Thai Baht Losses 3.3 Percent In One Month

[Mai Krap]

Grim economic news gives dollar and yen a boost

NEW YORK ; -- Grim economic news from around the world sent the US dollar mostly higher on Friday while the yen regained favor as a safe haven investment, analysts said.

Jittery traders rushed into the greenback and yen after news of a dismal 6.2 percent annualized fourth-quarter contraction in the US economy and more troubling economic data from Europe.

The euro fell to US$1.2671 at 10pm GMT from US$1.2743 late on Thursday. The dollar dipped to ￥97.65 from ￥98.46 on Thursday.

The market action came after news of a sharper-than-expected 6.2 percent contraction in the US economy in the fourth quarter, highlighting the stunning meltdown in activity late last year.

In late New York trading, the dollar stood at 1.1701 Swiss francs after SF1.1644 on Thursday.

The pound was at US$1.4310 after US$1.4322.

Asian currencies fell this month, with South Korea’s won tumbling to an 11-year low and the Indian rupee dropping to a record, on concern sliding exports and shrinking economies will deter investment.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slumped to a four-year low on Friday as global funds favored safer bets than emerging-market assets. Government reports this week showed India’s economy expanded at the slowest pace since 2003, Singapore’s had the biggest quarterly contraction in at least 33 years, and Hong Kong’s exports fell the most in half a century.

The won fell 1.1 percent to 1,534 against the US dollar on Friday, according to Seoul Money Brokerage Services Ltd. It reached 1,544, the weakest since March 1998. India’s rupee declined 1.3 percent to 51.15, extending its loss this month to 4.4 percent.

Eight of the 10 most-active Asian currencies dropped against the dollar this month. China’s yuan and the Hong Kong dollar, which is pegged to the greenback, were little changed.

The MSCI Asia-Pacific Index of regional shares slid 7.4 percent this month, taking its loss for the year to 16 percent. The benchmark plunged 43 percent in 2008.

India’s economy, Asia’s third-largest, expanded 5.3 percent from a year earlier in the last quarter, the government said on Friday. Singapore’s gross domestic product declined an annualized 16 percent during the three-month period and Hong Kong’s exports in January tumbled 22 percent, separate reports showed.

The New Taiwan dollar dropped as low as NT$35.008 on Friday, the weakest since April 2003, according to Taipei Forex Inc. The NT dollar closed 0.3 percent lower versus the greenback at NT$34.95 on Friday, capping a 3.3 percent drop for the month.

Indonesia’s rupiah dropped 4.5 percent this month to 11,980 to the dollar, according to data compiled by Bloomberg. The rupiah had a seventh weekly decline, the longest losing streak since November 2007.

Malaysia’s ringgit declined 2.6 percent this month and reached 3.7065 per dollar on Friday, the lowest since March 2006.

Thailand’s baht sank to a two-year low of 36.18 per dollar on Friday, having lost 3.3 percent this month. The Philippine peso slid 2.9 percent to 48.798. China’s yuan was little changed for the month at 6.8398.

-- Bloomberg/AP 2009-03-01

[Mai Krap]

http://www.bloomberg.com/apps/news?pid=206...&refer=asia

Thailand Will Probably Cut Key Interest Rate Further, Korn Says

By Daniel Ten Kate and Suttinee Yuvejwattana

March 1 (Bloomberg) -- Thailand’s central bank will probably cut its key interest rate further this year to boost growth as the country faces its first recession in 11 years and 1 million job losses, Finance Minister Korn Chatikavanij said.

The central bank cut its benchmark interest rate on Feb. 25 for a third straight month to 1.5 percent to buoy demand after consumer prices fell and the economy shrank in the fourth quarter for the first time since 1999.

“Given where inflation is and given where economic growth is, I’d be surprised if last week’s was the last reduction that we’ll see,” Korn said in an interview yesterday in Cha-am, Thailand, where leaders of the 10-member Association of Southeast Asian Nations are meeting for a summit. “There’s probably more to come if I had to bet.”

Prime Minister Abhisit Vejjajiva, who took power 10 weeks ago following months of violent protests, has pledged fresh stimulus measures to stem the economy’s slide. Manufacturing production contracted the most on record in January, the central bank said Feb. 27. The current account surplus widened to the most in two decades in January as oil costs fell and demand for raw materials dried up.

“The way things are looking, we’re going to see some nasty figures for at least the next month or two,” Korn said. “February will be pretty mean, and March probably the same.”

