Thb Cross Rates - Usd/eur/jpy Vs Thb

[badge]

The CHF, the NZD, CAD, GBP... none of these currencies have sufficient Physical flows to drive their own cross rate with the THB. Their exchange rates are simply derived by dividing/multiplying USDTHB by USDand the currency you wish to quote.

This complicates analysis, but there is far more to be gained by looking at USDTHB and cable than there is looking at GBPTHB I believe.

To that end, USDTHB is currently correcting. It may have further to fall(THB to strengthen), and the only real clue to any THB weakness will be a break above the recent 36.37 high.

There was significant trade within 34.00-35.00, so perhaps some support may emerge there.

[badge]

GBPUSD has fallen precipitously, as GBP has against most currencies around the world. I believe it will have a rebound at some stage, and that rebound against the USD will have a very positive effect on GBPTHB; even if USDTHB is still declining correctively.

Right now, for the penny pinchers, GBPTHB is ticking down(with USDTHB). if its recent trendline support goes, then the previous lows my offer support, and any significant strength in GBPTHB will only be worth considering once it overcomes the recent highs around 52.50.

[badge]

My personal view is that THB will come under alot of pressure in coming months, and will weaken significantly against the Majors. There are numerous fundamental arguments for this and it is certainly in Thailands best interests, but I think someone on another said something along the lines of 'its pointless comparing THB to western currencies' which is totally correct, it should be compared to its peers, so lets do that briefly.

For the sake of ease I'll quote them all aganst the USD first. This is just to gauge exactly whats going on out there as a bit of fun

Its a similar story to that of any financial market - what goes up usually comes down. The myth perpetrated this time round is that asia will 'decouple' from the import hungry developed countries they export too. It wont. The -ve figures are already breathtaking. However, it also wont fare as badly as other developing regions. Asia is perhaps the fittest in the ward.

Edited March 29, 2009 by badge

[torrenova]

Of course you can extrapolate all FX rates from one another minus the bid / offer spread and commissions or else one would simply arbitrage and reap untold billions.

If you want to bring in JPY then you need to look at the impact of low USD interest rates on the JPY carry trade.

[badge]

Of course you can extrapolate all FX rates from one another minus the bid / offer spread and commissions or else one would simply arbitrage and reap untold billions.

Very true, and a very profitable business its been too However the physical flows of capital do tend to have a bearing on currencies movements too.....

If you want to bring in JPY then you need to look at the impact of low USD interest rates on the JPY carry trade.

I dont think thats really necessary here, but top marks for mentioning the carry trade

[Naam]

Of course you can extrapolate all FX rates from one another minus the bid / offer spread and commissions or else one would simply arbitrage and reap untold billions.

Very true, and a very profitable business its been too However the physical flows of capital do tend to have a bearing on currencies movements too.....

If you want to bring in JPY then you need to look at the impact of low USD interest rates on the JPY carry trade.

I dont think thats really necessary here, but top marks for mentioning the carry trade

there is not too much left to mention as JP¥ carry trades have shrunk to a minimum since most carry traders (HY vs. JP¥) got burnt. only recently an increase is again noticed and surprisingly EUR and USD are competing with JP¥.

[badge]

there is not too much left to mention as JP¥ carry trades have shrunk to a minimum since most carry traders (HY vs. JP¥) got burnt. only recently an increase is again noticed and surprisingly EUR and USD are competing with JP¥.

Classicly JPY and CHF have been the funding currencies in carry trades. I'd certainly like to see your source detailing the recent increase in carry trades, and increased use of EUR and USD funding carry.

[Naam]

there is not too much left to mention as JP¥ carry trades have shrunk to a minimum since most carry traders (HY vs. JP¥) got burnt. only recently an increase is again noticed and surprisingly EUR and USD are competing with JP¥.

