How Does The Baht Stay So Strong?

[dennis3506]

Maybe this topic has already been discussed, but I can't find it.

I don't have a degree in, or even a basic understanding of world economics, but it just seems very strange that a developing country like Thailand has what appears to be one of the strongest currencies around. Our Aussie dollar has devalued by at least 30% against the Baht and I believe UK and USA currencies have taken similar losses. I'm sure the Thai economy must be paying the price, if not in exports, in tourism. Surely the Baht can't remain this strong against other currencies?

[britmaveric]

Yank $ has been pretty stable and actually gained on the baht!

[tb86]

The baht has fallen against the dollar in the last year it was a low of 31 to the dollar around last feb, today it stands at 35 to the dollar from xe.com so a 12% devaluation against the dollar, it reached 35.9 about 3 months ago but unfortunally fell

[Geekfreaklover]

I'm no expert either, but have the feeling that the current strength of the BT owes something to "creative accountancy" i.e; what is declared as value may not represent actual value. Buying time. Also, Thailand does have some monetry reserves.

But, this is just a guess. wait for someone who knows what their talking about to comment!

Edited January 25, 2009 by Geekfreaklover

[dennis3506]

The baht has fallen against the dollar in the last year it was a low of 31 to the dollar around last feb, today it stands at 35 to the dollar from xe.com so a 12% devaluation against the dollar, it reached 35.9 about 3 months ago but unfortunally fell

When I was in Thailand 5 months ago, the Baht was 31 to the Aussie dollar on arrival and was 22 three months later when I left. It may have improved to 23 now, but that's a far cry from 31. Anyway, that still doesn't answer my question as to how the Baht has remained so strong.

[britmaveric]

BOT is propping it up plain/simple.

[chiangmaibruce]

Maybe this topic has already been discussed, but I can't find it.

Here, borrow my glasses. A new thread on this topic gets started about twice a week. start in the business sub-forum

[davejonesbkk]

From my understanding and what I've read in books and online it is mainly due to politics as it's never good for the current government to have the nation's currency get devalued, but with a large proportion of Thailand's GDP coming from exports surely the negatives from exports going down is now outweighing the negatives of having a weak currency. This is what I don't understand. Anyone have an explanation?

[MJo]

Look USD and EUR against THB and then do the same with AUD and GBP. Now it is strange how the mighty Thai baht has pushed AUD and GBP down but left USD and EUR to be so far...

Or could it tell you something about the state of economy in AUS and UK ? I'm no expert either but interest rates etc etc effect. Like GBP, is down agains all currencies, not only against baht !

[jubby]

Because The Baht; Thailand ; and we exist in a wonderful alternate reality and dimension . Enjoy it.

[MeetJohnDoe]

You are approaching the question from the wrong side...as has be pointed out repeatedly...it's not that the baht is strong...it's that the Pound (and Aussie $, Canada $ and other currencies) so weak. The answer then is clear...the UK is on its way to national bankruptcy so its currency is loosing value by the minute and many of the other countries are mainly resource exporting economies (Rooland, Canada, So. Africa) and with the crash of commodities, their currencies are in the tank as well.

Another way to think of it is why does anyone outside a country need the currency issued by that country To buy goods or services that originate in those countries right...and when was the last time you bought anything that was made in the UK? They don't make anything the rest of the world wants/needs...therefore, no demand for their currency...therefore the price (exchange rate) of the currency drops against others.

There is no god. So stop worrying and enjoy your life.

Edited January 25, 2009 by MeetJohnDoe

[dennis3506]

Because The Baht; Thailand ; and we exist in a wonderful alternate reality and dimension . Enjoy it.

It's a little more difficult to "enjoy it" when your money is worth 30% less than it used to be. I know things are relatively cheap in Thailand, but if I was considering buying a condo and having to pay an extra $30,000 per $100,000, that would hurt.

[tb86]

The baht has fallen against the dollar in the last year it was a low of 31 to the dollar around last feb, today it stands at 35 to the dollar from xe.com so a 12% devaluation against the dollar, it reached 35.9 about 3 months ago but unfortunally fell

When I was in Thailand 5 months ago, the Baht was 31 to the Aussie dollar on arrival and was 22 three months later when I left. It may have improved to 23 now, but that's a far cry from 31. Anyway, that still doesn't answer my question as to how the Baht has remained so strong.

the aussie dollar took a dive against the usd a few months ago, after we purchased a good sum of aud figures, so it should not be supprising that its weakened against the baht

[dennis3506]

Maybe this topic has already been discussed, but I can't find it.

Here, borrow my glasses. A new thread on this topic gets started about twice a week. start in the business sub-forum

A new thread gets started on Thai girlfiends/ripoffs every week as well, no shortage of responses to those posts either.

