What's All This Talk Of A Baht Collapse?

[Naam]

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.

So you have no links verifying 'the fact' and 'stated policy'? May have to pop up CM sometime for a bit of bar stool 'factual' analysis.

why argueing? do some research:

-Thailand's export are ~65% of GDP

-estimated GDP in 2008 = ~$240 billion

-estimated exports ........= ~$156

-estimated imports ....... = ~$120

-calculated surplus........ = ~$ 36

reserves end 2007....... = ~$ 88

reserves end 2008....... = ~$103

difference................... = ~$ 15 billion

paint your own picture

[meom]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

[mommysboy]

I guess there won't be a crash and I must admit it probably is wishful thinking. All this means some very painful decisions as my business is failing and life is just getting too expensive anyway.

I reckon only a 20% revaluation would help anyway.

I don't understand though. The first thing China did was set about dampening the value of it's currency because it is very reliant on exports. Thailand is equally reliant, is performing badly it seems but the currency remains the same and even goes up.

[Naam]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

[Smithson]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

The govt. may have been selling $, but I don't think there's a specific policy to strengthen the Baht. Not so long ago, when there was a stated policy to try to weaken the Baht, Thailand bought lots of US$. As the $ continued to weaken there was a lot of talk that it's reserves had way too much $. Maybe now they are selling them to balance things out a bit.

There has been lots of conspiracy theories regarding the Bahts strengths due to the fact that it has gained value despite major political problems. This goes right back to before Thaksin was ousted. Even when there was a coup the Baht hardly moved.

Personally I don't believe the govt is capable of doing much regarding the Baht's value, everyone knows there an incapable bunch at the best of times.

[chiang mai]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

The govt. may have been selling $, but I don't think there's a specific policy to strengthen the Baht. Not so long ago, when there was a stated policy to try to weaken the Baht, Thailand bought lots of US$. As the $ continued to weaken there was a lot of talk that it's reserves had way too much $. Maybe now they are selling them to balance things out a bit.

There has been lots of conspiracy theories regarding the Bahts strengths due to the fact that it has gained value despite major political problems. This goes right back to before Thaksin was ousted. Even when there was a coup the Baht hardly moved.

Personally I don't believe the govt is capable of doing much regarding the Baht's value, everyone knows there an incapable bunch at the best of times.

And whilst I can't find the required link to substantiate this I believe there has been a stated policy over the past twelve months to keep the Baht stronger(er) and Naam's figures seem to support that has indeed been taking place. If you recall the Finance Minister in the previous government was at pains publicly to try to get Tarrisa (BOT Governor) to weaken the Baht and even suggested she should be replaced until the King invited her to the Palace to commend her for the good job she was doing - Tarisa's comments up until that point was that the BOT intention was to keep the Baht strong(er). As far as the BOT diversifying it's reserves out of USD is concerned, I believe you will find that the decision to diversify into EURO on a 40/60 basis was taken more than one year ago.

Edited January 13, 2009 by chiang mai

[Naam]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

The govt. may have been selling $, but I don't think there's a specific policy to strengthen the Baht. Not so long ago, when there was a stated policy to try to weaken the Baht, Thailand bought lots of US$. As the $ continued to weaken there was a lot of talk that it's reserves had way too much $. Maybe now they are selling them to balance things out a bit.

nobody made that claim and mentioned "strengthen". but what we see as an undeniable fact is that quite obviously "they" (whoever those might be who are in charge) try to let the Baht depreciate vs. the Dollar in a slow and orderly way and that was until now achieved. in my opinion that can be done only by intervention which is possible because unlike 1997 no attack on the Baht exists. a side effect is of course that the Baht appreciates/strengthens vs. all currencies which fall vs. the Dollar.

[Naam]

Personally I don't believe the govt is capable of doing much regarding the Baht's value, everyone knows there an incapable bunch at the best of times.

that's your personal opinion based on an assumption but you are entitled to it.

[chiang mai]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

The govt. may have been selling $, but I don't think there's a specific policy to strengthen the Baht. Not so long ago, when there was a stated policy to try to weaken the Baht, Thailand bought lots of US$. As the $ continued to weaken there was a lot of talk that it's reserves had way too much $. Maybe now they are selling them to balance things out a bit.

nobody made that claim and mentioned "strengthen". but what we see as an undeniable fact is that quite obviously "they" (whoever those might be who are in charge) try to let the Baht depreciate vs. the Dollar in a slow and orderly way and that was until now achieved. in my opinion that can be done only by intervention which is possible because unlike 1997 no attack on the Baht exists. a side effect is of course that the Baht appreciates/strengthens vs. all currencies which fall vs. the Dollar.

I sense a forthcoming debate over the differences between the words "strengthen" and "strong(er)" which I trust does not need to take place.

