Gbp Sterling

[chiang mai]

For those people who don't follow such things, GBP has fallen against USD and as a consequence it has also fallen against THB - today for the first time in a quite a while traders are talking once again about the possibility of parity with the EURO and this time around I suspect it could become a reality. SO, if you're staying in Thailand and you hold Sterling but spend THB, best get some changed PDQ because things are not likely to get any better for quite a while.

[12DrinkMore]

Aah, beat me to it.

Yes, currencies have been out of the headlines for a while, eclipsed I suppose by the stock market and gold. I was just looking to resurrect the good old thread about the value of the GBP, but whatever, lets have a new one....

http://www.telegraph.co.uk/finance/finance...oes-deepen.html

http://www.telegraph.co.uk/finance/currenc...-with-euro.html

Well, isn't this just great news for all the UK pensioners?

What was it Gordo said?

"A weak currency is a sign of a weak government"

Looks like both are becoming weaker by the day. I hope that the UK will finally join the Euro. Brown/Darling/King are obviously unable to hold any measure of fiscal discipline and the next lot, Osborne, Cameron et al, are just another bunch of clueless <deleted>. The only solution is to have the GBP taken away from them, so that they cannot keep playing it off against their deficits, both budgetary and moral.

Merkel, she's the one.

And, settling a little higher on the soapbox, I am now fed up with the stupid squabbling between Tory and Labour, for months all we have been hearing is

"They will cut budgets" "No we won't", "yes you will", But you will cut more than us" "no we won't", "yes you will" and so on and so on.

That is the current state of UK politics. A bunch of infantile brats shouting at each other over the garden fence. Which is all we have go to look forward to until the next election is over.

So here is my forecast for the next twelve months:

1. GBP DOWN.

2. Unemployment UP to 2.8 million, but the real rate well over three million.

3. GDP massaged by magic FLAT.

4. Inflation, also undergoing a substantial massage, STEADY 1.8%

5. Interest rates STEADY 0.5%

6. House prices DOWN 10%

You see, I am pretty good with all these forecasts, took all of three minutes. Maybe I should be looking for a job in the government, single handedly I could replace huge swathes of overpaid and under productive cubicle idiots?

[chiang mai]

Aah, beat me to it.

Yes, currencies have been out of the headlines for a while, eclipsed I suppose by the stock market and gold. I was just looking to resurrect the good old thread about the value of the GBP, but whatever, lets have a new one....

http://www.telegraph.co.uk/finance/finance...oes-deepen.html

http://www.telegraph.co.uk/finance/currenc...-with-euro.html

Well, isn't this just great news for all the UK pensioners?

What was it Gordo said?

"A weak currency is a sign of a weak government"

Looks like both are becoming weaker by the day. I hope that the UK will finally join the Euro. Brown/Darling/King are obviously unable to hold any measure of fiscal discipline and the next lot, Osborne, Cameron et al, are just another bunch of clueless <deleted>. The only solution is to have the GBP taken away from them, so that they cannot keep playing it off against their deficits, both budgetary and moral.

Merkel, she's the one.

And, settling a little higher on the soapbox, I am now fed up with the stupid squabbling between Tory and Labour, for months all we have been hearing is

"They will cut budgets" "No we won't", "yes you will", But you will cut more than us" "no we won't", "yes you will" and so on and so on.

That is the current state of UK politics. A bunch of infantile brats shouting at each other over the garden fence. Which is all we have go to look forward to until the next election is over.

So here is my forecast for the next twelve months:

1. GBP DOWN.

2. Unemployment UP to 2.8 million, but the real rate well over three million.

3. GDP massaged by magic FLAT.

4. Inflation, also undergoing a substantial massage, STEADY 1.8%

5. Interest rates STEADY 0.5%

6. House prices DOWN 10%

You see, I am pretty good with all these forecasts, took all of three minutes. Maybe I should be looking for a job in the government, single handedly I could replace huge swathes of overpaid and under productive cubicle idiots?

Let me also stick my neck out and make some projections covering the next twelve months:

1. GBP/THB sub 50, heading for 45 (and now Mommysboy is starting to panic in case of right a few months ago).

2. FTSE 100, sub 4,500

3. Conservatives win by narrow margin

4. Chiang Mai wins lottery and stops worrying about exchange rates

I'm with you on the other points.

Edited September 19, 2009 by chiang mai

[loverboy44]

Agree with you both.

The biggest fault the UK made was not to join the EURO in 2002.

[mommysboy]

Glad this thread started again.

I think the current value against the bt is about where it's at but the shorters are clearly out again.