Stimulus Package

A 116.7 billion-baht ($3.3 billion) package of training programs, cash handouts, property tax breaks and public works will enter the economy in April, Korn said. The government is also designing a second package worth 1.9 trillion baht over three to four years consisting of small-scale infrastructure projects that are “as close to being immediately executed as possible,” he said.

The spending will help reduce job cuts expected to be “at least one million” this year, Korn said. “The worst thing that could happen to any government is rising unemployment,” he said.

The largest contraction since 1982 in the U.S. economy, Thailand’s biggest single overseas market, has prompted exporters such as Charoen Pokphand Foods Pcl and local units of Toyota Motor Corp. and Seagate Technology Inc. to predict lower sales and cut jobs. Overseas shipments, which amount to 70 percent of GDP, plunged 26.5 percent in January from a year earlier, the government said.

“We are heading into a recession,” said Somprawin Manprasert, an economist at Tisco Securities Ltd in Bangkok. “The central bank still has room to cut rates, but I don’t think they will cut the rate to zero because they are still concerned inflation may come back.”

Entering Recession

Thailand’s gross domestic product in the first quarter may shrink more than the fourth quarter’s 4.3 percent contraction, the government’s planning agency said this week, putting the economy into its first recession in a decade. For the year, GDP may miss its 0 percent to 2 percent target, Korn said.

“Achieving growth this year all depends on how the economy reacts to the stimulus packages that we put forward and more importantly how the world economy settles down toward the latter part of the year,” Korn said. “Government spending was always designed basically to keep things ticking and buy us time in order for the rest of the world to recover.”

Commercial banks are projecting net loan growth this year of 6 percent to 7 percent, Korn said. The government may inject funds into state-run banks such as the Islamic Bank of Thailand and the Government Housing Bank, and “would be happy” to provide more funding than the 8 billion baht allocated last month to the Export-Import Bank of Thailand and the Small Business Credit Guarantee Corp., both state-run institutions.

Thai banks cut 75 basis points on lending rates and 1.31 percentage points on deposit rates after the central bank reduced the rate in December and January, Duangmanee Vongpradhip, a Bank of Thailand assistant governor, said Feb. 25. Siam Commercial Bank Pcl cut lending, deposit and savings rates by 25 basis points on Feb. 27, the first commercial bank to react to the central bank’s latest rate cut.

Dominant Banks

Siam Commercial, Bangkok Bank Pcl and Kasikornbank Pcl accounted for more than 50 percent of revenue from 11 Thai banks last year. The average profit margin for the three was 21 percent, compared with 12 percent for all lenders, based on Bloomberg data.

The central bank’s rate cut will ease the decline in average net interest margins at Thai banks this year, Sugittra Kongkhajornkidsuk, a DBS Vickers analyst, wrote in a Feb. 26 note to clients. They are forecast to fall 0.34 percent this year to 3.25 percent, she wrote.

Baht’s Loss

Net interest margins at Thailand’s banks are “clearly wider than regional peers, and banks need to provide a clearer answer to society as to why this remains the case,” Korn said. “I haven’t yet received an entirely convincing argument as to why it needs to be where it is.”

Thailand’s baht in January had its biggest monthly loss since October as overseas investors dumped the nation’s stocks. Foreign investors sold $207 million more Thai stocks than they bought this year, according to stock exchange data.

“The balance has probably tipped to the scale of those who want the baht to be weaker rather than stronger,” Korn said. “The baht is pretty close to where it should be and I know that the central bank is keeping a close eye on it.”

To contact the reporters on this story: Daniel Ten Kate in Bangkok at [email protected];

Last Updated: February 28, 2009 12:01 EST

[mommysboy]

You just can't read anything in to exchange rates. In theory the terrible news should have devalued the dollar. As it is more people sold their dolar investments and are just holding them in dollars until such time they can be repatriated at a better rate, invested in another country, or simply reinvested when things get better.

Likewise interest rate cuts do not provoke the same reaction as in saner times.

[submaniac]

I would think that a lower Thai baht would be good news to everyone. Certainly to those who get paid in foreign currency (such as myself) as well as to Thai businesses which do export (such as my uncle's company).

[Mai Krap]

I would think that a lower Thai baht would be good news to everyone. Certainly to those who get paid in foreign currency (such as myself) as well as to Thai businesses which do export (such as my uncle's company).

