What's All This Talk Of A Baht Collapse?

[mommysboy]

Sorry to bring this up yet again-[yes, I know it's been covered to death]-but I would like to hear from all the learned TV financial wizards as to why people keep posting that this decline is either possible or even imminent--is this just wishful thinking from people who's income in Thailand is based in foreign currencies or is there any grounds for such 'optimism'? Does Thailand have any IMF or World Bank loans, does Tarissa really artificially hike the baht [by buying/selling $US or whatever] and so on--please can you give me some ideas?

Layman-speak would be nice.

In all honesty who knows, but there is a general consensus that the bt must weaken. There is one compelling reason: exports. Performance is woeful.

Regarding the pound, I think again it's more a case of the pound being majorly undervalued against all other currencies.

If major currencies like the pound can be 'worked over' then so could the bt, so a collapse is not impossible; it's not just wishful thinking.

[BigSnake]

Well one thing for sure the Bank of Thailand will do it very best to see that it does not. THAI PRIDE!! trust me on this one.

[jdrake72]

I don't think you fully understand - the BOT has been selling USD in order to keep the Baht strong, if they wish to weaken the Baht it is easy to do except that they haven't tried nor wanted to.

Since when? Why do the want a high Baht?

Therein lies the mystery - strong currency, strong economy, face, who knows, the facts remain however. Possible pain later or not, unsure.

Is it a mystery or a fact? Even if they wanted to, they make little difference. Do you know what happened in '97?

all the opposite.

A managed devaluation would PREVENT a crush.

Don t forget that 1997 crush followed YEARS of stable exchange rate and the same obsessive policy of strong baht.

After years and years , when the toy broke up, the 1997 crush was the result.

I dont think I am paranoic, I am looking at many facts and -being an investor- i have good resons to be afraid.

If I were sure Baht would be at 35 per $ for the next 20 years , It would be ok ...not the perfect exchange rate but I would adapt to it,...the problem there is a real risk of a drop of the baht in the short or maybe medium term...

Edited January 7, 2009 by jdrake72

[jdrake72]

With interest rates in the US going to zero and the UK BOE under pressure to reduce more, economically it would suggest a zero end game.

The only reason to devalue the baht from the Bank of Thailands and govt eyes would be to stimulate domestic consumption and cheapen exports. Would it stimulate consumption? Doubtful to have a massive effect. The govt has already tabled plans for tax breaks on high value houses. Any saving in mortgages the people will pocket not spend because they are scared about losing their jobs. It wouldn't lead to a splurge of spending.

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

It might have a small boost to tourism, but would you change your decision on travelling to Thailand because it was 10% cheaper, 20% cheaper or 30% cheaper? Flights and the whole lot probably cost 1500 gbp per head at least, would you decide to travel because it is 1350? Some might, but the news in the UK is so bad right now, holidays are off the menu for many irrespective of cost.

Since the main trade is USD Baht and the GBP rate is probably calculated on a ratio of this, the rise of the baht to the GBP has more to do with the mess in the UK than strength in Thailand.

I can imagine a measured devaluation to 36 to the USD and a little bit to the pound 55, not a collapse as imagined. But then again the news in the US and the Europe is going to be shocking and the new govt will try its absolute damndest not to be involved in another currency collapse. Plus who knows how much foreign borrowing the major industrials have been doing and I am sure they would be in the govts ears to avoid another 97.

yes, good point man.

BUT teh fact Thia exports are going to crush and hundreds of thousands of Thais will be jobless iIF the country loses competitivity compared to its neighbour .

Most of them have already devaualted their curencies to teh dollar by 15-20-25%. Plus they have higher interest rates. Plus they have higher growth.

Thailand has already a twin deficit too. Investment is slowing at worrying level. Politics doesn t help...

I see things for Thailand becoming worse and worse if the baht remains so strong.

The point is if the other countries are devaluating their currencies and Thailand doesn t , it is losing competivness.

Chinese yuan is almost pegged at 6.85 but China is anyway much much cheaper than Thailand for anything plus how can we compare their monstruos trade surplus with the Thai twin deficits ?

Actually , Bahtit is rising against the dollar again, today 34.37 buying rate and 46.6 against the euro (SCB rates) when in December it was lower. Baht is much stronger againts the yen compared to last week too.