[lannarebirth]

My opinion is that most of this talk about baht manipulatations is pretty pointless. It's a niche currency and in non pressurized market (ie: no great inflows or outflows) its not all that hard to move. Its dropping to support levels and holding ground. If it fails in it's low 35 support it could be expected to orderly move to its next support near 38. Of much more importance to all of our respective currencies is the Balance of Trade report coming out of the USA in about an hours time.

[Gary A]

I'm not sure what Thailand wants. When the dollar hit the skids, they did their best to weaken the baht. That really didn't work very well. Then oil went crazy. At that point they wanted a strong baht to buy oil. I'd guess that at this point with cheap oil, they would be happy for the baht to weaken to increase exports.

[Naam]

I sense a forthcoming debate over the differences between the words "strengthen" and "strong(er)" which I trust does not need to take place.

[mommysboy]

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.

Another way of reading this is to say 'Oh well we're so far gone there's no point devaluing the bt because we can't compete anyway' and that might be true in which case big trouble ahead. The news in US and Europe already is shocking in Thailand it's going to be shocking because exports have taken a big hit. There is a time lag that's all. Markets are irrational, for some reason currencies swing wildly, so if it does start to lose value my guess is it will be quite marked.

[jdrake72]

So far there is no measured devaluation at all.

After the amazing rates cut, the baht is rising even more compared to yestarday. now Bhat is up 4 cents compared to yestarday closure, although in late morning it was losing something.

Of course the bahat is highly overvalued, but BOT can still keep it , since reserves are still quite huge.

34.45 per dollar and 45.6 per euro SCB buying rates...baht always very strong and keep rising even against a rising dollar (from 34.49 closure of last week).

[chiang mai]

So far there is no measured devaluation at all.

Not so according to this link:

http://www.x-rates.com/d/THB/USD/hist2008.html

[jdrake72]

So far there is no measured devaluation at all.

Not so according to this link:

http://www.x-rates.com/d/THB/USD/hist2008.html

According to a basket of currencies, the baht IS RISING against most of the world currencies and are amongst the strongest currencies in the world.

Compared to the US dollar the baht is up amazingly compared to the exchange rates of the begin of this decade (in the 40s), if it is down in the past few months, it is anyway up in the past years.

Today baht rising again like crazy against any world currencies, as you can check easily from the yesterday's and today's closure exchange rates.

A cut of the rates more than expecveted and the currency goes up like crazy, it doesn tmake any sense, no doubt the baht is by far the most overvalued currency in the world and sooner or later we will see a collapse of its value (20% or more), just like it happened 12 years ago.

Where is the managed devaluation if 1 month ago the dollar stand at 35.37 (BUYING RATE) compared to today 34.43 and the euro at 49 compared or today 45.3 (buyin rate, SCB) ?

Baht is in fact rising like crazy, in the past weeks amongst the strongest currency in the world and it has risen steadly both against dollar and euro.

Edited January 14, 2009 by jdrake72

[jdrake72]

All the regular tourist visitors to Thailand and expats who live here, hoping for a Baht crash - given the way they run the country they surely can't be capable of managing their economy or central banking affairs I hear them say, it's dead cert that the Baht must crash! Wishful thinking I say, get used to the idea that the problems of 1997 are well behind us.

like I said it is not wishful thinking.

If many economists who are based outside Thailand are predicting the same thing, or they are all wrong (it might be) or there are many reasons to think Baht will go down.

i suggest we agree on one thing that cannot be debated as it is a fact. the much discussed and prophesied crash of the Baht has been wishful thinking since a couple of years until today.

yes, maybe. But today the scenario is quite different . No more russian-mafia money coming like crazy, less and less arab money coming too, not to say about european or american imnvestiment.

Indian investiment is down too. Export bad (we will see the data for December published on Jan 20th and it will be a DISASTER, believe me). Interest rates amongst the lowest in the region, instability the highest, Standard and Poor ratings plunging, confidence index plungig, twin deficits ,etc...

Condos being built everywhere and who knows who is gonna live there or buy back up to 250K baht per square meter for Chitlom condos. Funny view if you come to BKK, skycrapers with hundreds of units with just 4 or 5 apartments lit at night... I don t share the optimism of some when they say there is no property bubble here: I would say , here, contrary to most of the world, it hasn t burst yet.

The only good thing is reserves are standing at high level, but WHENEVER they will start to falter, good bye THB, good bye pegging,... it may take not weeks or months, possibly even few years, but for a serious long time investors it is not a good starting point to invest in a country with an overvalued currency.

I say overvalued because I compare it with the trend of most other currencies and compare their economy data...