In all honesty the Telegraph always runs the worst case scenario.

It could be the pound will dive by as much as 5 - 10% again in general, but I don't think it will lose much against the dollar as both economies are in a similar position. I'm about to change another wad though as I reckon 51bt is in the offing again.

And once again, viewing the pound and the troubles of the UK economy in isolation too, is IMHO a mistake that is always made.

[chiang mai]

Glad this thread started again.

I think the current value against the bt is about where it's at but the shorters are clearly out again.

In all honesty the Telegraph always runs the worst case scenario.

It could be the pound will dive by as much as 5 - 10% again in general, but I don't think it will lose much against the dollar as both economies are in a similar position. I'm about to change another wad though as I reckon 51bt is in the offing again.

And once again, viewing the pound and the troubles of the UK economy in isolation too, is IMHO a mistake that is always made.

Presumably you refer to USD shorters, certainly, nobody is shorting THB - that being the case then yes, that is a problem.

I managed to squeeze thru. a closing door last week and booked my transfer at 56.02 - as sure as eggs eggs, every time Mervyn speaks, the Pound falls - we'ld all do well to figure out his speaking schedule for the month and trade on that basis alone!

[Pez]

For those people who don't follow such things, GBP has fallen against USD and as a consequence it has also fallen against THB - today for the first time in a quite a while traders are talking once again about the possibility of parity with the EURO and this time around I suspect it could become a reality. SO, if you're staying in Thailand and you hold Sterling but spend THB, best get some changed PDQ because things are not likely to get any better for quite a while.

I am no expert but if you read the Thai Business section of the Bkk Post there is a lot of feeling that the Thb value is too high, not just against the the Western countries but compared to its Asian friends. Look at the price of rice Vietnam wow a lot cheaper than here. According to the THai experts the value is too high and thyat takes into account of imports costing more with a weaker Thb.

So, I do not think you can plot the value just on the Telegraph or some other western source.

[12DrinkMore]

I am no expert but if you read the Thai Business section of the Bkk Post there is a lot of feeling that the Thb value is too high, not just against the the Western countries but compared to its Asian friends. Look at the price of rice Vietnam wow a lot cheaper than here. According to the THai experts the value is too high and thyat takes into account of imports costing more with a weaker Thb.

So, I do not think you can plot the value just on the Telegraph or some other western source.

Aah, you have touched a few other important and interesting issues.

Rice production in Thailand is one of the more inefficient in the world. I'll try and find the references but am a little busy now, so maybe somebody else can post them. There are a couple of ways of dealing with this problem. The THB could be devalued, but then the price of imports, especially fuel and fertilizer would increase, reversing any benefit.

Or Thailand could finally realise that in a competitive global economy, efficiency and productivity have to be increased to the level of the competition.

The "beggar the neighbour" currency devaluation might provide a short term benefit, but in the long term does not solve the underlying inefficiencies, and is therefore no long term solution. History has generally shown that government intervention to support inefficiences leads to increased poverty and penalises the poor/middle classes. The rich, almost by definition, will end up richer.

But this thread is about the GBP/THB rate, so, if you want a discussion on the "efficiency of rice production in Thailand", or, maybe, "would a THB devaluation be beneficial to Thailand?" then please go ahead and start a new topic. I personally think that Tarisa is doing a splendid job in stabilising the value of the THB against the basket of currencies that have been selected. Especially with the background of all the political turmoil that Thailand is undergoing.

[ged]

Glad this thread started again.

I think the current value against the bt is about where it's at but the shorters are clearly out again.

In all honesty the Telegraph always runs the worst case scenario.

It could be the pound will dive by as much as 5 - 10% again in general, but I don't think it will lose much against the dollar as both economies are in a similar position. I'm about to change another wad though as I reckon 51bt is in the offing again.

And once again, viewing the pound and the troubles of the UK economy in isolation too, is IMHO a mistake that is always made.

Presumably you refer to USD shorters, certainly, nobody is shorting THB - that being the case then yes, that is a problem.

I managed to squeeze thru. a closing door last week and booked my transfer at 56.02 - as sure as eggs eggs, every time Mervyn speaks, the Pound falls - we'ld all do well to figure out his speaking schedule for the month and trade on that basis alone!

Seconded , every single time he opens his mouth the pound takes a battering , er, The econommy is showing signs of recovery (Hurrah the pound is gaining) BUT the recession is deeper than we thought and will take longer to get out ( and the pound is struggling again).

It is almost as if they want a weak pound

[loverboy44]

Some people in the UK surely want a week pound because in the short term as 12drinkmore said it helps the exports.