I think BOT cannot keep the currency at this level without causing a big economical depression in Thailand: that s quite simple.

It is not for us bad farangs who want to live cheaper, it is for millions of Thais who could lose their jobs if their factory is closing (and it is already happening every day....).

[IMA_FARANG]

With interest rates in the US going to zero and the UK BOE under pressure to reduce more, economically it would suggest a zero end game.

The only reason to devalue the baht from the Bank of Thailands and govt eyes would be to stimulate domestic consumption and cheapen exports. Would it stimulate consumption? Doubtful to have a massive effect. The govt has already tabled plans for tax breaks on high value houses. Any saving in mortgages the people will pocket not spend because they are scared about losing their jobs. It wouldn't lead to a splurge of spending.

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

It might have a small boost to tourism, but would you change your decision on travelling to Thailand because it was 10% cheaper, 20% cheaper or 30% cheaper? Flights and the whole lot probably cost 1500 gbp per head at least, would you decide to travel because it is 1350? Some might, but the news in the UK is so bad right now, holidays are off the menu for many irrespective of cost.

Since the main trade is USD Baht and the GBP rate is probably calculated on a ratio of this, the rise of the baht to the GBP has more to do with the mess in the UK than strength in Thailand.

I can imagine a measured devaluation to 36 to the USD and a little bit to the pound 55, not a collapse as imagined. But then again the news in the US and the Europe is going to be shocking and the new govt will try its absolute damndest not to be involved in another currency collapse. Plus who knows how much foreign borrowing the major industrials have been doing and I am sure they would be in the govts ears to avoid another 97.

I guess the Baht/pound and the Baht/dollar rates are much more due to the perception of the relative value of the U.K. and the U.S. economy than any reality of the relative value of the economies. The perception seems to be that the U.K. economy is in trouble....for that reason the pound is down against the Baht. As long as that perception remains the pound will be weak,

Now the U.S. dollar is used as a trading currency worldwide. Much of the raw matierial and goods used in manufacturing are qouted/valued in U.S. dollars. Thailand imports these matierials and pays for them in U.S. dollars. If the Baht rate went to 40 Baht to a dollar, then Thai comapanies that needed raw matierials costed in dollars, would have to raise their price for the goods they manufacture (in Baht) in order to make the same profit margin. (If it takes 1 dollar of matierial to make an object at an exchange rate of 35 Baht to a dollar, you can sell that object at 37 Baht, and still make a 2 Baht profit. When the Baht exchange rate rises to 40 to a dollar, you have to sell that item at 42 baht for the same 2 Baht profit). Result for the Thai consumer...they have to pay more for the goods they buy. The Thai consumers don't like that, and the politiciams get the message very quickly. That's why selling off dollar reserves to keep the Baht strong is a good idea for the Thai government.

The question is....does the Thai economy have the basic strength to maintain that Baht/dollar rate for a long period? Are the dollar reserves there to keep the Baht at that higher value?

I don't know....would be nice to have that information. My guess...just a guess...is that the Thai economy can't sustain the overvalued Baht forever. But I don't see an abrupt collapse, I think the rate will go to 36 to 38 to a dollar....depending on how much support the Thai government can manage...and also of course on the perception of the strength or weakness of the U.S. economy.

[Thai at Heart]

With interest rates in the US going to zero and the UK BOE under pressure to reduce more, economically it would suggest a zero end game.

The only reason to devalue the baht from the Bank of Thailands and govt eyes would be to stimulate domestic consumption and cheapen exports. Would it stimulate consumption? Doubtful to have a massive effect. The govt has already tabled plans for tax breaks on high value houses. Any saving in mortgages the people will pocket not spend because they are scared about losing their jobs. It wouldn't lead to a splurge of spending.

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

It might have a small boost to tourism, but would you change your decision on travelling to Thailand because it was 10% cheaper, 20% cheaper or 30% cheaper? Flights and the whole lot probably cost 1500 gbp per head at least, would you decide to travel because it is 1350? Some might, but the news in the UK is so bad right now, holidays are off the menu for many irrespective of cost.

Since the main trade is USD Baht and the GBP rate is probably calculated on a ratio of this, the rise of the baht to the GBP has more to do with the mess in the UK than strength in Thailand.

