Thai Bhat

[Ricardo]

Well it has been a while now since I made the 1st post

The country has come to its knees with Red Shirts

But the Bhat is still at a level that is to High

I feel my listing has been hijacked by radical Falang

My question was in the 1st Post

Thai's in Issan are hurting as the money is not coming back to them through the normal channel

Why all the rambling on about nothing to do with my origional question

The Red Shirts complained that te poor people are not being looked after

This is my comment

The high Bhat is hurting the poor people who get the money from the tourist industry

If it is possible please read my post again

1) tourist converts a dollar at the exchange

2) Tourist spends less as he gets less

3) Bar Girl, tuk tuk driver, food seller etc make less money as there is less to spend

4) Issan girl. guy sends less money home as they make less

5) People in village have less money to spend

6) My wifes parents own the village shop and they have been hit with a 60% down turn

This is happening every where in the poorer villages

Do you think they worry about exports etc.

Lower the Bhat exchange rate and the above money spending channel will improve

And the life stylr of the poor Village people will improve

But why should the Expats on this site worry, unless you have a Thai family you are helping to support, you can always buy another beer, and cut down the price of the local Bar Girl as times are tough

I suspect that most expats are helping support a Thai family, one way or another, and our interests in the strength of the Baht are the same as Thai exporters or the poor of Isaan, if we're living off an income from overseas. That doesn't automatically make us "radical Falang" or hijackers. Or indeed unsympathetic to the poor.

When the Red Shirts complain, that the country or government are not looking after the poor, a statement which IMO is not totally correct by-the-way, they might in fairness add that the BoT's Strong-Baht policy also operated equally under the PPP-governments too.

One might have thought that last week's events might have had a significant effect, on the Baht:$ rate, that it hasn't shows that the whole thing is being managed, and has been for a long time. We should also recall that, a couple of years ago when the Baht was strengthening rapidly, the BoT did claim to be trying to slow its rise.

[thaimythai]

just seen exports are down 23.1% in march to last year, feb was ok because of the silly amounts of gold exported, surely they must do something with the baht now, england say there exports are going great because the pound is low.

[Time Traveller]

just seen exports are down 23.1% in march to last year, feb was ok because of the silly amounts of gold exported, surely they must do something with the baht now, england say there exports are going great because the pound is low.

Thailand runs a current account surplus. With most western countries with huge debts and running huge trade deficits, countries such as thailand are attractive to foreign investors.

Secondly, thailand is a net exporter. IT don't really matter if exports fall, imports will also fall because most of what thailand imports is for re-export. So it's likely to keep running trade surpluses for some time. At least until they start the large megaprojects again in which large amounts of capital equipment will need to be imported.

Thirdly, with all of thai's trading partner in recession or facing downturn's, it's unlikely that a 10% (or 20%) cheaper holiday will entice people to come to phuket. Not as long as they need to pay down debts or are worried about losing their jobs. So any weaker exchange rate for the baht will not help improve visitor numbers, nor help export sector much.

Fourthly, BOT policy is to maintain a stable and orderly exchange rate in line with regional currencies (which are not really weakening at the moment)

Finally, a bit a cynicism here, but I really don't think the government cares about people who are on the bottom rung of the ladder anyway so in conclusion, Weaker baht will not help improve things much

[Naam]

Weaker baht will not help improve things much

the wishful thinkers will strongly disagree

[ozzieman05]

So you feel a weaker baht will not help, and the following does not make sense then

1) tourist converts a dollar at the exchange

2) Tourist spends less as he gets less

3) Bar Girl, tuk tuk driver, food seller etc make less money as there is less to spend

4) Issan girl. guy sends less money home as they make less

5) People in village have less money to spend

6) My wifes parents own the village shop and they have been hit with a 60% down turn

If the expats on this site can not see how the basic money chain works, then we have no chance that Thai's will

[jcon]

So you feel a weaker baht will not help, and the following does not make sense then

1) tourist converts a dollar at the exchange

2) Tourist spends less as he gets less

3) Bar Girl, tuk tuk driver, food seller etc make less money as there is less to spend