But what can the UK export any more? BMW Minis or Rolls Royce? Or Volkswagen Bentleys?

The UK is no production hub any more and they have to import the most. Because of this the recovery of the economy and the Pound will not begin until there can be seen a fiscal discipline and a starting of a saving money instead of only mortgaging money in the population.

[mommysboy]

Some people in the UK surely want a week pound because in the short term as 12drinkmore said it helps the exports.

But what can the UK export any more? BMW Minis or Rolls Royce? Or Volkswagen Bentleys?

The UK is no production hub any more and they have to import the most. Because of this the recovery of the economy and the Pound will not begin until there can be seen a fiscal discipline and a starting of a saving money instead of only mortgaging money in the population.

It's certainly no production hub, but it's a myth that it doesn't export. It's a major trading hub, and in addition has a fair stake in pharmaceuticals and high tech: 17-20% exports in GDP. A low pound will also attract inward investment thus expect some major capital inflows at the low point.

Yes for sure the Govt wants a weak pound at present, it's us expats that don't. A weak pound curbs imports, boost exports and brings a bit of inflation that ironically is needed at this point, and yes it's orchestrated for sure.

Ref my comment on shorting, I meant shorting of the pound. It's one of those sex and violence currencies that shorters love.

But the downward move is justified to an extent due to yet more quantitative easing, but not so much after all just look at what's happening in the world.

[chiang mai]

I loved the following from an article I just read, pretty much sums it up for me - full article to be found at the link below:

"Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral".

http://www.telegraph.co.uk/finance/comment...-supremacy.html

[cmsally]

Maybe a period of hyper inflation as Faber predicted. But with Chinese holding US$ in bonds etc. do they really want to see it go through the floor.

China Daily

or are maybe more of these bonds actually "inflation indexed" than we realise, in which case the Asian countries are well protected.

China Daily

Would be interesting to see what the percentage is and how well that protects the Chinese, it could make a big difference to US$ future.

[Naam]

Maybe a period of hyper inflation as Faber predicted. But with Chinese holding US$ in bonds etc. do they really want to see it go through the floor.

China Daily

or are maybe more of these bonds actually "inflation indexed" than we realise, in which case the Asian countries are well protected.

China Daily

Would be interesting to see what the percentage is and how well that protects the Chinese, it could make a big difference to US$ future.

they are not. the ratio of inflation indexed bonds compared to total issue of USTs is miniscule.

[cmsally]

Doesn't give figures relating to China but provides an idea.

Wall Street Journal

[cmsally]

Marc Fabers view

Marc Faber

Doesn't have much to say on the pound though. Should we assume there is an up with the US$ down?

[cmsally]

Deleted due to double post, keep getting stupid "moct" interference

Edited September 21, 2009 by cmsally

[mommysboy]

The last few threads are very interesting but how does this relate to the pound and the bt. Although not officially linked to the dollar it seems to have a strong correlation, so I'd guess low dollar low bt- right? and low dollar higher pound - right?

Also how could the Asian countries become prime movers if there is little or no demand from the west?, and a higher currency valuation for China for instance would dampen exports- which would leave China in the cart- same Thailand (not that it is not in big enough trouble anyway).

Relating to the bt only, I don't understand it's strength- the economy is performing worse than even UK and US, not to mention the political uncertainty. This is an economy heading for the rocks and no turning as yet.

[chiang mai]

If you didn't already see it BBC News 24 today has a section in the business program that is really an announcement from the BOE stating that the current level of Sterling, one fifth down on a year ago, is the level the bank expects Sterling to remain at for some years to come. Contrast that scenario with regional currencies such as THB and the Chinese RMB that can barley be contained at their existing levels and are itching desperately to strengthen (as the article entitled supremacy confirms). GBP and THB want to go in opposite directions and we're now seeing the respective Central Banks say OK, if that's what you want, do that, we can't fight gravity or nature! Now whether all of that will lead us into a period of deflation in the UK and hyperinflation in Asia remains to be seen.

[cmsally]

Be interesting to see where Australia lies in this, as it supplies a lot of the Asian raw materials and is becoming tied more to Asia.

I don't know that an Asian bubble is very sustainable without their large export markets in the west.

[mommysboy]

If you didn't already see it BBC News 24 today has a section in the business program that is really an announcement from the BOE stating that the current level of Sterling, one fifth down on a year ago, is the level the bank expects Sterling to remain at for some years to come. Contrast that scenario with regional currencies such as THB and the Chinese RMB that can barley be contained at their existing levels and are itching desperately to strengthen (as the article entitled supremacy confirms). GBP and THB want to go in opposite directions and we're now seeing the respective Central Banks say OK, if that's what you want, do that, we can't fight gravity or nature! Now whether all of that will lead us into a period of deflation in the UK and hyperinflation in Asia remains to be seen.