I can imagine a measured devaluation to 36 to the USD and a little bit to the pound 55, not a collapse as imagined. But then again the news in the US and the Europe is going to be shocking and the new govt will try its absolute damndest not to be involved in another currency collapse. Plus who knows how much foreign borrowing the major industrials have been doing and I am sure they would be in the govts ears to avoid another 97.

yes, good point man.

BUT teh fact Thia exports are going to crush and hundreds of thousands of Thais will be jobless iIF the country loses competitivity compared to its neighbour .

Most of them have already devaualted their curencies to teh dollar by 15-20-25%. Plus they have higher interest rates. Plus they have higher growth.

Thailand has already a twin deficit too. Investment is slowing at worrying level. Politics doesn t help...

I see things for Thailand becoming worse and worse if the baht remains so strong.

The point is if the other countries are devaluating their currencies and Thailand doesn t , it is losing competivness.

Chinese yuan is almost pegged at 6.85 but China is anyway much much cheaper than Thailand for anything plus how can we compare their monstruos trade surplus with the Thai twin deficits ?

Actually , Bahtit is rising against the dollar again, today 34.37 buying rate and 46.6 against the euro (SCB rates) when in December it was lower. Baht is much stronger againts the yen compared to last week too.

I think BOT cannot keep the currency at this level without causing a big economical depression in Thailand: that s quite simple.

It is not for us bad farangs who want to live cheaper, it is for millions of Thais who could lose their jobs if their factory is closing (and it is already happening every day....).

I think what we have to consider is more that everyone's exports in the region are going to be reduced. We are in Thailand and that isn't good for Thailand. This we know.

I am no scientific economist, but if the US, the UK and Europe all slip into recession at the same time, there are going to be simply fewer customers to buy exports from everyone. This will be a global contraction of GDP, which the modern system has absolutely no experience of how to handle. The social issues of Thai politics are terrible and millions will lose their jobs, but all the devaluation under the sun won't spur people in Europe or the US to buy cars, t-shirts or flip flops if they are out of a job also. The jobless figures in the US and the UK are horrible and rising, Europe will be next to drop interest rates I believe. China is groaning right now, but instead of devaluing they are spurring domestic consumption.

This is so much a global problem right now, I think Thailand will try to increase with domestic consumption with a big cut in interest rates and govt deficit. They could use the USD to fund consumption, but, that would increase pressure on the baht. Imagine if China did this to fund their increased govt spending. Whammo, the USD will got to nothing. The BOT appear to be keeping their tinder dry to wait for when the battle really comes to Thailand's doorstep, which probably is the right thing to do.

Some say it is here already, but I reckon there is going to be a big and deep recession in the western world.

However, interest rates in the US right now are 0% and oil is at 50$, demand for USD is pretty weak after the initial flight to quality/cash from the far East. The FED has shot all its weapons, there is nothing left. Anyone care to guess whether the Dow might drop even more after it's slight resurgence? The stimulus hasn't kicked in yet which should help, but you can bet that won't be used to fund imports of stuff from here.

Speaking to some banking friends in Korea where the currency has plummeted, many of the big Chaebol are exposed to very large USD debt and and they are really concerned that one might get into real trouble if this exchange rate stays at 1400 as opposed to 900 6 months ago. The basic problem was that USD funds held about 75% of the Korean stockmarket. The funds have cashed out and headed back to the US.

This hasn't happened in Thailand for the ironic reason that corporate governance in Thailand won't allow the big US funds such as Calpers to invest here. Ironically, by not being so connected to the US and the US banks through legislation and poor corporate governance, Thai banks appears to have had almost no direct contact to the subprime fiasco.

I do wonder if there are some very large Thai companies with USD exposure pulling a string or two. I had believed that they had learnt that lesson from 97, but who knows.

Until there is some sustained good news out of the US, there isn't much reason globally for the USD to move up that much. The GBP might go way below parity to the Euro.

Sit tight and watch the fun.

[chiang mai]

With interest rates in the US going to zero and the UK BOE under pressure to reduce more, economically it would suggest a zero end game.

The only reason to devalue the baht from the Bank of Thailands and govt eyes would be to stimulate domestic consumption and cheapen exports. Would it stimulate consumption? Doubtful to have a massive effect. The govt has already tabled plans for tax breaks on high value houses. Any saving in mortgages the people will pocket not spend because they are scared about losing their jobs. It wouldn't lead to a splurge of spending.

