Gbp Sterling

[chiang mai]

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?

Are you simply bored Mommysboy or what.

[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?

Are you simply bored Mommysboy or what.

There is an element of boredom to my entire life ChiangMai(sally).

No, just interested in trying to find an explanation for something I can't get my head around at all: the strength of the Thai bt. I understand why the pound is where it is but not Bertie Bt.

But as I've been here 5 years I really ought to know better.

[chiang mai]

Well, logically we could guess that a strong Baht makes existing foreign currency loans cheaper and incoming tourist revenue more valuable. Apart from those things I have little idea.

[Naam]

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!

any "President of Europe" will, for decades to come, have the power of a clown at a children's birthday party. but if the bootlicker Tony B. Liar gets that seat it would indeed be a slap in the face of all honest Europeans.

[mommysboy]

From Bangkok Post:

The Asian Development Bank (ADB) has further cut its projection for the Thai economy for 2009, from a contraction of 2 per cent to 3.2 per cent, ADB country director for Thailand, Jean-Pierre Verbiest, said on Tuesday.

Mr Verbiest said the economic growth projection’s revision was based on the impact of global recession and the current political uncertainty, which had hurt confidence of the business sector and diminished the domestic consumption.

“Even if there is a sign showing that the economic recession has bottomed out, the political turmoil has pressured the country to post the lowest economic growth rate in Southeast Asia,” the ADB director said.

Bet the bt strengthens on the back of this wonderful news !!!!!!

[chiang mai]

But what the ADB alos said was:

"Developing Asia is proving to be more resilient to the global downturn than was initially thought, the Asian Development Bank (ADB) says in a new major report. Despite worsening conditions in the global economic environment, developing Asia is poised to lead the recovery from the worldwide slowdown," said ADB Chief Economist Jong-Wha Lee".

So yes, we indeed see the Baht rise yet again.

[Naam]

So yes, we indeed see the Baht rise yet again.

Baht strengthened indeed. but only versus a weakening Dollar.

[mommysboy]

But what the ADB alos said was:

"Developing Asia is proving to be more resilient to the global downturn than was initially thought, the Asian Development Bank (ADB) says in a new major report. Despite worsening conditions in the global economic environment, developing Asia is poised to lead the recovery from the worldwide slowdown," said ADB Chief Economist Jong-Wha Lee".

So yes, we indeed see the Baht rise yet again.

Well I did say so, this really is a strange country. One day I'll let go of a stone in my hand and it'll float upwards, and you know I won't bat an eyelid.

But wait yet more ill news:http://www.bangkokpost.com/business/economics/154966/fiscal-deficit-up-b251-4-bn

And more to come I'd say.

[mommysboy]

Oh good grief yet more:

Thailand to post only 2-3 % over the next few years (they hope). See economics section Bangkok Post-

"Thailand will face the risk of rising liabilities over the next three years, with public debt likely to hit an all-time high of as much as 60% of gross domestic product due to larger budget deficits and other negative factors that are dampening economic growth," he said.

"The Thai economy is likely to return to positive annual growth in 2010, with growth averaging 2% to 3% per year over the next several years. But this marginal growth will not generate enough funds to support investment and debt repayments."

[chiang mai]

For every article you find that suggests the Thai economy is heading for ruin I can almost certainly find one that suggests the opposite, that's a real problem these days for the likes of you and me who are simply trying to understand directions, causes and probable outcomes. So let's not get caught up in the trap of posting opposing quotes because that's not productive and doesn't really serve to help find the answer, agreed? Let's see what we can agree here:

Do you agree that:

1) the BOE seems to think that the current value of Sterling is broadly where it should be and that the current levels of value will continue for quiet some time, likely years?

2) the value of THB is determined to a greater extent by the corresponding value of USD?

3) USD is weakening and that trend is likely to continue for the foreseeable future?

Let's start with those things.

[mommysboy]

For every article you find that suggests the Thai economy is heading for ruin I can almost certainly find one that suggests the opposite, that's a real problem these days for the likes of you and me who are simply trying to understand directions, causes and probable outcomes. So let's not get caught up in the trap of posting opposing quotes because that's not productive and doesn't really serve to help find the answer, agreed? Let's see what we can agree here:

Do you agree that:

1) the BOE seems to think that the current value of Sterling is broadly where it should be and that the current levels of value will continue for quiet some time, likely years?