I see it as a positive for those of us who have American Dollars. For those who recently brought money into the country and converted it, they have lost a chunk of change in the process on top of the normal loss when converting currencies legally in Thailand.

What many have feared was ever letting this snowball go down hill in the first place, now that its gone, there is no way to predict how far it can go. The banks in Thailand are withholding much information to this day regarding their solvency as many western banks have already come clean and are allowing properties to be auctioned off to the highest bidder.

This has happened to some extent with the Auto Industry in Thailand concerning repossessed vehicles put on the auction block but has not happened with property. Second hand trucks have lost somewhere around 50 percent of their value in the last 6 months if you have watched the real markets. I see trucks being offered for 250,000 that nobody will even look at when two years ago they would have sold quickly for 400,000. What remains to be seen is a scenario where the Baht hits 40 and Americans start buying condos again but any way it goes the market is heading down hill quickly. Its possible the baht will crash this time to 50 to 1 Dollar as the Euro also takes a hard loss on the Dollar.

[Mai Krap]

http://opinion.inquirer.net/inquireropinio...global-meltdown

Battling global meltdown

Asia scrambles to fight recession

By Noel Adlai O. Velasco

Philippine Daily Inquirer

First Posted 04:53:00 03/01/2009

Filed Under: World Financial Crisis

BANGKOK, Thailand—Barely eight months ago, Asian governments were too preoccupied with curbing double-digit inflation, as oil and commodity prices surged to levels not seen in decades.

Central banks across Asia had to implement a series of interest-rate increases to rein in inflation.

Now, Asia’s economies are fighting a different kind of battle: recession.

In an effort to stimulate their economies, Asian central banks have been cutting key interest rates, with some rates already reaching zero levels, a sharp reversal from the tight monetary policies they adopted just months ago.

With exports plunging and millions of workers losing their jobs, governments across Asia and around the world are rushing to come up with economic stimulus packages to shore up their faltering economies, stimulate growth and avoid slipping into recession.

The effects of the global financial crisis, which intensified last September with the collapse of US investment bank Lehman Brothers, have spilled into the real economies of Asia, most of which project lower growth rates this year.

Weak exports have already pushed Japan, Hong Kong and Singapore into recession. Other Asian countries like Taiwan and South Korea are teetering on the brink of recession.

Experts warn that the current global financial turmoil may take a bigger toll on emerging Asia than the 1997-1998 regional crisis, despite its enhanced financial muscle.

Economic growth in Asia has been severely affected by the global collapse in demand for goods.

Asian exports plunged at double-digit rates in January as a result of weaker European and American consumer spending. Exports account for about 32 percent of Asia’s GDP, according to the World Bank.

The sharp drop underscores the vulnerability of Asia’s export-driven economies during global downturns and points to more cuts in jobs, production and profits in the coming months.

To counter the global slowdown, the International Monetary Fund has urged governments to “stimulate their economies.”

Japan

Japan’s parliament passed in January a 4.8 trillion yen (US$52.2 billion) stimulus plan that includes a cash payout of 12,000 yen ($133) per taxpayer.

Japan is considering additional measures to shore up the economy with fresh spending likely to top 10 trillion yen ($109 billion).

Its economy shrank 12.7 percent in the fourth quarter, the steepest drop in 35 years amid an unprecedented collapse in exports and production in the world’s second-biggest economy. Its exports in January fell 45.7 percent.

The drop in Japan’s GDP in October-December far outpaced declines of 6.2 percent [revised] in the United States and 1.2 percent in the Euro zone.

Economy minister Kaoru Yosano says Japan now faces “the worst economic crisis” in the postwar era.

Japan’s economy has contracted for three straight quarters.

Due to weak global demand, Toyota, Toshiba and Hitachi have fired thousands of workers. The firings have intensified in the past weeks, with Nissan, NEC and Panasonic announcing combined job cuts of 55,000.

Singapore

Singapore’s government has unveiled a multibillion dollar plan to boost spending and cut taxes in an effort to ease the worst recession in the city-state’s history.

It also lowered corporate taxes, subsidized wages, guaranteed bank loans and spent more on infrastructure as part of the S$20.5 billion (US$13.6 billion) stimulus package.

Singapore slipped into recession in the fourth quarter when real GDP contracted 3.7 percent, following a decline of 0.2 percent in the preceding quarter.