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

It might have a small boost to tourism, but would you change your decision on travelling to Thailand because it was 10% cheaper, 20% cheaper or 30% cheaper? Flights and the whole lot probably cost 1500 gbp per head at least, would you decide to travel because it is 1350? Some might, but the news in the UK is so bad right now, holidays are off the menu for many irrespective of cost.

Since the main trade is USD Baht and the GBP rate is probably calculated on a ratio of this, the rise of the baht to the GBP has more to do with the mess in the UK than strength in Thailand.

I can imagine a measured devaluation to 36 to the USD and a little bit to the pound 55, not a collapse as imagined. But then again the news in the US and the Europe is going to be shocking and the new govt will try its absolute damndest not to be involved in another currency collapse. Plus who knows how much foreign borrowing the major industrials have been doing and I am sure they would be in the govts ears to avoid another 97.

yes, good point man.

BUT teh fact Thia exports are going to crush and hundreds of thousands of Thais will be jobless iIF the country loses competitivity compared to its neighbour .

Most of them have already devaualted their curencies to teh dollar by 15-20-25%. Plus they have higher interest rates. Plus they have higher growth.

Thailand has already a twin deficit too. Investment is slowing at worrying level. Politics doesn t help...

I see things for Thailand becoming worse and worse if the baht remains so strong.

The point is if the other countries are devaluating their currencies and Thailand doesn t , it is losing competivness.

Chinese yuan is almost pegged at 6.85 but China is anyway much much cheaper than Thailand for anything plus how can we compare their monstruos trade surplus with the Thai twin deficits ?

Actually , Bahtit is rising against the dollar again, today 34.37 buying rate and 46.6 against the euro (SCB rates) when in December it was lower. Baht is much stronger againts the yen compared to last week too.

I think BOT cannot keep the currency at this level without causing a big economical depression in Thailand: that s quite simple.

It is not for us bad farangs who want to live cheaper, it is for millions of Thais who could lose their jobs if their factory is closing (and it is already happening every day....).

Until there is some sustained good news out of the US, there isn't much reason globally for the USD to move up that much. The GBP might go way below parity to the Euro.

Not really relevant to the OP's question but GBP will not reach parity with the EURO and is in fact now going the other way, expect a target of around 1.17 by E1Q09.

[Thai at Heart]

With interest rates in the US going to zero and the UK BOE under pressure to reduce more, economically it would suggest a zero end game.

The only reason to devalue the baht from the Bank of Thailands and govt eyes would be to stimulate domestic consumption and cheapen exports. Would it stimulate consumption? Doubtful to have a massive effect. The govt has already tabled plans for tax breaks on high value houses. Any saving in mortgages the people will pocket not spend because they are scared about losing their jobs. It wouldn't lead to a splurge of spending.

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

It might have a small boost to tourism, but would you change your decision on travelling to Thailand because it was 10% cheaper, 20% cheaper or 30% cheaper? Flights and the whole lot probably cost 1500 gbp per head at least, would you decide to travel because it is 1350? Some might, but the news in the UK is so bad right now, holidays are off the menu for many irrespective of cost.

Since the main trade is USD Baht and the GBP rate is probably calculated on a ratio of this, the rise of the baht to the GBP has more to do with the mess in the UK than strength in Thailand.

I can imagine a measured devaluation to 36 to the USD and a little bit to the pound 55, not a collapse as imagined. But then again the news in the US and the Europe is going to be shocking and the new govt will try its absolute damndest not to be involved in another currency collapse. Plus who knows how much foreign borrowing the major industrials have been doing and I am sure they would be in the govts ears to avoid another 97.

yes, good point man.

BUT teh fact Thia exports are going to crush and hundreds of thousands of Thais will be jobless iIF the country loses competitivity compared to its neighbour .

Most of them have already devaualted their curencies to teh dollar by 15-20-25%. Plus they have higher interest rates. Plus they have higher growth.

Thailand has already a twin deficit too. Investment is slowing at worrying level. Politics doesn t help...

I see things for Thailand becoming worse and worse if the baht remains so strong.

The point is if the other countries are devaluating their currencies and Thailand doesn t , it is losing competivness.

