, something hasn t happened yet and who knows if it will ver happen. In a way, yes, it is quite funny. Link to comment Share on other sites More sharing options...
Naam Posted January 7, 2009 Share Posted January 7, 2009 When the ammount of reserves will start to drop faster (now they are about 20% down from their peak some months ago) it will be very hard for the BOT to keep the baht at its artificial value. Please enlighten me. As of 26 December last year the foreign reserves stood at 110,891.81 million US$. Exactly 1 year earlier they stood at 89,297.41 million Baht. So they grew foreign reserves by 24%! one explanation is that JDrake is using creative percentage calculation I am not. It is not my theory in fact. I have just read about it by some economists and they are all saying the same thing and explained with charts.It doesn t mean it is bible: in fact we don t know what to believe amindst this jungle of "experts" , "economists", "analysts", etc.Nevertheless I really fear something can happen to the baht, otherwise BOT wouldn t be so ossesively keep its value at a virtual peg or managed peg. What do you think they fear about in a floating market ? Too sharp rising of the Baht or the opposite ? If they fear nothing, so why doesn t allow the baht to float ? I am also enjoying all these threads, actually there is a new one, maybe the5th or the 6th about the same topic: baht crash, something hasn t happened yet and who knows if it will ver happen. In a way, yes, it is quite funny. i don't thing it's a matter of "fear" but just following a certain policy. member "Soundman" raised a point which i consider quite valid although i don't have the insight knowledge to judge. in his opinion it's a matter of energy imports. cheaper energy equals lower inflation as energy is a cost factor in each and every product. as we have already a rampant inflation, especially food prices which hurts particularly the average Somchai who earns the pittance of 5-8,000 Baht, lower energy prices might keep the inflation rate in check. Link to comment Share on other sites More sharing options...
Smithson Posted January 7, 2009 Share Posted January 7, 2009 When the ammount of reserves will start to drop faster (now they are about 20% down from their peak some months ago) it will be very hard for the BOT to keep the baht at its artificial value. Please enlighten me. As of 26 December last year the foreign reserves stood at 110,891.81 million US$. Exactly 1 year earlier they stood at 89,297.41 million Baht. So they grew foreign reserves by 24%! one explanation is that JDrake is using creative percentage calculation I am not. It is not my theory in fact. I have just read about it by some economists and they are all saying the same thing and explained with charts.It doesn t mean it is bible: in fact we don t know what to believe amindst this jungle of "experts" , "economists", "analysts", etc.Nevertheless I really fear something can happen to the baht, otherwise BOT wouldn t be so ossesively keep its value at a virtual peg or managed peg. What do you think they fear about in a floating market ? Too sharp rising of the Baht or the opposite ? If they fear nothing, so why doesn t allow the baht to float ? I am also enjoying all these threads, actually there is a new one, maybe the5th or the 6th about the same topic: baht crash, something hasn t happened yet and who knows if it will ver happen. In a way, yes, it is quite funny. All this talk about tiny little Thailand being able to control the Baht rate is too much! I think a lot of ppl have trouble accepting that the Thai economy is in better shape than a lot of Western economies. They went thru a financial meltdown in 97 and applied safeguards to prevent a credit crunch happening again. The lost all their reserves in 97 and won't be so stupid again. Link to comment Share on other sites More sharing options...
Naam Posted January 7, 2009 Share Posted January 7, 2009 All this talk about tiny little Thailand being able to control the Baht rate is too much! don't forget that tiny little Thailand needs only to control the rate of a tiny little currency. unlike 1997 no hot money is flowing out and no speculators are attacking the Baht. Link to comment Share on other sites More sharing options...
Smithson Posted January 7, 2009 Share Posted January 7, 2009 All this talk about tiny little Thailand being able to control the Baht rate is too much! don't forget that tiny little Thailand needs only to control the rate of a tiny little currency. unlike 1997 no hot money is flowing out and no speculators are attacking the Baht. Yes, but western economies are in trouble and cutting interest rates, so investors look elsewhere. Despite complaints from the locals, things aren't that bad here, especially compared to the west. If the govt. was selling $ to prop up the baht, it's a prime opportunity for the speculators. It's possibly they could affect the currency through policy, but I doubt they would be selling $. Link to comment Share on other sites More sharing options...