[jdrake72]

I'm not sure what Thailand wants. When the dollar hit the skids, they did their best to weaken the baht. That really didn't work very well. Then oil went crazy. At that point they wanted a strong baht to buy oil. I'd guess that at this point with cheap oil, they would be happy for the baht to weaken to increase exports.

so far it hasn t happened

The Baht is up about 2.5% against the dollar compared to early December when the airport seizures.

Up against the euro, pound, chinese yuan, and virtually any currency in the world excpet maybe the yen.

All that despite having the wlowest interest rates in the region. Really funny but UNSUSTEINABLE situation.

Somebody abroad is buying baht like crazy and it is a mystery who is and why is doing that.

I remember anyway after the coup, the year later the baht was the strongest currency in the world (font The Economist) , really funny a country after a coup d etate has the currency the strongest performance in the world, despite having a very low growth compared to neighbour countries.

I remember some generals debating about proud and Thailand is an "important" country and needs to have a very strong currency. I remembert that few weeks after the coup.

THB value is 100% artificial and managed by somebody who orders the BOT how to act. Since nothing last forever, as the long peg at 20-25 had lasted loong time before collapsing, the current situation will come to an end too. The more now they are trying to keep its value artificially, the more will slide later.

[jdrake72]

Any ideas as to where the balance 21 billion went (difference between 36 billion surplus and 15 billion increase in reserves)?

a good part must have been used to service (both corporate and government) foreign currency external debt and a part to stabilise the Baht. how much for these and various other purposes is anyone's guess.

ok, but what a pity new figures shows already TWIN DEFICITS (trade deficit and budget deficit) and reserves in the past months (after the peak in the first half of 2008) has actually dropped.

So, if mathematically there is no more surplus money to stabilize the baht , what will happen ?

next months will give us a cleaer picture anyway if the "wishful thinkers" or the "reasonable stabilizers" are right. There is nothing wrong to discuss and disagree in some things. I am still convinced the baht is quite overvalued (20% more or less) but I don t pretend to be right for sure. It also depends on what will happen in the next months, since we don t live in a very stable country ....

Edited January 14, 2009 by jdrake72

[chiang mai]

So far there is no measured devaluation at all.

Not so according to this link:

http://www.x-rates.com/d/THB/USD/hist2008.html

According to a basket of currencies, the baht IS RISING against most of the world currencies

Today baht rising again like crazy against any world currencies, as you can check easily from the yesterday's and today's closure exchange rates.

I can only post the same link again and ask you to look at the exchange rates over a twelve month period. Comparing exchange rates on a day to day basis is largely meaningless and does not imply trend.

[henryalleman]

I think in the very near future some people gone earn Billions. Remember in 1997 only one man (Soros) created the downfall of the Bath and the domino's in SE started to fall down.

I advised my wife and her family to watch the currency rates very closely and start to prepare to sell there Baht's.

[henryalleman]

Where is the managed devaluation if 1 month ago the dollar stand at 35.37 (BUYING RATE) compared to today 34.43 and the euro at 49 compared or today 45.3 (buyin rate, SCB) ?

are we looking at the same rates form SCB?

08.15h rate 45.845

15.46h rate 45,8175

Kasikorn

15.50h rate 45,8170

euro telex buying rates

[Naam]

next months will give us a cleaer picture anyway if the "wishful thinkers" or the "reasonable stabilizers" are right. There is nothing wrong to discuss and disagree in some things. I am still convinced the baht is quite overvalued (20% more or less) but I don t pretend to be right for sure. It also depends on what will happen in the next months, since we don t live in a very stable country ....

even some "reasonable stabilisers" (like me) think that the Baht is overvalued. the difference between the disagreeing parties is that one claims "the arse will fall out of the currency" and the others expect an orderly depreciation.

[hill16]

Right now the SCB exchange rate for those wishing to buy Baht notes is 45.16375 to the Euro and 49.7 to Stg. Is this likely to deteriorate even further this week/month? If i have foreign currency to exchange is it a good idea to do it now instead of risking an even further decline?

[chiang mai]

Right now the SCB exchange rate for those wishing to buy Baht notes is 45.16375 to the Euro and 49.7 to Stg. Is this likely to deteriorate even further this week/month? If i have foreign currency to exchange is it a good idea to do it now instead of risking an even further decline?

Ah yes, the second most popularly asked question - reading the thread you posted in may give you some clues.

[jumnien]

With the continuation of chaos, corruption and bad news coming out of the US and Europe I'd expect the Thai baht to be strengthening in the coming months. I wouldn't bet on any of the major currencies at this point.

[jdrake72]

So far there is no measured devaluation at all.

Not so according to this link:

http://www.x-rates.com/d/THB/USD/hist2008.html

According to a basket of currencies, the baht IS RISING against most of the world currencies

Today baht rising again like crazy against any world currencies, as you can check easily from the yesterday's and today's closure exchange rates.

