Baht-uk Pound

[cmsally]

In Chiang Mai we have the answer to this one. Gets rid of a certain person and appeases the spirits - kills two birds with one stone.

Spirits demand a sacrifice

[chiang mai]

With not much time left this morning (I'm off on holiday today) I seem to be having problems posting for some unexplained reason - I will however reply more fully when I get to where I'm going and will not leave this hanging. But in a nutshell, I see THB gaining against USD and GBP over time but not necessarily by similar amounts. If you look at the history of USD/THB it has gone from the peg level of 1.25 in 1997 its current 1.34, that's a gain of only 9 cents, expecting a strengthening of say 5 Baht to 1.30 over the next seven to ten years is entirely likely given the QE taking place in the US - that would put USD/THB in shooting distance of its old peg level. As for the balance needed to reach a 35 Baht Pound: well clearly the debt overhang from the current crisis will leave the Pound weakened - prior to the crash USD/GBP traded at 1.50, not too far away from where RBS predicts it will be at the end of this year!

As for the effects on tourism and exports: Thailand has shifted its focus away from USD over the past few years and in light of recent events I see them continuing along that course, as indeed will many other countries in the region - I also think that Thailand is likely to shift its export focus over time as the Asian market matures further. Let's not forget also we are talking about a time frame of seven to ten years and change over time is easy to absorb.

Shifted away from the USD to where? may i ask

I still think the US will be a prime target for any thing in the East what markets could Thailand sell to more competitively CHINA mmmm not sure about that INDIA mmm not sure about that but i suppose it depends on what they are trying to sell..pineapples may be.

Take a look here, you'll note that the range of export countries and products is far more extensive than just the US.

http://www.bot.or.th/English/Statistics/Ec...ionalTrade.aspx

[chiang mai]

It's simply that when I read a thread you are there and I disagree with what you write in the main.

On previous threads I pointed why I felt your predictions were wrong, not just wrong but wholly wrong. Central to this is your belief is that the pound will fall to 35bt. You regarded this as a historical norm, in part accurate but only in as much as it was fixed at a particularly unrealistic price against the dollar with disasterous consequences. When challenged to provide figures you did not do so. Nor acknowledge the effect of inflation in eroding currency values- on this point I'm not so sure of relative diffs. myself.

Then we were given all sorts of reasons as to why powerhouse Thailand would motor through the recession leaving UK standing. They seemed to revolve around the notion that demand would pick up in Asia from other countries, but it is clear that all countries are in the mire, and Asia seems very dependent on the west for demand. Thailand's contraction in particular seems alarming, especially given that it is still an emerging market. And it's performance is weak anyway and has been for years.

You have taken many aspects and glorified them where Thailand is concerned and downplayed them where UK is concerned. Where you acknowledge a problem you simply dismissed it as trivial, eg, the decline in tourism, as if a few percent made no difference! I know this thread is about UK and Thailand, but you do seem to be oblivious to the plight of other countries. Sure the UK is in big trouble so is every major economy in fact some worse.

As far as I can see though the UK has awful public finances and the only storm could be a major breakdown if it fell in to a position of default, and indeed Moodys changed it's rating to negative. It's taken to be a shot across the bows and I think we can take it as read that public spending will be massively reduced in coming years. Thailand on the other hand seems to have balanced finances for the time being, but later not so.

I can't predict a rate and it is best if we all say we are guessing- yes guessing. I think it's also best to average out, in effect change money in chunks if poss.

Well my stalking friend I'm not sure that what you have written here is entirely accurate in as much as I don't recall you ever pointing out in any detail why you disagree with my earlier opinion - nor do I see the links I asked you to provide to support your claims nor do I see evidence to support your theory that the UK economy is better than some! But never mind, let's go back in time and start again shall we!! For the purposes of our disagreement on these matters let's refer to the following as my baseline post shall we, that way we have a point of reference:

In a separate thread some time ago a poster stated that he saw GBP strengthening to 80 Baht per Pound and I replied by way of contrast saying that over the next seven to ten years I see THB strengthening to around 35/40 per Pound. In the short term I said I see THB weakening to the mid 50's (+/- a 10% margin of error) and there after I see THB strengthening against the Pound. When asked why I was so bullish on THB I replied that I thought the UK economy would soon see a second tranche of falls in value and that the effects of QE and government debt would linger far longer and have a greater impact than the effects of the loss of tourists and exports would on the THai GDP - in summary I said I thought that Thailand would recover more quickly than the UK.

In respect of tourism: I said that the current 7% of GDP generated by tourism was not a huge number and that even if arrivals are down 50% for a twelve month period (which they are not), a 50% drop in tourism revenues would only be temporary and would likely be made up again by tourists from other destinations over time - regardless, 3.5% of GDP remains a small number.