Classicly JPY and CHF have been the funding currencies in carry trades. I'd certainly like to see your source detailing the recent increase in carry trades, and increased use of EUR and USD funding carry.

my source are several meetings in Singapore (two weeks ago) with bankers from Credit Suisse, Julius Baer, Standard Chartered and UBS. JP¥ dropped for obvious reasons out of favour, CHF remains in favour and EUR as well as USD are gaining favour because of the ridiculously low o/n rates.

in this connection it is worthwhile to mention that for the first time i can remember banks are offering more favourable loan rates to their clients i.e. BELOW prevailing interbank rates based on Euribor and Libor.

[lannarebirth]

there is not too much left to mention as JP¥ carry trades have shrunk to a minimum since most carry traders (HY vs. JP¥) got burnt. only recently an increase is again noticed and surprisingly EUR and USD are competing with JP¥.

Classicly JPY and CHF have been the funding currencies in carry trades. I'd certainly like to see your source detailing the recent increase in carry trades, and increased use of EUR and USD funding carry.

my source are several meetings in Singapore (two weeks ago) with bankers from Credit Suisse, Julius Baer, Standard Chartered and UBS. JP¥ dropped for obvious reasons out of favour, CHF remains in favour and EUR as well as USD are gaining favour because of the ridiculously low o/n rates.

in this connection it is worthwhile to mention that for the first time i can remember banks are offering more favourable loan rates to their clients i.e. BELOW prevailing interbank rates based on Euribor and Libor.

That's interesting, thanks. Any insight into what borrowers might be doing with all this cheap money that the presumably hope will depreciate as well? Pretty hard to find "safe" returns out there at present.

[badge]

there is not too much left to mention as JP¥ carry trades have shrunk to a minimum since most carry traders (HY vs. JP¥) got burnt. only recently an increase is again noticed and surprisingly EUR and USD are competing with JP¥.

Classicly JPY and CHF have been the funding currencies in carry trades. I'd certainly like to see your source detailing the recent increase in carry trades, and increased use of EUR and USD funding carry.

my source are several meetings in Singapore (two weeks ago) with bankers from Credit Suisse, Julius Baer, Standard Chartered and UBS. JP¥ dropped for obvious reasons out of favour, CHF remains in favour and EUR as well as USD are gaining favour because of the ridiculously low o/n rates.

in this connection it is worthwhile to mention that for the first time i can remember banks are offering more favourable loan rates to their clients i.e. BELOW prevailing interbank rates based on Euribor and Libor.

Hmmm, ok. I would of liked to see some stats but nevermind. Cheers. Over what time span are you refering to? Im not convinced EUR and USD are being used as a 'carry' in any further sense than they have at any point in the past. Anyone attempting to exploit USD rate differentials will have had their head handed to them over the past year.

I dont think carry trades are really on anyones mind at the moment.

[badge]

That's interesting, thanks. Any insight into what borrowers might be doing with all this cheap money that the presumably hope will depreciate as well? Pretty hard to find "safe" returns out there at present.

buying banks? Its hard to foresee CHF, EUR and USD all depreciating.

Edited March 30, 2009 by badge

[Naam]

That's interesting, thanks. Any insight into what borrowers might be doing with all this cheap money that the presumably hope will depreciate as well? Pretty hard to find "safe" returns out there at present.

the problem of investment banks is that their "valued" clients are presently hardly interested in loans and carry trades whereas their "less valued" clients, who had to bear the brunt of margin calls and even close-outs in the last quarter 2008, lack the necessary collateral to qualify. the latter is mainly based on the most rigid conditions and extreme lowering of loan values with partly ridiculous results. on one hand the banks prefer to hand out loans to their clients (who's details they know) instead of using the interbank market but on the other their handling of loan values is paranoid. for example swiss banks decided recently to value some triple B assets lower than double or single B assets because the price fluctuations are more pronounced due the higher rating and therefore higher interest rate sensitivity. PLUS if the price of an asset falls below 50 the loan value is ZERO! the Singapore bankers i know are p*ssed off with their headquarters, the clients are p*ssed off with their personal bankers but the beancounters in the headquarters in the Alps couldn't care less.

on a side note and off topic... if you look at our daily mailing list you find a dozen or so of each above-mentioned [client] category. some of them were hurt so badly that the "group" organised a bailout to avoid close-outs.

as opposed to the 1980s and 90s when i was heavily involved in carry trades using currency interest rate differentials i use loans nowadays only as a hedge, e.g. CHF loan to cover a CHF investment as i don't hold any CHF cash. it would be nonsensical for me to take loans in EUR or USD at X+margin and cashing in X-margin on the cash i hold.