Chinese yuan is almost pegged at 6.85 but China is anyway much much cheaper than Thailand for anything plus how can we compare their monstruos trade surplus with the Thai twin deficits ?

Actually , Bahtit is rising against the dollar again, today 34.37 buying rate and 46.6 against the euro (SCB rates) when in December it was lower. Baht is much stronger againts the yen compared to last week too.

I think BOT cannot keep the currency at this level without causing a big economical depression in Thailand: that s quite simple.

It is not for us bad farangs who want to live cheaper, it is for millions of Thais who could lose their jobs if their factory is closing (and it is already happening every day....).

Until there is some sustained good news out of the US, there isn't much reason globally for the USD to move up that much. The GBP might go way below parity to the Euro.

Not really relevant to the OP's question but GBP will not reach parity with the EURO and is in fact now going the other way, expect a target of around 1.17 by E1Q09.

Hope so. Lets see.

Presumably assuming all other variables are constant.

[henryalleman]

I'm more interested why the THB/Euro rate is acting like a roller-coaster, While the USD/THB rate is rather fixed.

http://www.scb.co.th/exchange/bk-pvsexchange.htm

can anybody explain this to me.

Thanks in advance

[expatgaz]

By September 09 we'll see Baht - USD at 39-40 and Baht - GBP at 63-65.

EPG.

[chiang mai]

By September 09 we'll see Baht - USD at 39-40 and Baht - GBP at 63-65.

EPG.

Only in your dreams I'm afraid.

[Naam]

I'm more interested why the THB/Euro rate is acting like a roller-coaster, While the USD/THB rate is rather fixed. can anybody explain this to me.

because of the fluctuations USD/EUR. as simple as that.

[Smithson]

How does Thailand manage to 'devalue' the Baht? The currency has been floated since 97.

"floated" doesn't mean much. The BOT has been constantly following a "management currency" policy. It's obvious, documented (the capital controls from december 2006 to march 2008, the on shore / off shore dual rates, the policy of buying USD, because a that time the THB was increasing too fast versus the USD etc.)

They have been attempting management, but it hasn't really worked. Those mentioned failed to stem the tide - the baht continued to rise. So I don't see how they can now 'manage' to lower it's value, because they haven't been able to in the past.

Not to mention that circumstances outside the country are much bigger factors than anything going on here.

I don't think you fully understand - the BOT has been selling USD in order to keep the Baht strong, if they wish to weaken the Baht it is easy to do except that they haven't tried nor wanted to.

adding "fully" does not seem to be appropriate

Do you believe they are selling US$? Take a look around, the economy here isn't so bad. Take a look around, there's plenty of ppl shopping, new building going up.

The Baht has lost value against the dollar over recent months, it's the other currencies that have plummeted against the dollar the gives the impression of a strong baht.

Nobody really knows, I hope I'm wrong because my business is export.

[Gary A]

The only people who care at all about exchange rate are the expats and businesses that do import export. Ask the average person on the street of any country and they either don't know or don't care. They only care about the local cost of living.

[Old Croc]

Yes, the only people who care are those that travel or whose money travels.

A fair proportion of the members of Thaivisa.

[Chaimai]

By September 09 we'll see Baht - USD at 39-40 and Baht - GBP at 63-65.

EPG.

I hope you are right, myThai deposits will run out about then and I will have to move Sterling across

[chiang mai]

How does Thailand manage to 'devalue' the Baht? The currency has been floated since 97.

"floated" doesn't mean much. The BOT has been constantly following a "management currency" policy. It's obvious, documented (the capital controls from december 2006 to march 2008, the on shore / off shore dual rates, the policy of buying USD, because a that time the THB was increasing too fast versus the USD etc.)

They have been attempting management, but it hasn't really worked. Those mentioned failed to stem the tide - the baht continued to rise. So I don't see how they can now 'manage' to lower it's value, because they haven't been able to in the past.

Not to mention that circumstances outside the country are much bigger factors than anything going on here.

I don't think you fully understand - the BOT has been selling USD in order to keep the Baht strong, if they wish to weaken the Baht it is easy to do except that they haven't tried nor wanted to.

adding "fully" does not seem to be appropriate

Do you believe they are selling US$? Take a look around, the economy here isn't so bad. Take a look around, there's plenty of ppl shopping, new building going up.