Lix Posted January 7, 2009 Share Posted January 7, 2009 maybe now only decent farrangs will be able to afford to come to Thailand, not a bad thing, most only come here because they can get 2 beers for a pound ! Link to comment Share on other sites More sharing options...
jdrake72 Posted January 7, 2009 Share Posted January 7, 2009 (edited) Quite simply if the relationship between the baht and other regional currencies prior to their devaluation was in any way reflective of respective fundamentals then the baht is unsustainably high and will fall. Whether it has a hard or soft landing is up to luck, the central bank and the politicians. Unless you believe that Thailand is somehow immune to the virus of world wide contraction then in the face of what are competitive devaluations it has to fall simply because the market will expect it and it becomes a self fulfilling prophecy. what market expects THB to fall? the only expectations i see is the (presently) wishful thinking of disgruntled expatriates living in Thailand who derive their income in other currencies than THB. global economic contractions affect other currencies too and level the playing field. having said so... i have no idea whether the Baht will fall or not and i don't participate in prophecies. nevertheless i too would appreciate a weaker Baht because the lion share of my expenses is in THB. apart of the wishful thinking of some (others who have already brought money here are actually afraid of a thai baht drop) there are many facts: -Thai Baht is one of the very few currencies in the region and in the developing world not to have crushed aginst the US$ in the past months (many asian currencies such indian rupiah, philipppines peso, korean won, indonesia rupiah, all south american currencies, mexican peso, ,etc etc) -Thailand is by far the most unstable political country in the region. Int. Aiport seizures is something you see only in Afghanistan or Somalia or some country like those one... -Thailand has amongst the lowest growth in the region amongst developing economies ,much lower than India, China, Philippines, etc.. -Thailand has amongst the lowest interest rates in the region -Thai exports are CRUSHING for the lost competitiveness of the strong baht compared to a basket of other currencies (that s have been admitted by virtually anybody in former and current Thai governments). Many sectors like jewelry and textile are going to bankrupcy, not to talk about the slump in tourism which will let hundreds of thousands of Thais jobless in the coming months. -Foreign investiment is falling , housing sector is halted, megaproject are halted, confidence sentiment is at its LOWEST IN YEARS -Standard and Poor's and other institution has RISEN THE RISK for Thailand etc etc I could follow... are there enough reasons (at least to FEAR about the future of the Thai Baht exchange rate) apart of wishful thinking ? Believe me if I weren t convinved that Baht is overvalued, I wouldn't have any problem in following my business, I would work with this rate of 34.37 and 46.65 (today buying rates at SCB at 5pm closure), but me and many others are really scared to invest because we really have reasons to fear a drop of the baht in the near future. It is not wishful thinking, it is scaring thinking. For sure , with these rumors and suspects around about a possible baht drop, most of investors are on hold and that s is really bad now, when Thailand should try to re-capture investment. What I fear, is that Thailand right now is just moving by inertia and there could be a sudden stop of the economy...I might be wrong, I might be right, but I am not the only one to fear that. Apart of it, I confess I am surprised how Thailand is still moving on, despite what has happened , shopping malls , restaurants, etc are full of Thais spending money, the more expensive the place, the more full is, the more expensive the item (t-shirt.,perfume,...) the longer the qeue of Thais waiting to buy it. Not to mention the Thais prefer to spend 10million for a brand new condo of a famous construction company of 60sqm in Chitlom than a 180sqm 1 year old condo (with ghosts inside) of 6 million in Jatujak area. Thailand seems to have hidden resources and after many years here, I still wonder HOW this country move on. Nevertheless I cannot spare to keep scared about the current situation: the 1997 crisis is still in my memory. Edited January 7, 2009 by jdrake72 Link to comment Share on other sites More sharing options...
jdrake72 Posted January 7, 2009 Share Posted January 7, 2009 All this talk about tiny little Thailand being able to control the Baht rate is too much! don't forget that tiny little Thailand needs only to control the rate of a tiny little currency. unlike 1997 no hot money is flowing out and no speculators are attacking the Baht. I agree, but i would add FOR NOW. We don t know what will happen in few months and we have good reasons: Thailand now is not exactly what we can call a stable country... Link to comment Share on other sites More sharing options...
Briggsy Posted January 7, 2009 Share Posted January 7, 2009 The cut in interest rates by the US Fed has led to the US Dollar weakening against other major currencies as the US markets opened this evening. So good news for us Brits. The Baht always follows the dollar so the Baht is pushing 53 to the pound right now. Link to comment Share on other sites More sharing options...
Briggsy Posted January 7, 2009 Share Posted January 7, 2009 It's hit 53 to the pound. All over Pattaya, fat Brit farangs are rushing to their ATM's Link to comment Share on other sites More sharing options...
barrella Posted January 7, 2009 Share Posted January 7, 2009 This will be a short lived 53 as the BOE I am sure will announce a cut in interest rates later and guess what? I think we will see 49 to the baht. Link to comment Share on other sites More sharing options...
Briggsy Posted January 7, 2009 Share Posted January 7, 2009 This will be a short lived 53 as the BOE I am sure will announce a cut in interest rates later and guess what? I think we will see 49 to the baht. Absolutely. This is certainly going to happen. Hence the elephant-like rumble towards the ATM machines tonight. Link to comment Share on other sites More sharing options...