Edited March 30, 2009 by Naam

[Naam]

Hmmm, ok. I would of liked to see some stats but nevermind. Cheers. Over what time span are you refering to? Im not convinced EUR and USD are being used as a 'carry' in any further sense than they have at any point in the past. Anyone attempting to exploit USD rate differentials will have had their head handed to them over the past year. I dont think carry trades are really on anyones mind at the moment.

i did not take any notes Badge (which would have been anyway out of bounds) plus i am not really interested (see above) in carry trades. of interest were for me the rate facts only, at that time e.g. USD @ 0.725% and EUR @ 1.125% INCLUDING margin !

[badge]

Naam - By "margin" do you mean interest/financing costs?

For example typical Margin(interest/financing cost) payments are LIBOR + 2%, which ultimately means margin costs fluctuate with LIBOR.

[Naam]

Naam - By "margin" do you mean interest/financing costs? For example typical Margin(interest/financing cost) payments are LIBOR + 2%, which ultimately means margin costs fluctuate with LIBOR.

i consider your "typical" margin as highway robbery Badge except during my early greehorn years as an investor when i had no bloody idea of nothin' and the banker thieves exploited my lack of knowledge my "typical" margin for the last two decades has never exceeded "+1%" but fluctuated between 0.5 and 0.75% and in rare cases negotiated down to a mere 0.125% for specific transactions.

what i don't understand is your statement that margin costs fluctuate with Libor. please elaborate. i only know them as static bps added to whatever benchmark interest you agree with your bank and therefore do not fluctuate except as calculated percentage of total finance cost, but that is in my view academic.

[badge]

lol yeah +2% is steep, last time I sorted an account out we offered LIBOR + 2%, just the first figure that sprung to mind.

Not sure if your insinuating im "[in my]greehorn years as an investor when i had no bloody idea of nothin' and the banker thieves exploited my lack of knowledge", but after working in derivative sales in London I now trade financial markets privately and have been doing so for about 8yrs, and in my experience +2% isnt that far off the norm, at least prior to the crisis. I dont deal with bankers I deal with brokers. My 'margin' requirements change for different financial instruments. I predominantly use MF Global. My financing costs(interest) payments are calculated on a daily basis @ LIBOR +X%(not sure at the moment, I dont tend to hold positions for long currently).

This is fairly standard.

Im paying interest on the outstanding nominal value of any positions, minus my margin(deposit). And of course short positions receive the interest/financing costs.

Perhaps your 0.125% figures are for commercial loans or some such?

[badge]

For example if I had $1,000,000 long nominal exposure to EURUSD futures, I pay my margin, then financing costs calculated each day. If I was long $1,000,000 EURUSD Spot, I simply pay the margin. I would then be debited/credited the 'roll', or 'carry' which is the difference in exchange rates. MArgin requirements are different for different markets, but for spot currencies I pay 0.5%-1% if thats what you mean? Theres an abundance of brokers that will offer better margin rates, but Ive never ecven come close to using all my margin allowances. If I have nominal exposure to $1,000,000 long of Tbonds, or BAC or IYR I still pay my margin and then financing costs of LIBOR +X% each day.