The Baht has lost value against the dollar over recent months, it's the other currencies that have plummeted against the dollar the gives the impression of a strong baht.

Nobody really knows, I hope I'm wrong because my business is export.

We're not talking about a matter of opinion here we are talking about fact hence everybody really does know, except you it seems! It is indeed a fact that the BOT has been selling USD in favor of the Baht and that has been their stated policy. Consequently the Baht has NOT lost value against USD over recent months and a quick review of the exchange rate tables over the same period will reassure you of that fact. Grasping the one phrase in your post that is correct, "it's the other currencies that have plummeted against the dollar", this has been true of most currencies over the past three months - however, it is not that reason that gives the impression of a strong Baht, the reason is that the Baht has been strong, artificially or otherwise.

[wolfmanjack]

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

.

Now the U.S. dollar is used as a trading currency worldwide. Much of the raw matierial and goods used in manufacturing are qouted/valued in U.S. dollars. Thailand imports these matierials and pays for them in U.S. dollars. If the Baht rate went to 40 Baht to a dollar, then Thai comapanies that needed raw matierials costed in dollars, would have to raise their price for the goods they manufacture (in Baht) in order to make the same profit margin. (If it takes 1 dollar of matierial to make an object at an exchange rate of 35 Baht to a dollar, you can sell that object at 37 Baht, and still make a 2 Baht profit. When the Baht exchange rate rises to 40 to a dollar, you have to sell that item at 42 baht for the same 2 Baht profit). Result for the Thai consumer...they have to pay more for the goods they buy. The Thai consumers don't like that, and the politiciams get the message very quickly. That's why selling off dollar reserves to keep the Baht strong is a good idea for the Thai government.

The exchange rate was apprx 40 to the $ or lower for many years. Are the prices now less than they were then ?? The prices went up in 1997 due to the poor exchange rate. The prices went up again when the oil prices skyrocketed. Oil has dropped drastically but have any of the prices dropped ?? Nope. Personally i think that the companies that import raw materials and sell to the domestic market in baht have 40-45 to the $ figured into their pricing structure and are pocketing the extra baht. making the exchange rate 40 to the $ should not raise prices for most items. Energy is the one item that has been rising and falling with the exchange rate but i have not seen any other products on the market following suit. Maybe there are others but i have not seen it.

[jdrake72]

Would it stimulate exports? It would have to go an awfully long way to bring customers back to source products in Thailand from other cheap producing countries. China is next door and Thailand will never be able to compete on price alone against it. If the yuan devalues, the baht may follow but I don't see it. Don't forget a massive amount of exports here rely on imported raw materials so a devaluation pushes up imports. Steel and oil are way down, so I am not sure, but the input cost of a lot of products may actually be falling.

.

Now the U.S. dollar is used as a trading currency worldwide. Much of the raw matierial and goods used in manufacturing are qouted/valued in U.S. dollars. Thailand imports these matierials and pays for them in U.S. dollars. If the Baht rate went to 40 Baht to a dollar, then Thai comapanies that needed raw matierials costed in dollars, would have to raise their price for the goods they manufacture (in Baht) in order to make the same profit margin. (If it takes 1 dollar of matierial to make an object at an exchange rate of 35 Baht to a dollar, you can sell that object at 37 Baht, and still make a 2 Baht profit. When the Baht exchange rate rises to 40 to a dollar, you have to sell that item at 42 baht for the same 2 Baht profit). Result for the Thai consumer...they have to pay more for the goods they buy. The Thai consumers don't like that, and the politiciams get the message very quickly. That's why selling off dollar reserves to keep the Baht strong is a good idea for the Thai government.

The exchange rate was apprx 40 to the $ or lower for many years. Are the prices now less than they were then ?? The prices went up in 1997 due to the poor exchange rate. The prices went up again when the oil prices skyrocketed. Oil has dropped drastically but have any of the prices dropped ?? Nope. Personally i think that the companies that import raw materials and sell to the domestic market in baht have 40-45 to the $ figured into their pricing structure and are pocketing the extra baht. making the exchange rate 40 to the $ should not raise prices for most items. Energy is the one item that has been rising and falling with the exchange rate but i have not seen any other products on the market following suit. Maybe there are others but i have not seen it.

Yes, that incredible and the more incredible Thais don t protest.