4) Issan girl. guy sends less money home as they make less

5) People in village have less money to spend

6) My wifes parents own the village shop and they have been hit with a 60% down turn

If the expats on this site can not see how the basic money chain works, then we have no chance that Thai's will

classic example of how someone has a distorted view (read self-importance out of whack with reality as it refers to economics).

we're talking about the ECONOMY in general, imports/exports on a grande scale, not bar girls and cell phones and buffaloes...

and haven't we already data that indicates from other exporting countries that in the current economic climate, devaluing currency isn't doing shit if nobody is buying anyway... there is proof out there, i'll let someone dig it up I can't be bothered, but it's not a silver bullet to devalue and then boom exports booming again and all is well... that would be ignorant at the very least.

I think Tarisa has been doing a fine job given the shit happening all around her.... and people forget the baht has lost 15-20% against the USD from it's highs already... I just hope lanna's prediction of 20thb/usd comes soon... I wanna blow this joint, asap. That would be sweet for those with assets in Thailand (some would say illiquid, but everything has a price), and a doubling of net worth of assets in thailand would be a huge bonus...

and just for good measure, applying western ideologies re: economics (or any social science for that matter) to thailand requires at the very least a cursory examination of economic sociology and it's idea of 'embeddedness'... for a good read on the subject, Mark Granovetter is the man.

I'm rambling, half a bottle of whiskey will do that. Sorry if I don't make sense. I thought I was replying to the motor forum

[JetsetBkk]

...I'm rambling, half a bottle of whiskey will do that...

Explains it all.

[jcon]

...I'm rambling, half a bottle of whiskey will do that...

Explains it all.

yep, I was actually replying to an idle-speed control problem in the motor forum and then had to rant about people's misunderstanding of economics... but back to the bottle. But I think I had a point in there somewhere!

[Naam]

we're talking about the ECONOMY in general, imports/exports on a grande scale, not bar girls and cell phones and buffaloes...

why not?

[ozzieman05]

<classic example of how someone has a distorted view (read self-importance out of whack with reality as it refers to economics).

we're talking about the ECONOMY in general, imports/exports on a grande scale, not bar girls and cell phones and buffaloes... >

Hy JCon

Can I please remind you that I am the one that started this thread, and I am refering to bar girls and cell phones and buffaloes...

My wife and her parents and many other in the villages do not give a ra..ts hoot about economics

They only worry there is no money coming from the people who send money home to them

If you want to start of a thread about economics please do so

You do not need to Hyjack my thread and change the subject

The fact is that if the baht is reduced against all currencies there will be more money going back to the villages

That is what this thread is about

[Time Traveller]

So you feel a weaker baht will not help, and the following does not make sense then

1) tourist converts a dollar at the exchange

2) Tourist spends less as he gets less

3) Bar Girl, tuk tuk driver, food seller etc make less money as there is less to spend

4) Issan girl. guy sends less money home as they make less

5) People in village have less money to spend

6) My wifes parents own the village shop and they have been hit with a 60% down turn

If the expats on this site can not see how the basic money chain works, then we have no chance that Thai's will

I can explain it like this. The weaker baht will not help the economy. Yes it might help the low income people in your village have more money, but there will be unintended consequences of a weaker baht which will destroy that higher income. What is it? It is called inflation.

Quite simply if everyone has more money prices for everything will naturally increase. What's more is that a weaker baht will make fuel more expensive which in turn will affect the price for transportation of all goods in the economy including food prices.

The government needs to concern itself with the bigger picture - namely the whole country - and while the extra money from a weaker exchange range may help a few people it will be everyone in the country that must pay higher prices. There is a balancing act between employment (or income) and inflation that governments undertake. Given the current lack of demand in western countries, it appears that the thai government accept that a weaker exchange rate will not do much to improve the income for the country when considering the alternative of higher inflation.