I haven't seen it, but how much of what you wrote (in red) is what was actually said and how much is your take.

Blimey you do read a lot in to things CM. I understand that it's possible to assume that the RMB will strenghten still further against the pound (well dollar) as it was effectively devalued a few months ago, but why bring the bt in to the equation as Thailand is one of the world's worst performing economies. Not only that, I have not heard one voice except yours that does not maintain the bt is overvalued.

You say the pound and bt want to go in opposite directions, but seemingly not if you accept the report as the pound looks set to remain stable, ie, it's not going in any direction.

Taking to pound aside, why do you think the bt itself will continue to strengthen?

[chiang mai]

The words in red are almost a direct quote, if you switch on BBC New 24 no you should be able to see it over the next half an hour or so. There was a short debate afterwards that tried to account for the reasons why and the conclusion was that it was Pound weakness and not USD strength.

I'm not sure it's just me that thinks that THB is getting stronger, the BOT seems to think so also, apparently - evidence for this is that BOT has had to intervene in the currency markets in recent days to prevent, "rapid movements against USD and other regional currencies". Actually I think much of that movement has been a weakening of USD but the effect on THB has been the same.

As for Thailand being one of the worlds worst performing economies, I believe we have discussed this before - according to Wiki Thailands GDP remains 11th in a list of Asia/Pacific countries and well ahead of the UAE, Malaysia, Hong Kong, Singapore and Vietnam - 35th best in the world.

http://en.wikipedia.org/wiki/List_of_Asian_countries_by_GDP

Edited September 21, 2009 by chiang mai

[chiang mai]

I attach a link to the BOE quarterly report on exchange rates and GBP movement, mentioned in the BBC report above.

http://www.bankofengland.co.uk/publication...in/qb090303.pdf

[mommysboy]

It's an awfully confusing topic. I'd certainly agree the pound is 20% down in value on average and that is what would have happened with a devaluation.

But does that explain why it is so down against the Thai bt for instance, and the Euro!

Why does the 35th most competitive economy (and going down I believe) enjoy such a strong currency? Particularly given it's credit ranking and the political uncertainty.

[cmsally]

Scary stuff which could have an effect on GBP

President of Europe

[Naam]

It's an awfully confusing topic. I'd certainly agree the pound is 20% down in value on average and that is what would have happened with a devaluation. But does that explain why it is so down against the Thai bt for instance, and the Euro!

Why does the 35th most competitive economy (and going down I believe) enjoy such a strong currency? Particularly given it's credit ranking and the political uncertainty.

because THB is a small fish in the ocean of currencies and can be rather easily manipulated by the Bank of Thailand. as certain restrictions apply big shorters would find it quite difficult to attack THB. as far as GBP/THB is concerned the explanation is weak Pound vs. Dollar. Ms Tarisa just props up Baht vs. Dollar thus causing a rather strong Baht vs. Pound.

[lannarebirth]

Scary stuff which could have an effect on GBP

President of Europe

Tony Blair = Mustapha Mond

[cmsally]

Scary stuff which could have an effect on GBP

President of Europe

Tony Blair = Mustapha Mond

Yikes even an American holds that point of view; OK what can you compare Cherie to?

[chiang mai]

Scary stuff which could have an effect on GBP

President of Europe

This one scares me to death. I like to think that the old line of, "you can fool me once ..." applies here but I somehow doubt it will. As an aside, I have a very good friend in the UK, a highly educated and very sensible man who is not prone to rash judgments or off the cuff statements, but he reckons that TB is the Devil incarnate!

[mommysboy]

It's an awfully confusing topic. I'd certainly agree the pound is 20% down in value on average and that is what would have happened with a devaluation. But does that explain why it is so down against the Thai bt for instance, and the Euro!

Why does the 35th most competitive economy (and going down I believe) enjoy such a strong currency? Particularly given it's credit ranking and the political uncertainty.

because THB is a small fish in the ocean of currencies and can be rather easily manipulated by the Bank of Thailand. as certain restrictions apply big shorters would find it quite difficult to attack THB. as far as GBP/THB is concerned the explanation is weak Pound vs. Dollar. Ms Tarisa just props up Baht vs. Dollar thus causing a rather strong Baht vs. Pound.

It's a more plausible explanation than any other I've heard, but what's the motive? Who's to gain from this?