SOME (just some, beacuse the list would be endless ) samples: bus fares: smaller green buses from 2.5 baht with cheap oil to 8 baht at oil at $147, NOW 7 baht (almost 300% more than when oil was at the same current price before rising)

Post Office and CARGOS: SINCE July when oil was at $147, UPS HAS RISEN THE PRICES 3 TIMES AND LOWERED 2 TIMES (for few cents) !! They are charging like oil was at over $200. DHL HAS RISEN 1 time and never dropped !!

Imported Stuff like pasta, cheese, etc;;;; :Since wheat prices dropped , imported pastry and pasta has risen by 5% to 30% and European food was higher even when euro dropped from 53 to 44 baht !! Amazing

Small soup from 5 baht to 13 baht OVERNIGHT 250%

Etc etc ...it is a endless list of contisous jump in prices of 20-30-50-100-200-300% overnight even in cases when raw material have gone down by 50%.

Govt.,should set up a commission of oversight this stuff, I doN T MEAN price controls like in certain stupid governments, but that s is quite an abuse and almost a human rights violation.

I don t say for me, because I can afford to live more expensive, but what about millions of Thais who make 6000-7000 baht a month ??

I dont blame taxis, they have been keeping their rates for 10-15 years and they are an excellent deal,just anything else...

[Naam]

Grasping the one phrase in your post that is correct, "it's the other currencies that have plummeted against the dollar",

i strongly and [not so] humbly beg to differ

[eastlight]

How does Thailand manage to 'devalue' the Baht? The currency has been floated since 97.

"floated" doesn't mean much. The BOT has been constantly following a "management currency" policy. It's obvious, documented (the capital controls from december 2006 to march 2008, the on shore / off shore dual rates, the policy of buying USD, because a that time the THB was increasing too fast versus the USD etc.)

They have been attempting management, but it hasn't really worked. Those mentioned failed to stem the tide - the baht continued to rise. So I don't see how they can now 'manage' to lower it's value, because they haven't been able to in the past.

Not to mention that circumstances outside the country are much bigger factors than anything going on here.

I don't think you fully understand - the BOT has been selling USD in order to keep the Baht strong, if they wish to weaken the Baht it is easy to do except that they haven't tried nor wanted to.

Just my two penny's worth - but isn't uncertainty the thing which the markets hate the most?

We have certainly had our fair share of uncertainty - terrorism in the south, political street fighting, airport takenover, no effective government for a period etc. A currency in any other country would be in the gutter!

[Naam]

Just my two penny's worth - but isn't uncertainty the thing which the markets hate the most?

We have certainly had our fair share of uncertainty - terrorism in the south, political street fighting, airport takenover, no effective government for a period etc. A currency in any other country would be in the gutter!

uncertainty exists in each and every market including currencies.

[Smithson]

We're not talking about a matter of opinion here we are talking about fact hence everybody really does know, except you it seems! It is indeed a fact that the BOT has been selling USD in favor of the Baht and that has been their stated policy. Consequently the Baht has NOT lost value against USD over recent months and a quick review of the exchange rate tables over the same period will reassure you of that fact.

Please post a link verifying they are selling $ to keep the raise the value. The average for January last year 30.2, from then it rose throughout the year, with November being only a little higher than Dec. Here is the link

Grasping the one phrase in your post that is correct, "it's the other currencies that have plummeted against the dollar", this has been true of most currencies over the past three months - however, it is not that reason that gives the impression of a strong Baht, the reason is that the Baht has been strong, artificially or otherwise.

There is no such thing as an 'impression' of a strong baht, most of the Baht trading is done in US$, therefore as the US rose against other western countries their value fell against the Baht.

[chiang mai]

We're not talking about a matter of opinion here we are talking about fact hence everybody really does know, except you it seems! It is indeed a fact that the BOT has been selling USD in favor of the Baht and that has been their stated policy. Consequently the Baht has NOT lost value against USD over recent months and a quick review of the exchange rate tables over the same period will reassure you of that fact.

Please post a link verifying they are selling $ to keep the raise the value. The average for January last year 30.2, from then it rose throughout the year, with November being only a little higher than Dec. Here is the link

Grasping the one phrase in your post that is correct, "it's the other currencies that have plummeted against the dollar", this has been true of most currencies over the past three months - however, it is not that reason that gives the impression of a strong Baht, the reason is that the Baht has been strong, artificially or otherwise.