Going into the recession I said that Thailand was better positioned than many countries, mainly as a result of the discipline instilled into it by the IMF following the 1997 crash. Foreign reserves are at an enviable level of circa 120 bill (the UK I think is around 17 bill), government borrowings is placed mainly with their regional trading parties and their own national banks (not the other way around as in the case of the UK!) and their central bank is well respected (not like the BOE unfortunately). Indeed, I read a survey in the past week that showed the top twenty countries most likely to be the LEAST impacted by the global recession and six of those countries were in Asia with Thailand being around number fourteen as I recall.

As for exports: I said that less around 50% of Thailands exports are to regional destinations and it is mainly the other 50% to the west that has been effected as a result of the recession. I said that I see Thailand's economy picking up again quickly once the latter 50% starts to grow again and that there will little overhang on the economy resulting from gearing up once again or from social readjustment (unemployed workers in Thailand will return to their villages and farms to pursue other work but will return to employment quickly as soon as it becomes available - western cultures tend to rely heavily on social support from central government which in many cases is a disincentive to return to full time paid employment quickly, case in point the percentage of the UK population who exists on benefits).

AS for historic exchange rates: what I said was that there has been an emotional attachment by many to a GBP/THB exchange rate of 70 for many years but that rate does not reflect fair or true value. Prior to 97 I said that the rate was around 35, or about 20 to the USD as I recall and that rate was closer to the real value. But there is no peg between THB and USD (as in the case of say Hong Kong where HKD is pegged to USD) and the only real link between the two currencies lies in the fact that BOT export bills are settled in USD. Today the BOT manipulates its currency to try and ensure a) there are no wild and sudden swings, and to ensure that THB remains competitive against a basket of regional currencies.

Now, I think that's pretty much all I have said previously on this subject but no doubt you will tell me if I have missed anything. What I have also said is that I am not an expert on economics but the above represents my opinion and am quite happy for my opinions to be challenged constructively. Your task now is to tell us all why my opinion is dangerous, where it could cost people money and if you like, why you disagree (but with supportive links only this time or your credibility might take a hit).

I do not pretend to be an expert and am always willing to listen to others but in my ignorance could you explain how you arrive at the assumption that Thailands 50% of exports to the west were affected which I would presume has an effect on their GDP. how are you expecting these figures to redeem themselves unless the wests economies improve to the point of importing again from Thailand, surely the whole execise on the fall of a countries currency/finance rating is dependant on their long term ability to keep public borrowing to a minimum and increase their exports not something I've read that any country is doing at the moment, I do not understand the logic that one or a few countries are going to be sole beneficiaries, it seems to me that everyones in the same boat, as for the number of tourists from the west falling and their numbers being replaced by people from other regions would this not depend a lot on these other regions not being in the same financial boat as the west, I always assumed that most developing nations had a need to export to the west to obtain the necessary foriegn currency, as I said I'm no expert, probably along the lines of most posters here.

It's the same answer as just given to another poster and the answer lays in part in the following:

http://www.bot.or.th/English/Statistics/Ec...ionalTrade.aspx

Foreign currency is not only derived from exports to the West but by Central Bank rules and agreements with trading parties - BOT export bills are settled in USD, regardless.

[chiang mai]

over 56 baht per £ today whooping heck!!!

Not for cash ........The best you'll get is dead on 55 at UOB,54.98 at Bank of Ayudhya

55. 70 at Ayudhya if you have a foreign currency account and transfer today as I will do in about 30 minutes! got to have reached a ceiling soon I would think

Its interesting as this is a big increase for the £ in just over 2weeks I wonder where its going to settle? Now superrich are doing 56.5 im hanging on for 57 then changing my cash. Has the worlds problems finally started to "hit home" for Thailands currency?

If you read the interview with Finance Minister Korn a few days ago you will see that he is concerned about the current strength of the Baht, not its potential weakness - his task at present is to figure out how to prevent the Baht from getting stronger so that it does not further damage exports and tourism. Can you imagine what the effect will be downstream in time when trade has picked up and there is no longer a need to artificially weaken the Baht, clearly it will be a Baht that is really quite strong (over time).

[wackysleet]

I do not pretend to be an expert and am always willing to listen to others but in my ignorance could you explain how you arrive at the assumption that Thailands 50% of exports to the west were affected which I would presume has an effect on their GDP. how are you expecting these figures to redeem themselves unless the wests economies improve to the point of importing again from Thailand, surely the whole execise on the fall of a countries currency/finance rating is dependant on their long term ability to keep public borrowing to a minimum and increase their exports not something I've read that any country is doing at the moment, I do not understand the logic that one or a few countries are going to be sole beneficiaries, it seems to me that everyones in the same boat, as for the number of tourists from the west falling and their numbers being replaced by people from other regions would this not depend a lot on these other regions not being in the same financial boat as the west, I always assumed that most developing nations had a need to export to the west to obtain the necessary foriegn currency, as I said I'm no expert, probably along the lines of most posters here.