I can only post the same link again and ask you to look at the exchange rates over a twelve month period. Comparing exchange rates on a day to day basis is largely meaningless and does not imply trend.

Nothing meaningless, I can post graphs of te last 2 years , 3 years , 5 years, the baht IS RISING like crazy against almost all world currencies.

In the past months THB up against almost all asian currencies, 30-40% against South American currencies, and most of the others.

Against USD, Thai baht UP if you see the average exchange rate of the past years (between 35 and 45).It has been down only few months, but actually in the last month is UP like crazy (3% in one month after the total disater of the ecomomy and the airport seizure)

Your graph is also meaningless because you use the period of time you wish, try to exytend it a couple of years more.

Or just try to use a basket of world currencies and you will see THB is amongst the strongest currencies in the WORLD, and in 2007 it was by far the strongest in the world, after the coup.

And yestarday up like crazy in few hours after the big interest cut.

All against any logic.

It is unavoidable to see a crash sooner or later, 1997 will repeat .

[jdrake72]

next months will give us a cleaer picture anyway if the "wishful thinkers" or the "reasonable stabilizers" are right. There is nothing wrong to discuss and disagree in some things. I am still convinced the baht is quite overvalued (20% more or less) but I don t pretend to be right for sure. It also depends on what will happen in the next months, since we don t live in a very stable country ....

even some "reasonable stabilisers" (like me) think that the Baht is overvalued. the difference between the disagreeing parties is that one claims "the arse will fall out of the currency" and the others expect an orderly depreciation.

OK, but than... I dont see any orderly depreciation, just the opposite in the past weeks.

Siunce December THB up almost 3% compared to USD (it is not peanuts, in just 1 month !, after all what happened and also after a total of 1.75% interest rates cut !!). So if BOT insists in not to guide an orderly depreciation, so than sooner or later the slump might not be that orderly, is that risk exist for you or it is just paranoic ?

Have you seen the trend of other regional currencies ? Singaporean dollar, korean won, indian rupee etc... all DOWN compared to USD, THB up almost 3% in the past 4-5 weeks....it seems THB is likely to moving according to japanese yen, but what a pity THB is NOT japanese yen, it is not an international currency, it has nothing to do with the reasons of yen appreciation ,...

I guess the bill will be served to the table to THB sooner or later... Thailand is losing competiviness against neighbour countries and against developing countries (South American most currencies down 20-40% to USD in the past months).

Edited January 15, 2009 by jdrake72

[jdrake72]

Anyway, I must also admit that BOT has the tool (reserves) of keeping this artificial value for awhile.

If Cambodia riel has managed to be quite stable , why cannot do the same thing Thailand with the baht ?

The main reason why I see THB overvalued anyway is its terrible lost of competivness compared to many other developing countries which currencies have plunged to USD in the past months by 20-30-40%. For me Thailand cannot afford that in the long term. Simply and round.

And sooner or later they will need to take the decision to let the THb following the market. If economy improves and money will start to flock back to Thailand, so that THB wouldn t probably depreciate too much, but due to teh circunstances I doubt it, since I am also convinced we are just in a lull waiting for the next crisis. Problems have not been solved, have just been covered.

[chiang mai]

So far there is no measured devaluation at all.

Not so according to this link:

http://www.x-rates.com/d/THB/USD/hist2008.html

According to a basket of currencies, the baht IS RISING against most of the world currencies

Today baht rising again like crazy against any world currencies, as you can check easily from the yesterday's and today's closure exchange rates.

I can only post the same link again and ask you to look at the exchange rates over a twelve month period. Comparing exchange rates on a day to day basis is largely meaningless and does not imply trend.

Nothing meaningless, I can post graphs of te last 2 years , 3 years , 5 years, the baht IS RISING like crazy against almost all world currencies.

In the past months THB up against almost all asian currencies, 30-40% against South American currencies, and most of the others.

Against USD, Thai baht UP if you see the average exchange rate of the past years (between 35 and 45).It has been down only few months, but actually in the last month is UP like crazy (3% in one month after the total disater of the ecomomy and the airport seizure)

Your graph is also meaningless because you use the period of time you wish, try to exytend it a couple of years more.

Or just try to use a basket of world currencies and you will see THB is amongst the strongest currencies in the WORLD, and in 2007 it was by far the strongest in the world, after the coup.

And yestarday up like crazy in few hours after the big interest cut.

All against any logic.

It is unavoidable to see a crash sooner or later, 1997 will repeat .

Not my graph, it was provided by another "expert", just thought it might help you a tad, no, OK.

I hope that George's TV business is not suffering too much as a result of the current economic shenanigans but the idea that he should resort to employing 3 posts at 1 time man seems somewhat underhanded, George, stop it and play fair.