“Our key objective in this package is to help Singaporeans keep their jobs,” Finance Minister Tharman Shanmugaratnam says. “We have to expect many more jobs to be at risk this year.”

The number of workers who lost their jobs last year soared to about 16,000, a five-year high.

Singapore has slashed its 2009 growth forecast, saying the economy could shrink as much as 5 percent as global demand for the country’s exports collapses.

The ruling People’s Action Party is hoping the stimulus package’s array of tax cuts and rebates will put cash in the pockets of consumers and resuscitate domestic demand.

The government will spend S$5.1 billion to help companies avoid layoffs, highlighted by a cut in the maximum corporate tax rate to 17 percent from 18 percent.

It also plans to subsidize 12 percent of the first S$2,500 of each employee’s monthly wages, hike cash handouts to low-income workers by 50 percent, and increase public sector hiring.

South Korea

Its economy is slipping into recession amid a sharp fall in exports and domestic consumption.

Exports in January plunged a record 32.8 percent from a year ago to $21.7 billion, sending the trade balance swinging to a deficit of $2.97 billion.

Falling exports and wobbly financial markets have taken the steam out of Asia’s fourth-largest economy, Korean officials said.

“The economic downturn is sharper than what we had predicted in mid-December, as exports, corporate profits, household income and domestic spending are all going downhill under the impact of the worldwide recession,” says Choi Choon-shin, an official at the Bank of Korea.

In the fourth quarter, the economy contracted 5.6 percent, its worst performance since the Asian financial crisis 11 years ago.

The government has allocated about 140 trillion won (US$102 billion), or 15 percent of GDP, in liquidity injections, tax cuts and stimulus packages.

Incoming Finance Minister Yoon Jeung-hyun says the government will revise the official 2009 growth target of 3 percent set in December as fears grow that the country’s GDP may contract this year.

The IMF says the Korean economy would shrink 4 percent in 2009. Lee Sun-young/The Korea Herald

Taiwan

Total exports, equivalent to about three-quarters of Taiwan’s economy, tumbled by a record 42 percent in December compared with the same month in 2007.

To boost domestic retail spending, President Ma Ying-jeou’s administration has issued NT$85.7 billion (US$2.5 billion) worth of shopping vouchers to encourage consumers to spend. Each of the island’s 23 million citizens, as well as foreign spouses, received NT$3,600 (US$105) worth of shopping vouchers. The government expects this program alone to add 0.6 percent to this year’s GDP.

The government also announced earlier an additional NT$200 billion on top of the current NT$500 billion stimulus package aimed at creating 150,000 new jobs in 2009 to combat Taiwan’s rising unemployment rate, which climbed in December to its highest level since 2003. The China Post

China

The Chinese government has announced a 4 trillion yuan ($586 billion) fiscal stimulus package to spur domestic demand and boost the slowing economy until 2010.

All provincial and municipal governments have also come up with their own stimulus packages, amounting to no less than 20 trillion yuan.

China’s economic growth has been slowing for five consecutive quarters. It dipped to 9 percent in the third quarter of 2008, the first growth rate below double digits in five years.

China reported an unexpectedly sharp 17.5 percent drop in January exports, the steepest decline since records began in 1993.

Due to weak demand for exports, companies have closed shop in China, rendering millions of workers jobless.

The government allocated 100 billion yuan for investment in the fourth quarter of 2008 and 20 billion yuan for reconstruction projects this year. These are expected to trigger an overall investment of up to 400 billion yuan.

China’s year-on-year GDP growth weakened to 9 percent in 2008 from 13 percent in 2007.

Analysts widely believe that the first and second quarters of this year will be the worst for the Chinese economy. It is predicted to gain strength starting the third quarter.

India

India’s economy began 2008 in robust fashion but ended on a note of mixed sentiments.

Exports fell in October for the first time in seven years. Industrial production, which was among the main drivers of the economy, fell 0.4 percent. The rupee fell perilously close to 50 to a dollar in November, an all-time low. And, as per the government’s own admission, some 65,000 jobs were lost between August and October.

Two key sectors, agriculture and industry, were affected by the global economic slowdown. This will have a serious effect on India’s overall growth, says the National Council of Applied Economics Research, an economic think tank.

India has unveiled a 300 billion rupee ($6 billion) package to bail out the corporate sector. It has stepped up public expenditures and has given various tax concessions to industry to combat economic slowdown. RC Rajamani/The Statesman

Thailand

Like most export-dependent countries in Asia, Thailand is suffering from a collapse in demand from the United States and Europe—the top buyers of Asian goods—as they slip deeper into recession.