Edited January 25, 2009 by dennis3506

[Geekfreaklover]

You are approaching the question from the wrong side...as has be pointed out repeatedly...it's not that the baht is strong...it's that the Pound (and Aussie $, Canada $ and other currencies) so weak. The answer then is clear...the UK is on its way to national bankruptcy so its currency is loosing value by the minute and many of the other countries are mainly resource exporting economies (Rooland, Canada, So. Africa) and with the crash of commodities, their currencies are in the tank as well.

Another way to think of it is why does anyone outside a country need the currency issued by that country To buy goods or services that originate in those countries right...and when was the last time you bought anything that was made in the UK? They don't make anything the rest of the world wants/needs...therefore, no demand for their currency...therefore the price (exchange rate) of the currency drops against others.

There is no god. So stop worrying and enjoy your life.

Agree with that. But not all exports are solid items. A huge amount of "Invisible exports" come from the Uk, insurance, skilled services etc.

[MeetJohnDoe]

It's a little more difficult to "enjoy it" when your money is worth 30% less than it used to be. I know things are relatively cheap in Thailand, but if I was considering buying a condo and having to pay an extra $30,000 per $100,000, that would hurt.

Nothing occurs in a vacuum. Houses and condos are down 20-30% or more than a couple years ago. The price of auto gas and diesel down by half from a few months ago. The "strong" baht also keeps the price of other imported goods in check.

There is no god. So stop worrying and enjoy your life.

[Pakeha]

Maybe it's just like property and share prices worldwide - i.e. false economy.... and soon it will just come tumbling down?

[davejonesbkk]

Of course the UK currency is doing crap right now so it's the GBP that is down and not the baht that is up. BUT with the global economy going down the drain and unemployment set to rise here in Thailand throughout 2009 (and possibly further) why doesn't the BOT weaken the baht a little to stimulate exports?

[Pakeha]

Of course the UK currency is doing crap right now so it's the GBP that is down and not the baht that is up. BUT with the global economy going down the drain and unemployment set to rise here in Thailand throughout 2009 (and possibly further) why doesn't the BOT weaken the baht a little to stimulate exports?

Yes - please weaken the baht. Anytime before April is fine by me.

[davejonesbkk]

Of course the UK currency is doing crap right now so it's the GBP that is down and not the baht that is up. BUT with the global economy going down the drain and unemployment set to rise here in Thailand throughout 2009 (and possibly further) why doesn't the BOT weaken the baht a little to stimulate exports?

Yes - please weaken the baht. Anytime before April is fine by me.

Sure we'd all like to be getting some more baht when we change our money but I don't think the BOT has us in mind when setting it's monetary policies, but why aren't they doing something to help the national economy?

[jubby]

Because The Baht; Thailand ; and we exist in a wonderful alternate reality and dimension . Enjoy it.

It's a little more difficult to "enjoy it" when your money is worth 30% less than it used to be. I know things are relatively cheap in Thailand, but if I was considering buying a condo and having to pay an extra $30,000 per $100,000, that would hurt.

When the pound was worth 70 baht not many months ago I was spending like there was no tommorrow. I new things were cheap and didn't expect them to stay that way so tried to get them while I could. Life was Good then.

Now its heading too much the other way, my spendings set to dry up and I'm watching every penny or baht. Lifes still Good . The suns still shineing.

Everythings been swinging wildly the last year or so. I expect things to continue to swing wildly. This is unlikely to be the end game.

maybe the Thai ecomony will swing shortly and you'll get a bargain on the condo market.

[marcofunny]

the currency exchange rate is determined by the amount of the foreign exchange reserves that a particular country holds in its central bank, the United states s dollar was weak due to the huge trade deficit with China, in other words the country imports more then export.

take a look at the Wikipedia List_of_countries_by_foreign_exchange_reserves, just Google

List of countries by foreign exchange reserves, Thailand currently ranks 12th holding 100 billion $in the world, china 1th 1.9 trillion, the US is 21th 71 billion UK22th 70 billion .

you will be very surprised to know that Thailand holds more foreign exchange currency in its central bank then both the US and Australia, and that explains why the baht is so strong.

so currently Thailand doesnt Import that much of foreign goods, therefore its currency will stay strong unless its export and tourism sector will be hit hard as it s the main source of hard currencies.

Edited January 25, 2009 by marcofunny

[Pakeha]

Of course the UK currency is doing crap right now so it's the GBP that is down and not the baht that is up. BUT with the global economy going down the drain and unemployment set to rise here in Thailand throughout 2009 (and possibly further) why doesn't the BOT weaken the baht a little to stimulate exports?

Yes - please weaken the baht. Anytime before April is fine by me.

