Time To Devalue The Baht?

[Time Traveller]

Need to quit smoking so much corn silk i think, the pound was way overvalued as a currency anyway for too long. I dont see any reason for the thais to devalue their currency just so you can have more money to spend here. Toyota hurting because of the baht ? too funny. Personally I think it is about in the right spot.

Toyota is hurting because people all over the world are Not buying new cars, As Thailand produces a huge number of Toyota's for export this will hit the parent companies bottom line.

regards

Freddie

Right. People are not buying. It don't matter whether those toyota's are made in thailand, china, brazil or bangladesh - people are not buying them. Therefore they almost certainly won't export many more from a devaluation in the baht.

The fact is Thailand runs a trade and current account surplus. There will be little to gain from devaluing in these circumstances and doing so would only led to inflationary pressure. (What's the point of having more money in your pocket if everything cost that much more?)

Most countries that devalue their currency do it when their trade and current account are in deficit. That is they import more than they export. Which is definitely not the case with thailand. Devalution in baht will not happen anytime soon.

[Texpat]

^^ very informative post chiang mai.

[chiang mai]

Indeed Thailand does have loans from Japan at least and probably from China as well but government borrowings to finance capital projects is not a bad thing as long as the money is put towards infrastructure building and it remains within sensible borrowing limits. As far as propping up the Baht is concerned, it doesn't take much money at all to manipulate a currency like the Baht because it is not a major currency - I think it has already been noted here that the cost to the BOT of maintaining the currency to date has had almost no impact at all on reserves and I doubt seriously that BOT would allow reserves to be used to repay those loans since that's the job of the current account.

Overall an excellent and informative post, however, I'm going to focus on the statement below...

Thereafter as the global economy recovers it's likely that Thailand will be well ahead of the pack since they will not have the overhang of central bank borrowings and QE.

... because I pretty dang sure that it's been reported that Thailand (would that be the BOT?) is going to get loans from Japan and also China. I reckon that these loans would be repaid with the foreign (USD$) reserves that Thailand has. Unless they "piss them away" propping up the Baht. Time will tell...

[Thighlander]

Didn't devalue after the coup or during the troubles last year, in fact it went the wrong way for me.

As a Brit I would be more than happy for the Baht to devalue, but I don't think it will any more than the Pound strengthen - I would be happy to be proved wrong

^ I agree the baht being de-valued would be good for me. I am from the US, so I feel this is the only way to "increase funds" because we all know the US dollar sucks right now and Idont see it getting better in the futrue.

The THB was just downgraded. You must be using a different Dollar than me. Cause mine is up 30% in a year against the Pound, and a similar gain against the Euro.

I just bought a luxury condo in a great area for 35K USD. In America....