Thailand’s exports fell 15.7 percent in December from a year earlier, after a 17.7 percent drop in November.

Atchana Waiquamdee, Bank of Thailand (BOT) deputy governor, believes the kingdom will experience a quarterly contraction but not a recession.

She also believes this year’s economy will even show continued growth, albeit at a very slow pace.

The BOT has revised the economic growth target this year to 0-2 percent, the lowest since 1988, citing the impact of the global credit crisis on exports.

BOT Assistant Governor Duangmanee Vongpradhip has projected that the country could contract for three consecutive quarters—beginning last year’s fourth quarter. [The economy contracted 4.3 percent in the fourth quarter.]

“Thai economic growth could be lower than zero percent but there is a very low probability of 5.5 percent,” says Duangmanee.

The new Abhisit Vejjajiva government has introduced two economic stimulus packages aimed at restoring confidence, boosting income, and improving quality of life and security.

The government’s first package (18 measures) has earmarked 116.7 billion baht (US$3.3 billion) for social welfare and infrastructure. It is providing 2,000 baht for each Thai earning less than 15,000 baht. The seven measures in the second package are aimed at bolstering the property sector, small- and medium-sized enterprises and venture capital, and at restructuring debt. Anoma Srisukkasem/The Nation

Malaysia

The Malaysian government has released a 7 billion ringgit ($1.9 billion) package to stimulate the faltering economy.

Deputy Prime Minister Datuk Seri Najib Tun Razak has promised a second stimulus package.

More than 10,000 Malaysians have lost their jobs since Jan. 1, according to Malaysian Employers Federation executive director Shamsuddin Bardan.

He says more are expected to lose their jobs in the days ahead as companies, particularly in the manufacturing sector, struggle to stay afloat.

The economic slowdown this time is much worse than the one in 1997 because it is more widespread globally, says Shamsuddin.

Malaysia has set a target of 3.5-percent growth for this year but it is likely to be revised downward due to the uncertain outlook.

Several economists and government officials say the worse-than-expected trade figures and slumping industrial production and export figures indicate the government will have little choice but to hope for growth of 1 percent to 2 percent.

In the last three months of 2008, 1.5 million lost their jobs as economic output shrank by 6 percent.

The Philippines

The IMF says the global economic turmoil can affect the Philippines more severely this year, projecting that weakening demand and job cuts abroad will cause foreign exchange remittances and export earnings to decline.

Exports plunged 40.4 percent in December, its steepest fall in more than two decades, according to the government’s statistics office. Shipments of electronics, the country’s main export, dropped 47.6 percent during the period.

Since October, some 39,000 workers have lost their jobs, many of them in the electronics sector.

Labor Secretary Marianito Roque has warned that up to 200,000 Filipinos could lose their jobs in the first six months of the year, mainly in the electronics and garments industries.

To pump prime the economy and generate three million jobs by yearend, the Philippine government plans a P330 billion ($6.9 billion) economic stimulus package. [An economic adviser to President Macapagal-Arroyo claims that only P7 billion is new spending.]

The government has also set up a P1 billion livelihood fund for overseas Filipino workers who could lose their jobs. The fund can be used to provide loans for returning workers who want to acquire new skills, undergo retraining or start a business.

Indonesia

Indonesia has set aside a 71.3 trillion rupiah ($6.31 billion) stimulus fund to boost the economy amid the crisis.

The package includes the 27.5 trillion rupiah stimulus previously announced.

The new stimulus revolves around tax savings worth 43 trillion rupiah, waived taxes and import duties for businesses and certain households worth 13.3 trillion rupiah, and subsidies and spending of 15 trillion rupiah for businesses.

Finance Minister Sri Mulyani Indrawati says the stimulus is aimed at increasing people’s purchasing power, improving the competitiveness and sturdiness of businesses and hiking spending for labor-intensive infrastructure projects.

The incentives include paying the income taxes of employees (now paid by businesses), subsidizing diesel, and increasing infrastructure spending.

Indonesia’s economy expanded 6.2 percent in 2008, slowing slightly from 6.3 percent in 2007.

In December, exports plunged 20 percent from a year earlier as overseas demand shrank. The decline overshadowed a 20-percent rise in full-year exports from 2007.