Sure we'd all like to be getting some more baht when we change our money but I don't think the BOT has us in mind when setting it's monetary policies, but why aren't they doing something to help the national economy?

Surely in an economy based on exports and tourism (yes and other things) what's good for us farangs (low baht) is good for most thais. The NZ economy is similar to the thai economy in terms of where we make our money (exports and tourism) so the current low exchange rate in NZ is good for the country, albeit bad for me . Surely the majority of thais would benefit greatly from a weaker baht - exports and tourism increase. 1 million lost jobs turns into 250,000 lost jobs - much better!

[wileycoyote]

Personally,I think it will drop albeit marginally as tourism wanes & Chinese growth slows

[Priceless]

You are approaching the question from the wrong side...as has be pointed out repeatedly...it's not that the baht is strong...it's that the Pound (and Aussie $, Canada $ and other currencies) so weak. The answer then is clear...the UK is on its way to national bankruptcy so its currency is loosing value by the minute and many of the other countries are mainly resource exporting economies (Rooland, Canada, So. Africa) and with the crash of commodities, their currencies are in the tank as well.

Another way to think of it is why does anyone outside a country need the currency issued by that country To buy goods or services that originate in those countries right...and when was the last time you bought anything that was made in the UK? They don't make anything the rest of the world wants/needs...therefore, no demand for their currency...therefore the price (exchange rate) of the currency drops against others.

There is no god. So stop worrying and enjoy your life.

I'm sorry, but I think that you are wrong What has happened is that a lot of the world's money has fled to 'safe havens', in particular the US dollar and the Japanese yen. This has resulted in almost all other currencies falling against these two:

(Source: http://www.xe.com/ict/ )

What is obvious from the table is that the Thai Baht has fallen a lot less than most other currencies. My personal guess is that the Bank of Thailand is supporting the currency (to save face ). My personal conviction is that we will see it fall drastically within 6-12 months, when exports really start to fall. Remember that exports account for 60-70% of Thailand's GDP.

/ Priceless

[TJAN]

Maybe this topic has already been discussed, but I can't find it.

I don't have a degree in, or even a basic understanding of world economics, but it just seems very strange that a developing country like Thailand has what appears to be one of the strongest currencies around. Our Aussie dollar has devalued by at least 30% against the Baht and I believe UK and USA currencies have taken similar losses. I'm sure the Thai economy must be paying the price, if not in exports, in tourism. Surely the Baht can't remain this strong against other currencies?

Are we gonna ask this question everyday how the hel_l we know you just have to wait like we all do.

[MeetJohnDoe]

Another way to think of it is why does anyone outside a country need the currency issued by that country To buy goods or services that originate in those countries right...and when was the last time you bought anything that was made in the UK? They don't make anything the rest of the world wants/needs...therefore, no demand for their currency...therefore the price (exchange rate) of the currency drops against others.

Agree with that. But not all exports are solid items. A huge amount of "Invisible exports" come from the Uk, insurance, skilled services etc.

Well that was the theory anyway and that's what all the financial types in London and New York thought, and many government officials and economists went along for the ride. No need to make anything of substance they all thought, we can just sell intangible services to each other and people in other countries and no need to actually get our hands dirty making anything of substance.

Funny how it's turned out that the countries in the worst economic trouble are the ones where the service sector of the economy grew to predominate over manufacturing, i.e., the UK, US, Ireland, Iceland, and to lesser extents Spain and Greece. The countries that actually still make tangible stuff (Germany, Japan, Brazil, China, and yes, even Thailand) are surely slowing down and in recessionary times but not as bad as the others and their financial systems are surely more sound too.

[MeetJohnDoe]

Remember that exports account for 60-70% of Thailand's GDP.

That figure is incorrect...it's nowhere near that high...it isn't for any country...even for export powerhouses like Germany, Japan, and China. Maybe you are thinking that Thailand earns 60-70% of its foreign exchange earnings from exports, with the balance coming from tourism and other sources.

Edited January 25, 2009 by MeetJohnDoe

[shantoon]

The demise of the pound and the dollar is very depressing. Every time I think about the words of an Elton John song pop into my head - "Think I'm gonna kill myself, cause a little suicide."

So I've stopped reading UK newspapers on the web and feel a lot better about life. The ostrich is a fine and noble bird...

[sorensen]

Remember that exports account for 60-70% of Thailand's GDP.

That figure is incorrect...it's nowhere near that high...it isn't for any country...even for export powerhouses like Germany, Japan, and China. Maybe you are thinking that Thailand earns 60-70% of its foreign exchange earnings from exports, with the balance coming from tourism and other sources.

Thailand's export/import is 60-70% of the Thai GDP. It is scary hight and way higher than any western country.

Edited January 25, 2009 by sorensen