[Merangue]

So you feel a weaker baht will not help, and the following does not make sense then

1) tourist converts a dollar at the exchange

2) Tourist spends less as he gets less

3) Bar Girl, tuk tuk driver, food seller etc make less money as there is less to spend

4) Issan girl. guy sends less money home as they make less

5) People in village have less money to spend

6) My wifes parents own the village shop and they have been hit with a 60% down turn

If the expats on this site can not see how the basic money chain works, then we have no chance that Thai's will

I can explain it like this. The weaker baht will not help the economy. Yes it might help the low income people in your village have more money, but there will be unintended consequences of a weaker baht which will destroy that higher income. What is it? It is called inflation.

Quite simply if everyone has more money prices for everything will naturally increase. What's more is that a weaker baht will make fuel more expensive which in turn will affect the price for transportation of all goods in the economy including food prices.

The government needs to concern itself with the bigger picture - namely the whole country - and while the extra money from a weaker exchange range may help a few people it will be everyone in the country that must pay higher prices. There is a balancing act between employment (or income) and inflation that governments undertake. Given the current lack of demand in western countries, it appears that the thai government accept that a weaker exchange rate will not do much to improve the income for the country when considering the alternative of higher inflation.

I do not deny what you are saying .... however........ There is a danger here of losing repeat customers within Thailand.

You have a medium sized company looking to open a factory. Does the company go to a politically torn and divded country with a high exchange rate and difficult business law which make it hard to operate or does it go to a neighbouring country where the politics are pretty tamed, it is easy to operate and the exchange rate is relatively decent.

How many people go to Thailand for the first time thinking they will never return afterwards on the strength of the exchange rate? They often end up coming back.

If the exchange rate is not all that good the Tourist will often visit Malaysia or some other country in the area where they get more for their money.

The hgher the exchange rate the more it impacts on the country in both the short term as Ozzieman is talking about and also in the longer term where long term investment and repeat custom is shrinking month by month.

It is all well and good talking about the small business in Isaan losing some cash but often it is the small business that is unable to sustain a long term loss of money so that small business goes bust. Small businesses in numbers go bust, medium sized business acting as supplier starts to hurt and therefore you start to get a chai reaction going the other direction.

Yes inflation is a danger but inflation is not as dangerous as losing large parts of your international investment and trade. Sometimes a little inflation is actually healthy.

[badge]

Looking at Tourist $'s is'nt that significant though as tourism(incl. hookers and the like) amounts to less that 15% of GDP. Epxorts account for over 60% of GDP. If your currency is strong, your exports become more expensive.

[ozzieman05]

So I should tell the wife, to say to all her friend's back in Thailand, when they go to bed with empty tummies that its all for the ood of the economy

And the small shop owner's who can not get paid, that it is for Thailand own good

And you wonder why the red shirts are ready to fight

You may be right, but I do not want to translate waht she will say about your thoughts when I tell her

P.S. I am not a red shirt supporter

But in Australia we lower the dollar, and we pay higher petrol prices, and our economy has not collapsed

[cclub75]

But in Australia we lower the dollar, and we pay higher petrol prices, and our economy has not collapsed

Because everything is relative...

Consider in Thailand and in Australia the price of 1 liter of gasoline and the wage for 1 hour of work...

In other words : australian peole, even "poor" can afford higher gasoline prices... In Thailand, the effect of higher gasoline prices would be much, much higher.

I remind you that we were on the verge of disaster last year, when oil prices hit a record... Diesel was like 43 THB per liter, right (peak in july 2008) ? The Samak government was subsidizing like crazy.... It was a real and huge problem for businesses, farmers etc.

http://thaicrisis.wordpress.com/2009/03/25...-to-march-2009/

Last point : Thailand has a very poor energy efficiency.... It means they import and use a lot of oil compared to GDP.

So overall, we can understand if they are looking the exchange rate issue, through the oil prices problem...

Edited April 23, 2009 by cclub75

[wolfmanjack]

Looking at Tourist $'s is'nt that significant though as tourism(incl. hookers and the like) amounts to less that 15% of GDP. Epxorts account for over 60% of GDP. If your currency is strong, your exports become more expensive.

Okay so Tourism is 15% and Exports are 60% so that is 75% of the GDP that would benefit from a weaker baht. Also i doubt the monthly payments sent by people that have family (or gf) in thailand are not included in that 15% so that need to be taken into account. By the way I am not only talking about westerners married to thais but all of the thais that are working over seas and sending money home. Sounds to me like devaluing would be a good thing for most thais. As for inflation it seems to me that most of the items in thailand were less expensive when the baht was 45 to the US$ than they are now. I know pork Loin was.