[Naam]

Not sure if your insinuating im "[in my]greehorn years as an investor when i had no bloody idea of nothin' and the banker thieves exploited my lack of knowledge", but after working in derivative sales in London I now trade financial markets privately and have been doing so for about 8yrs,

i'm not insinuating anything Badge but was referring exclusively to my[meanwhile not so]humble self. at that time of course i was humble² and stupid, e.g. allowed a banker to buy in october a bond at a price of 107 which had a call and was called in january @ par.

it wasn't only margin where the banksters robbed me blind but the whole range of other fees too. you name them, they charged me. not double, not triple but 4 and 5 times. at that time i was an easy target sitting more or less incommunicado in the bush, jungle, desert or swamps with no access to any financial information except once in a while a several weeks old financial times as well as BBC Wordl Service on short wave and a statement of my portfolio every six months. for me there was also no obvious reason to complain. in my job i minted money, all income tax free, all expenses paid for, neither time nor opportunities to spend big money and my holdings were growing nicely.

only after 1989, when i threw in the towel and said good bye to my professional career i found the time and the sources to educate myself in finance.

[Naam]

1. Im paying interest on the outstanding nominal value of any positions, minus my margin(deposit). And of course short positions receive the interest/financing costs.

2. Perhaps your 0.125% figures are for commercial loans or some such?

1. that of course demands an additional percentage of fees. in my case 25-75bps (depending on the loan currency).

2. no such thing like commercial loans. in the mid/end 90s i was one of the "founding fathers" of a group of private investors, bankers and traders from more than two dozen countries who initially met daily virtually on the internet and later several times a year to discuss investment and exchange views. that what was the period when i graduated from greenhorn to [sort of] partly informed. a few years later we pooled our knowledge and of course our holdings, moved with the group to one bank and negotiated best available conditions. we have changed banks once and are planning to change most probably this year again. this setup worked out to our full satisfaction and cannot be compared to the situation when an investor fights his battles with bankers as a "lonely soldier".

[Naam]

For example if I had $1,000,000 long nominal exposure to EURUSD futures, I pay my margin, then financing costs calculated each day. If I was long $1,000,000 EURUSD Spot, I simply pay the margin. I would then be debited/credited the 'roll', or 'carry' which is the difference in exchange rates.

1. MArgin requirements are different for different markets,

2. but for spot currencies I pay 0.5%-1% if thats what you mean?

Theres an abundance of brokers that will offer better margin rates, but Ive never ecven come close to using all my margin allowances. If I have nominal exposure to $1,000,000 long of Tbonds, or BAC or IYR I still pay my margin and then financing costs of LIBOR +X% each day.

1. are you referring to "loan values" or "financial cost"? in my case if "loan values" the answer is 'yes', if "cost" the answer is 'no'.

2. i am not sure what you mean by mentioning "spot currencies" in context with loans and loan cost.

[badge]

For example if I had $1,000,000 long nominal exposure to EURUSD futures, I pay my margin, then financing costs calculated each day. If I was long $1,000,000 EURUSD Spot, I simply pay the margin. I would then be debited/credited the 'roll', or 'carry' which is the difference in exchange rates.

1. MArgin requirements are different for different markets,

2. but for spot currencies I pay 0.5%-1% if thats what you mean?

Theres an abundance of brokers that will offer better margin rates, but Ive never ecven come close to using all my margin allowances. If I have nominal exposure to $1,000,000 long of Tbonds, or BAC or IYR I still pay my margin and then financing costs of LIBOR +X% each day.

1. are you referring to "loan values" or "financial cost"? in my case if "loan values" the answer is 'yes', if "cost" the answer is 'no'.

2. i am not sure what you mean by mentioning "spot currencies" in context with loans and loan cost.

1. In my statement "MArgin requirements are different for different markets" Im refering to margin requirements.

2. I didnt mention "spot currencies" in context with loans and loan cost.

Ive no idea what your refering to in general. Apologies for any confusion.

[4xman]

Anybody know where in Bangkok can i open account for USD/THB trading? Any brokers there? thx

[badge]

nope! the institutional FX brokers offer it, www.barx.com too i believe.