LaoPo Posted January 7, 2009 Share Posted January 7, 2009 Apart of it, I confess I am surprised how Thailand is still moving on, despite what has happened , shopping malls , restaurants, etc are full of Thais spending money, the more expensive the place, the more full is, the more expensive the item (t-shirt.,perfume,...) the longer the qeue of Thais waiting to buy it.Not to mention the Thais prefer to spend 10million for a brand new condo of a famous construction company of 60sqm in Chitlom than a 180sqm 1 year old condo (with ghosts inside) of 6 million in Jatujak area. Thailand seems to have hidden resources and after many years here, I still wonder HOW this country move on. Nevertheless I cannot spare to keep scared about the current situation: the 1997 crisis is still in my memory. Yes...banks, (still) willing to give out mortgages and credit. As soon as the <deleted> hits Thailand you will notice the consequences and a different consuming behavior than you watch now. But, if you've watched more closely you will have seen the reports that sales of cars and motor bikes already dropped in november/december, quite steep in fact, which is a sign that money-consuming investments like cars, motor bikes and houses are dropping. There is more out there than Bangkok consumers in shopping malls and restaurants; soon they will be empty as well. LaoPo Link to comment Share on other sites More sharing options...
Smithson Posted January 8, 2009 Share Posted January 8, 2009 Thais are great consumers and will only stop when flat broke and unable to borrow more money. Link to comment Share on other sites More sharing options...
Ricardo Posted January 8, 2009 Share Posted January 8, 2009 It's hit 53 to the pound.All over Pattaya, fat Brit farangs are rushing to their ATM's assisted by thin, but very friendly, younger female helpers, Bless Them ! Link to comment Share on other sites More sharing options...
lordofdelusion Posted January 8, 2009 Share Posted January 8, 2009 OK, Allright. Thailand has foreign currency reserves. So what? I am 1) NOT an economist and 2) In that class of wishful thinkers as I convert my dollars to Thai Baht to live. But the U.S. Has a large foreign currency reserve. See here http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htm#I They also have a large national debt. I hear Thailand will run an account defecit this year. So they have currency. And they have obligations. Someone tell me why that makes them financially sound. Link to comment Share on other sites More sharing options...
Naam Posted January 8, 2009 Share Posted January 8, 2009 OK, Allright. Thailand has foreign currency reserves. So what? I am 1) NOT an economist and 2) In that class of wishful thinkers as I convert my dollars to Thai Baht to live. But the U.S. Has a large foreign currency reserve. See here http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htm#I They also have a large national debt. I hear Thailand will run an account defecit this year. So they have currency. And they have obligations. Someone tell me why that makes them financially sound. quite obviously "nomen est omen" applies to you Mylord as you harbour the delusion that the U.S. has large foreign currency reserves. fact is that in comparison to Thailand and in relation to Gross National Product the U.S. reserves are tiny. but whatever, nobody has claimed that Thailand is financially sound. Link to comment Share on other sites More sharing options...
lordofdelusion Posted January 9, 2009 Share Posted January 9, 2009 OK, Allright. Thailand has foreign currency reserves. So what? I am 1) NOT an economist and 2) In that class of wishful thinkers as I convert my dollars to Thai Baht to live. But the U.S. Has a large foreign currency reserve. See here http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htm#I They also have a large national debt. I hear Thailand will run an account defecit this year. So they have currency. And they have obligations. Someone tell me why that makes them financially sound. quite obviously "nomen est omen" applies to you Mylord as you harbour the delusion that the U.S. has large foreign currency reserves. fact is that in comparison to Thailand and in relation to Gross National Product the U.S. reserves are tiny. but whatever, nobody has claimed that Thailand is financially sound. Of course! That's why I chose the name. It's my Buddhist background. This is all a delusion, including anyone thinking they can predict economic activity. But doesn't a country's currency reflect the strength of their economy and not their foreign currency reserves? Or is it just a matter of trade? Supply and demand? Link to comment Share on other sites More sharing options...
Naam Posted January 9, 2009 Share Posted January 9, 2009 OK, Allright. Thailand has foreign currency reserves. So what? I am 1) NOT an economist and 2) In that class of wishful thinkers as I convert my dollars to Thai Baht to live. But the U.S. Has a large foreign currency reserve. See here http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htm#I They also have a large national debt. I hear Thailand will run an account defecit this year. So they have currency. And they have obligations. Someone tell me why that makes them financially sound. quite obviously "nomen est omen" applies to you Mylord as you harbour the delusion that the U.S. has large foreign currency reserves. fact is that in comparison to Thailand and in relation to Gross National Product the U.S. reserves are tiny. but whatever, nobody has claimed that Thailand is financially sound. Of course! That's why I chose the name. It's my Buddhist background. 1.This is all a delusion, 2. including anyone thinking they can predict economic activity. 3.. But doesn't a country's currency reflect the strength of their economy and not their foreign currency reserves? 4. Or is it just a matter of trade? Supply and demand? 1. try to go a few days without food and liquid and tell your belly it's all delusion. 2. i fully agree with you. but the various currency prophets posting in Thaivisa won't. 3. the answer is a clear no as it reflects neither. 4. yes, if the currency has no attached restrictions and no interventions are made. the latter however is nothing but supply and demand too. Link to comment Share on other sites More sharing options...
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