Indonesia’s exports slid to $8.7 billion in December from $9.6 billion the previous month.

Real GDP growth of selected

Asian countries (in percentage)

Country 2008 2009**

Japan -0.7 -2.6

Singapore 1.2 -5.0

South Korea 2.5 3.0

Taiwan 1.87* 2.12

China 9.0 8.0

India 6.8 6.0

Thailand 3.6* 0-2.0

Malaysia 5.8* 3.5

Philippines 4.6 3.4-4.7

Indonesia 6.2 4.5-5.0

Vietnam 6.23 4.0-6.5

Laos 7.9 8.0

Bangladesh 6.2 6.0

*Preliminary estimates

**Forecast

[NHJ]

this is a "good" news, thai bath seems to go out of it's out of time bubble. few months ago the governement was talking about devaluating the bath by 5%.

bath should go down again as bad news come, investment will start again aswell as exportation.

[tijnebijn]

this is a "good" news, thai bath seems to go out of it's out of time bubble. few months ago the governement was talking about devaluating the bath by 5%.

bath should go down again as bad news come, investment will start again aswell as exportation.

So if I understand you right you are in the bubblebath business and got exportation cause the government

wanted 5 percent discount ?

[NHJ]

So if I understand you right you are in the bubblebath business and got exportation cause the government

wanted 5 percent discount ?

the governement thought few month ago to devaluate the thb, the thb isn't fluctuating like other currencies, the governement keep it artificially high.

recently the prime minister ordered a study regarding the advantages and inconvenients of devaluating the bath, study wich conclude it wasn't necessary.

so finally things are moving naturally and thb seems to fluctuate again, wich is normal.

and no i'm not in the bubble bath business, i'm mostly spending THB

[hardy1943]

So if I understand you right you are in the bubblebath business and got exportation cause the government

wanted 5 percent discount ?

the governement thought few month ago to devaluate the thb, the thb isn't fluctuating like other currencies, the governement keep it artificially high.

recently the prime minister ordered a study regarding the advantages and inconvenient of evaluating the bath, study wich conclude it wasn't necessary.

so finally things are moving naturally and thb seems to fluctuate again, wich is normal.

and no i'm not in the bubble bath business, i'm mostly spending THB

Thai exports only dropes 37% in January and you have not seen nothing yet. China are are the only smart ones th

they keep their currencies artificially low.

[cclub75]

Thai exports only dropes 37% in January and you have not seen nothing yet. China are are the only smart ones th

they keep their currencies artificially low.

And what about the... Japanese ? Exports minus 47 % in january !!!!!

Talk about a very powerful incentive to crash their currency.

And they try : Yen was at 89 against USD on january 26.... One month later, JPY is at 97,56 !

-10 % in one month, that's nice...

Anyway. It won't really change the situation. Exports are crashing because the demand is vanishing. I'm not sure that a discount of 10 % could convince people in the US for instance... to buy more japanese cars. When you are broke, you are broke. And if, on the top of that, you are in debt... then... even a free car would not be a good deal (pay insurance, pay gasoline etc.)

Edited March 1, 2009 by cclub75

[wasabi]

Baht, not Bath,

I think it should go back to 44:1 USD

[BAZZAT]

Baht, not Bath,

I think it should go back to 44:1 USD

Yes we all Wish!!!!!!

[Kimera]

Baht, not Bath,

I think it should go back to 44:1 USD

It go were it likes against the dollar, 70 to the £ would be good

[pilgrim2505]

Baht, not Bath,

I think it should go back to 44:1 USD

It go were it likes against the dollar, 70 to the £ would be good

Those were better days. Be good to see them back!

Edited March 1, 2009 by pilgrim2505

[Thai at Heart]

Baht, not Bath,

I think it should go back to 44:1 USD

It go were it likes against the dollar, 70 to the £ would be good

Those were better days. Be good to see them back!

I think there are probably millions of people who clearly remember the 97 crisis that would disagree with you completely.

[PeaceBlondie]

I would love to see 40:1 against the USD, just to be selfish. But let's be careful what we wish for. Mexico, far larger and stronger than Thailand, just lost 45% against the dollar, and the peso is below all-time lows. The US is its only major trading partner, and the entire economy is hurting tremendously. Plus, they have worse corruption, and the drug warlords are battling it out.

[MeetJohnDoe]

Can't be long before a major baht crash...Korean won has lost 40% against the US$ in the past few months...what's taking the baht so long?