2) the value of THB is determined to a greater extent by the corresponding value of USD?

3) USD is weakening and that trend is likely to continue for the foreseeable future?

Let's start with those things.

Certainly the report on GDP is fact isn't it, how can one dispute this, it's not a question of interpretation at all.

I'm not going to be able to respond for a little while so I'll quickly tap off a few lines.

1. Yes, short and mid term, across a basket of currencies. Long term, honestly, who can say.

2. No not so sure it works that way anymore.

3. I think it will stabilise soon and then be like the pound, so broadly to remain weak yes.

But this detracts from the fact that Thailand is now feeling the heat too and clearly has it's own problems: worst economic performance in SE Asia, spiralling debt, and a staggeringly small growth rate for a country in it's position, and one that means it cannot support it's debt repayments quite possibly.

[chiang mai]

For every article you find that suggests the Thai economy is heading for ruin I can almost certainly find one that suggests the opposite, that's a real problem these days for the likes of you and me who are simply trying to understand directions, causes and probable outcomes. So let's not get caught up in the trap of posting opposing quotes because that's not productive and doesn't really serve to help find the answer, agreed? Let's see what we can agree here:

Do you agree that:

1) the BOE seems to think that the current value of Sterling is broadly where it should be and that the current levels of value will continue for quiet some time, likely years?

2) the value of THB is determined to a greater extent by the corresponding value of USD?

3) USD is weakening and that trend is likely to continue for the foreseeable future?

Let's start with those things.

Certainly the report on GDP is fact isn't it, how can one dispute this, it's not a question of interpretation at all.

I'm not going to be able to respond for a little while so I'll quickly tap off a few lines.

1. Yes, short and mid term, across a basket of currencies. Long term, honestly, who can say.

2. No not so sure it works that way anymore.

3. I think it will stabilise soon and then be like the pound, so broadly to remain weak yes.

But this detracts from the fact that Thailand is now feeling the heat too and clearly has it's own problems: worst economic performance in SE Asia, spiralling debt, and a staggeringly small growth rate for a country in it's position, and one that means it cannot support it's debt repayments quite possibly.

Sort of like the UK potentially needing to go to the IMF for a bailout, is that what you mean?

For the time being in this debate I had planned to treat the economic futures of both Thailand and the UK as even, both in not particularly good shape, and instead to focus on the drivers for currency change - if we can agree the drivers for currency change, then we can exchange rhetoric about how the future of one country's economic growth is worse than the others.

[mommysboy]

For every article you find that suggests the Thai economy is heading for ruin I can almost certainly find one that suggests the opposite, that's a real problem these days for the likes of you and me who are simply trying to understand directions, causes and probable outcomes. So let's not get caught up in the trap of posting opposing quotes because that's not productive and doesn't really serve to help find the answer, agreed? Let's see what we can agree here:

Do you agree that:

1) the BOE seems to think that the current value of Sterling is broadly where it should be and that the current levels of value will continue for quiet some time, likely years?

2) the value of THB is determined to a greater extent by the corresponding value of USD?

3) USD is weakening and that trend is likely to continue for the foreseeable future?

Let's start with those things.

Certainly the report on GDP is fact isn't it, how can one dispute this, it's not a question of interpretation at all.

I'm not going to be able to respond for a little while so I'll quickly tap off a few lines.

1. Yes, short and mid term, across a basket of currencies. Long term, honestly, who can say.

2. No not so sure it works that way anymore.

3. I think it will stabilise soon and then be like the pound, so broadly to remain weak yes.

But this detracts from the fact that Thailand is now feeling the heat too and clearly has it's own problems: worst economic performance in SE Asia, spiralling debt, and a staggeringly small growth rate for a country in it's position, and one that means it cannot support it's debt repayments quite possibly.

Sort of like the UK potentially needing to go to the IMF for a bailout, is that what you mean?

For the time being in this debate I had planned to treat the economic futures of both Thailand and the UK as even, both in not particularly good shape, and instead to focus on the drivers for currency change - if we can agree the drivers for currency change, then we can exchange rhetoric about how the future of one country's economic growth is worse than the others.