[Time Traveller]

So I should tell the wife, to say to all her friend's back in Thailand, when they go to bed with empty tummies that its all for the ood of the economy

And the small shop owner's who can not get paid, that it is for Thailand own good

And you wonder why the red shirts are ready to fight

You may be right, but I do not want to translate waht she will say about your thoughts when I tell her

P.S. I am not a red shirt supporter

But in Australia we lower the dollar, and we pay higher petrol prices, and our economy has not collapsed

I understand why people feel that way. But consider this. Money tends to flow to some people and businesses more than others. You can see this by the fact that some people have a lot and others have not much. The problem with inflation is that it tends to widen income gap between the have's and the havenot's. In fact early last year in China there were many concerns that inflation in food prices would lead to riots. China has been accused of artificially keeping the exchange rate weak - as can be seen by the massive build up in fx reserves. To do this, the bank of china buy dollars and then prints Remnimbi to buy the dollars. The problem with this strategy is that is leads to inflation.

Thailand is already doing this to a small extend, you can see it by the constant buildup of fx exchange reserves over the last several years. That is, they buy dollars/sell baht to stop the baht strengtening too much. Are they good at it? Who knows, only time will tell.

I'm not trying to upset anyone or give false promises, but the natural direction on thai baht is for it to strengthen. As long as thailand exports more than it imports (seen in the trade and current account surpluses) then the BoT will need to keep buying dollars to stop baht strengthening even further. It is somewhat different from Australia which runs deficits and has to rely on foreign investment to keep the currency strong. In that case the Aussie would naturally weaken.

Perhaps if the government speeds up megaprojects or the army decides it needs to buy 100 or so military tanks and aircraft, then the baht may weaken.

[Time Traveller]

A weak currency may help a little, but it's no magic silver bullet to improve the standard of living of a country. If it was, then we'd all be buying things from Zimbabwe, instead of China.

[Gary A]

Those who blame Thailand for their own country's weak currency really have no idea how FOREX works. It would be incredibly expensive for Thailand to even try to manipulate the baht. The baht is in much better shape than most western currencies and the stability is proof of that fact. The entire world is in a recession and Thailand too is in a severe economic downturn. It has very little to do with currency.

[tb86]

does anyone at this time really think that a weaker baht will help out the poor farmers?

Thinking that a better exchange rate in thailand will increase tourism, please correct me if im wrong, is where the money to the bg's, hotel workers, taxi drivers an ect are reciving their money to send home from.

when the current climate created by protestors in thailand has effectivly damaged the tourism industry, in combination with the current economic situation , consumer confidence and precived job security

is at this time thinking a better exchange rate will bring in more money to the poor a pipe dream?

[Priceless]

Looking at Tourist $'s is'nt that significant though as tourism(incl. hookers and the like) amounts to less that 15% of GDP. Epxorts account for over 60% of GDP. If your currency is strong, your exports become more expensive.

Okay so Tourism is 15% and Exports are 60% so that is 75% of the GDP that would benefit from a weaker baht. Also i doubt the monthly payments sent by people that have family (or gf) in thailand are not included in that 15% so that need to be taken into account. By the way I am not only talking about westerners married to thais but all of the thais that are working over seas and sending money home. Sounds to me like devaluing would be a good thing for most thais. As for inflation it seems to me that most of the items in thailand were less expensive when the baht was 45 to the US$ than they are now. I know pork Loin was.

A few points:

- Officially, tourism is supposed to form ~6% of GDP. Admittedly, this does not include bg's revenue and some other things. Nowhere near 15% though.

- Exports are equivalent to ~65% of GDP, but do not form ~65% of GDP! When you calculate the GDP of a country, you only include net exports, i.e. gross exports minus gross imports. In the first quarter of this year, exports were valued at USD 33.8 billion, while imports were USD 26.7 billion. The resulting net exports were USD 7.1 billion, which is in the region of 10% of GDP.