It's the same answer as just given to another poster and the answer lays in part in the following:

http://www.bot.or.th/English/Statistics/Ec...ionalTrade.aspx

Foreign currency is not only derived from exports to the West but by Central Bank rules and agreements with trading parties - BOT export bills are settled in USD, regardless.

Would you for the purpose of clarity, explain why tourists numbers have fallen by 50% but that the figures of 3.5% are not that important to the economy and will soon be made up to their previous levels, you also state that in your opinion the bahts real value should be somewhere in the middle 30s, do you honestly think that at those levels the baht rate will induce tourists back here, {personally I don't} and can you tell me what value the BOT bills for export amount to in comparison to the lost exports.

I cannot see the tourists flooding back here when the wests economies improve in the same numbers as before, Thailand has started to get a bad reputation around the world hence the governments actions to improve tourism "I don't know why if it's such an insignificant amount that they bring in " and people are beginning to try other countries for holidays such as Vietnam and the trend will grow, just look at what has happened in Europe in the last 40 years, first it was tourists to France then Italy then Spain then Cyprus then Goa then Thailand believe me there are other countries that would see that insignificant amount of foriegn currency from tourists as a godsend to their economies and although they may not be called L.O.S. they offer a welcome that is at honest.

As I have said previously, I do not pretend to be an expert but there are anomalies in the arguments from different posters that I cannot get my head around, you cannot all be right, I know that for sure.

[chiang mai]

For Wackysleet - apologies that I can't quote here but the tags seem to be screwed up.

It's important to put what I said into context. I said that a 50% fall in tourist numbers (which represents a 3.5% fall in GDP) was not significant because that fall was only reported for a single month - only if that decrease was maintained for a full year would it represent a hit of 3.5% on GDP, that hasn't happened, yet! I also think that a potential 3.5% hit on GDP is largely irelevant in the context of the overall economy and the entire economic problem (in SEVEN OR TEN YEARS).

I also said that I think that Thai's are quite good at their marketing when it comes to selling Thailand as a tourist destination hence I expect them to recover much of their lost tourist trade by adding new markets - cases in point, the way in which they added direct flights from Russia to Pattaya and have recently added new direct flights to Scandinavian countries.

I did not say the Baht should be around the mid 30's! What I said was that over the course of the next seven to ten years I can see GBP/Baht reaching 55 in the short term and in the longer term it could reach it's old peg level against USD of 25 and that could easily translate into GBP/THB of around 35 to 40. I also said that the medium term picture remained unclear to me as a result of the Thai political situation and the effects of QE in the West.

As for the export figures, no I can't tell you because I haven't done the math but I did supply you with the data hence, go for it if you wish.

[mommysboy]

For Wackysleet - apologies that I can't quote here but the tags seem to be screwed up.

It's important to put what I said into context. I said that a 50% fall in tourist numbers (which represents a 3.5% fall in GDP) was not significant because that fall was only reported for a single month - only if that decrease was maintained for a full year would it represent a hit of 3.5% on GDP, that hasn't happened, yet! I also think that a potential 3.5% hit on GDP is largely irelevant in the context of the overall economy and the entire economic problem (in SEVEN OR TEN YEARS).

I also said that I think that Thai's are quite good at their marketing when it comes to selling Thailand as a tourist destination hence I expect them to recover much of their lost tourist trade by adding new markets - cases in point, the way in which they added direct flights from Russia to Pattaya and have recently added new direct flights to Scandinavian countries.

I did not say the Baht should be around the mid 30's! What I said was that over the course of the next seven to ten years I can see GBP/Baht reaching 55 in the short term and in the longer term it could reach it's old peg level against USD of 25 and that could easily translate into GBP/THB of around 35 to 40. I also said that the medium term picture remained unclear to me as a result of the Thai political situation and the effects of QE in the West.

As for the export figures, no I can't tell you because I haven't done the math but I did supply you with the data hence, go for it if you wish.

Would it not be better to put your basic ideas in to context CM?

'Anomalies' says one poster, it's double accounting as far as I can see, take the jaw dropping analysis of strength of dollar vs. pound, when it's patently obvious that they are in the same boat.

This stong bt.! is that not likely to depress demand even further, and thus how can the Thai economy grow given that it is already in decline?

This demand from other areas, what other areas are there that haven't also been effected and that are not dependent on the west?

And why would they buy from Thailand anyway, given it's reputation,problems and increasing expense?

Although you seem to have an effective grasp of the microscopic and theoretical, all else seems at odds to reality IMHO and you make some crass assumptions that simply defy argument because of their absurdity.

[Jezz]

Pound sterling down to 51.87 bt today. Hey-ho!

[Naam]

Pound sterling down to 51.87 bt today. Hey-ho!

bad luck to be a Brit?