There is no such thing as an 'impression' of a strong baht, most of the Baht trading is done in US$, therefore as the US rose against other western countries their value fell against the Baht.

If you look at the data in the link you provided for the months of August through December you will note that THB fell roughly one Baht from 33.81 to 34.89 or approximately 3% only. At the same time some other currencies fell by as much as 30% (GBP) against USD and SGD fell around 12%.

Agreed that most Baht trading is done against USD but when USD gains and the Baht fails to fall in line with other international currencies that leaves the impression that the Baht is strong(er).

[pkrv]

We're not talking about a matter of opinion here we are talking about fact hence everybody really does know, except you it seems! It is indeed a fact that the BOT has been selling USD in favor of the Baht and that has been their stated policy. Consequently the Baht has NOT lost value against USD over recent months and a quick review of the exchange rate tables over the same period will reassure you of that fact.

Please post a link verifying they are selling $ to keep the raise the value. The average for January last year 30.2, from then it rose throughout the year, with November being only a little higher than Dec. Here is the link

Grasping the one phrase in your post that is correct, "it's the other currencies that have plummeted against the dollar", this has been true of most currencies over the past three months - however, it is not that reason that gives the impression of a strong Baht, the reason is that the Baht has been strong, artificially or otherwise.

There is no such thing as an 'impression' of a strong baht, most of the Baht trading is done in US$, therefore as the US rose against other western countries their value fell against the Baht.

If you look at the data in the link you provided for the months of August through December you will note that THB fell roughly one Baht from 33.81 to 34.89 or approximately 3% only. At the same time some other currencies fell by as much as 30% (GBP) against USD and SGD fell around 12%.

Agreed that most Baht trading is done against USD but when USD gains and the Baht fails to fall in line with other international currencies that leaves the impression that the Baht is strong(er).

That may be correct but it is not IMO 'strictly true'. The UK population is about 61m and the US 304m. So yes the US will trade far more with Thailand. However you don't not have to go through the USD to trade in THB for GBP.

The instrument GBPTHB= is used to trade between the UK and Thailand.

[bonzor]

Just my two penny's worth - but isn't uncertainty the thing which the markets hate the most?

We have certainly had our fair share of uncertainty - terrorism in the south, political street fighting, airport takenover, no effective government for a period etc. A currency in any other country would be in the gutter!

uncertainty exists in each and every market including currencies.

He's talking about degrees of uncertainty as you well know. Of course uncertainty is in every market but there's a qualitive differnce between uncertainty about which bank will deliver the best quarterly results in 2006 and whether a bank will actually go bust as in 2008. Perhaps you could indicate you grasp that with one of your pithy one liners. Incidentally why are you a man of so few words or is it just that you are graphologically constipated?

[Naam]

Just my two penny's worth - but isn't uncertainty the thing which the markets hate the most?

We have certainly had our fair share of uncertainty - terrorism in the south, political street fighting, airport takenover, no effective government for a period etc. A currency in any other country would be in the gutter!

uncertainty exists in each and every market including currencies.

He's talking about degrees of uncertainty as you well know. Of course uncertainty is in every market but there's a qualitive differnce between uncertainty about which bank will deliver the best quarterly results in 2006 and whether a bank will actually go bust as in 2008. Perhaps you could indicate you grasp that with one of your pithy one liners. Incidentally why are you a man of so few words or is it just that you are graphologically constipated?

if you weren't such a bloody newbie in this forum you'd know that i'm not always a man of few words. moreover, quite often a few words express more than a novel containing a lot of rubbish

[englishoak]

if you weren't such a bloody newbie in this forum you'd know that i'm not always a man of few words. moreover, quite often a few words express more than a novel containing a lot of rubbish

[cclub75]

The instrument GBPTHB= is used to trade between the UK and Thailand.

Sure it is... But, by volume, it's totally irrelevant (compared to USD).

Check the data :

http://thaicrisis.wordpress.com/2009/01/08...nvoiced-in-usd/

[Gary A]

Many posts complain that the Thai government is buying baht with dollars and that keeps the baht strong. Of course they are buying baht for dollars. The US is their biggest trading partner. Why wouldn't they buy baht?