- A devalued baht (much as it would benefit me personally) would raise the price of everything imported, e.g. fuel, inputs for the export industry etc. A devaluation may well benefit a country that exports a lot of (domestically produced) commodities, but for a country with a high import content in its exports it is a much more mixed blessing.

/ Priceless

[jdrake72]

I observed carefully the cross rates of THB against major currencies in the past years and the conclusion is that THB is closely related (almost pegged with a very small fluctuaction )with the singaporean dollar.

Check the historical rates of the past 2-3 years and you will not see a currency with such small fluctuation like the singaporean dollar.

But Thailand is not Singapore and eventually this dog-style following peg will blow off.

It has happened with the parity of Argentina, it has happened with the THB 25/1USD and it has happened with lots of other currencies which had tried to peg their currencies to other currencies.

It creates distortions in the medium-long term which one day will blow off. THB is strongly overrated and its competitviness in exports might have been compromised. It will be more evident -I think- when global demand will start to recover.....we will see South korea and India having a boom in exports due to their much undervalued currencies, like Thailand and Japan having trouble to revive their exports due to their highly overvalued currencies.

Thailand is not Japan and its currency is not a safe heaven and it doesnt offer any minimal guarantee due to its political/economical situation and one day all the factors will be put in the scale. Asian neighbours are very agressive competitors,a weaker baht is not THE unique and perfect solution (but only a part of it) of course and it is not free of side effects, but a exchange rate around 40 for 1USD would be more reasonable and a good equilibrium between import and export costs :I made a survey amongst several hundreds Thai companies who relies in both import and export and ask their best exchange rate to get the best profit... the average was around 40THB/1USD.

Edited April 29, 2009 by jdrake72

[stumonster]

THB vrs the SGD and the AUD seems to have lost major ground today.

anybody have ideas to why ?

[Merangue]

THB vrs the SGD and the AUD seems to have lost major ground today.

anybody have ideas to why ?

As i am at work and my ability to read news etc is limited, the only economic news i have seen today is about the Hotel loss of business. Not sure it would effect the baht so much however.

i

[Naam]

THB vrs the SGD and the AUD seems to have lost major ground today.

anybody have ideas to why ?

weakening USD vs. all major currencies, THB following mostly USD.

[mommysboy]

THB vrs the SGD and the AUD seems to have lost major ground today.

anybody have ideas to why ?

weakening USD vs. all major currencies, THB following mostly USD.

The economic news out today was plain (read Bangkok Post) dismal, worse than Germany, UK, Japan, US, and what's more from an emerging country Still, Thai logic being what it is expect the bt to nudge 30 to the dollar next week .

[jdrake72]

THB vrs the SGD and the AUD seems to have lost major ground today.

anybody have ideas to why ?

weakening USD vs. all major currencies, THB following mostly USD.

I don t think so. USD today very down against the THB, about 12 cents during the afternoon.

Watch the historical exchange rates of the past 2-3 years and you will see for yourself the currency which has fluctuated less vs. the THB is the Singaporean dollar, not the USD.

I think euro exchange rate is 100% cross-rate, THB has a managed exchange rate which include a "secret" formula based on USD, Singapore Dollar and probably in some extent the japanese yen.

I don t think any other currency is taken into consideration: it is a simple basket, which % of these 3 currencies we don t know, and also besides the balanced valued of these 3 currencies, there is a room for a small and limited fluctuation.

This is just my idea, after watching closely the THB exchange rates of the past years.

In turn, Laotian kip follows the THB and the Malaysian ringgit has its "self-following" of the Singaporean dollar (after breaking its 3.80 peg to 1 USD), Cambodian riel seems to be more related to the USD with a very small devaluation.

Well, most of the currencies are manipulated in some way,....

Chinese renmbimbi seems virtually frozen at 6.85 for 1 USD since few months , the Singaporean dollar itself flctuates within a band and the Hong Kong dollar is almost pegged to the USD.

Japanese yen and korean won fluctuate freely , Indonesian rupiah, Indian rupiah and Philippines peso seem also to fluctuate but i guess sometimes their govt put an invisible hand when they feel it is necessary to intervene.