[IMA_FARANG]

I would think that a lower Thai baht would be good news to everyone. Certainly to those who get paid in foreign currency (such as myself) as well as to Thai businesses which do export (such as my uncle's company).

Actually a cheaper Baht is a mixed blessing for Thailand.

Yes, a cheaper Baht makes exports relatively cheaper and therefore iimoroves the Thai product competatively aginst other available products.

But many Thai export products use commodities and resources from other countries, which are brought in and used to manufacture a Thai export product. A lower Baht makes those imported commodities more expensive and therefore the Thai manufactuer has to raise the sale price of the exported product to maintain the same profit, Also prices on fuel and energy may depend on foriegn imported products with prices set or denominated in dollars/euros/pounds/etc. This raises the fuel and energy costs for the Thai manufactuer, which again mean the Thai manufactuer has to raise local prices to maintain the same profit. And thirdly, the prices of imported goods will go up as the Baht gets weaker. That increases the local cost of living in Thailand, and therefore increases inflationary pressure on the Thai economy and Thai consumers.

In economics most things are not a complete "good" or a complete "bad", but usually a mixture of "good" and "bad". Everything is a balance of good an bad, and currency rates are the same.

Edited March 2, 2009 by IMA_FARANG

[IMA_FARANG]

Baht, not Bath,

I think it should go back to 44:1 USD

It go were it likes against the dollar, 70 to the £ would be good

Those were better days. Be good to see them back!

Would you really? What does a slab of imported English cheese cost now at 46 Baht to the pound? Now what would the same cheese cost at 70 Baht to a pound?

Think about it.

[BigSnake]

Just set back and watch today(2 Mar) and the next couple of days see how strong it will be.

[bungy007]

Baht, not Bath,

I think it should go back to 44:1 USD

It go were it likes against the dollar, 70 to the £ would be good

Those were better days. Be good to see them back!

Unfortunately, that rate was based on a false economy (built on a property bubble/ household debt). They are paying the price for this and will be for the forseable future. The UK is now looking at printing money as they can no longer use the interest rate to influence the markets. The fact is there is very little positive news to spurn on investment into the pound and increase its intrinsic worth.

Being paid in baht, I hope it drops back to 45bt to the quid or even lower

[henryalleman]

Japan

Japan's parliament passed in January a 4.8 trillion yen (US$52.2 billion) stimulus plan that includes a cash payout of 12,000 yen ($133) per taxpayer.

Japan is considering additional measures to shore up the economy with fresh spending likely to top 10 trillion yen ($109 billion).

Its economy shrank 12.7 percent in the fourth quarter, the steepest drop in 35 years amid an unprecedented collapse in exports and production in the world's second-biggest economy. Its exports in January fell 45.7 percent.

The drop in Japan's GDP in October-December far outpaced declines of 6.2 percent [revised] in the United States and 1.2 percent in the Euro zone.

Economy minister Kaoru Yosano says Japan now faces "the worst economic crisis" in the postwar era.

Japan's economy has contracted for three straight quarters.

Due to weak global demand, Toyota, Toshiba and Hitachi have fired thousands of workers. The firings have intensified in the past weeks, with Nissan, NEC and Panasonic announcing combined job cuts of 55,000.

In february the care sales went down with 32% in japan

Edited March 2, 2009 by henryalleman

[johnwills]

The Thai Economy seemed to be doing fine when it was 70 baht for 1 pound, why would going back to that level now hurt Thailand? Can anyone enlighten me?

[Thai at Heart]

The Thai Economy seemed to be doing fine when it was 70 baht for 1 pound, why would going back to that level now hurt Thailand? Can anyone enlighten me?

If you think running to the IMF for an emergency bailout because you can't pay your bills is a good policy to follow, then yes it was just rosy around here then. Thailand is still paying for the mess that caused. The policies were flawed, but 70 to the GBP crippled hundreds of companies and banks here because they had borrowed in USD at 25 and couldn't pay back at 45.

The values of 70 to the USD and 50 to the USD were caused from a currency crisis, and as such were never going to last forever. On the back of them, export businesses surged, and logically the currency strengthened as business took off again. Now the baht is relatively strong, and exports are under pressure so the baht is weakening in response.

All part and parcel of the natural movements of economies and all you can hope is that governments help to smooth out the excesses.

Edited March 4, 2009 by Thai at Heart