I'm really just going on reported fact.

We can talk about the mechanics if you like but to what end.

But having established where the dollar is, where the pound is, I thought it essential to establish fundamentals about the bt in isolation.

It seems to me and many others that it is overly strong but I don't know if this actually pans out on a graph. Certainly, Thailand will show a very big contraction in GDP this year for an emerging economy, the Thai Govt or Bank has predicted insufficient growth for several years to come and as previously discussed on this thread the Thai economy performed the worst in SE Asia, despite Asia remaining quite resilient. And then there is the fast growing public debt reported earlier. Hardly rhetoric! Also lets not forget (3 months ago)Moodys had vaunted Thailand for a downgrade citing concerns over Thailand's ability to service it's debts- a remarkably accurate prediction that, and is it wrong to assume that this downgrade will happen shortly? It's not suggestive of a strong currency.

So I'd say yes the drivers are important, but it's more about how intrinsically sound the currency is. To my mind the dollar and pound are basically fair valuation as they appear to have taken their due medicine, but it could be the bt is ripe for a big fall. I just don't know and thus it would be interesting to discuss.

[chiang mai]

I know I said we shouldn't post quotes but the following article in the Telegraph caught my eye and is relevant:

"depreciation is precisely what a country like the UK needs to rebalance and recover. Indeed, as Goldman Sachs economist Ben Broadbent has pointed out, this is exactly what happened in the early 1990s. It seems likely that such a scenario helps explain why the Bank, and its Governor Mervyn King, appear so keen to see sterling drop further. Indeed, there may be an extra push in that direction from today's Bank minutes".

I thought it was appropriate to post it here because you said that you think GBP and USD are at fair value - I reckon however that GBP has further to fall and apparently others do also. Most pundits reckon that GBP will see parity with the Euro and with USD determinedly bearish, that's not good for GBP/THB. After all, if we can get a handle on GBP/USD then the answers on a probable level of GBP/THB is easy.

[Naam]

It seems to me and many others that it is overly strong but I don't know if this actually pans out on a graph. Certainly, Thailand will show a very big contraction in GDP this year for an emerging economy, the Thai Govt or Bank has predicted insufficient growth for several years to come and as previously discussed on this thread the Thai economy performed the worst in SE Asia, despite Asia remaining quite resilient. And then there is the fast growing public debt reported earlier. Hardly rhetoric! Also lets not forget (3 months ago)Moodys had vaunted Thailand for a downgrade citing concerns over Thailand's ability to service it's debts- a remarkably accurate prediction that, and is it wrong to assume that this downgrade will happen shortly? It's not suggestive of a strong currency.

neither does it necessarily suggest a weak currency, especially not a currency which is "managed" like THB. neither a military coup, nor the global crisis, no red shirts and no yellow shirts had a real negative impact on the Baht.

i am not claiming that THB will remain strong forever but it is a fact that the year long prayers, ravings, rantings, wife beatings, dog kickings, Thailand bashings, crash forecasts did not really impress the Baht.

[chiang mai]

I agree, probably one of the main differences between THB and GBP (for the purposes of our analysis of exchange rates) is that THB is not susceptible to negative media reports whereas GBP suffers horribly - despite continued political uncertainty, recent capital inflows remained buoyant. With a backwards glance, the holders of that capital were pretty smart, non - be interesting to know the currency makeup of those flows.

[Naam]

GBP is still an important currency, a number of commodities are quoted in GBP whereas THB is an insignificant Micky Mouse currency without any international importance (notwithstanding the fact that the exchange rate is of great importance for most of us Farangs).

[mommysboy]

GBP is still an important currency, a number of commodities are quoted in GBP whereas THB is an insignificant Micky Mouse currency without any international importance (notwithstanding the fact that the exchange rate is of great importance for most of us Farangs).

There are some fascinating points being made by Naam and CM. The article below is well worth a read, and supports my own view:

http://www.telegraph.co.uk/finance/economi...UK-surplus.html

[chiang mai]

GBP is still an important currency, a number of commodities are quoted in GBP whereas THB is an insignificant Micky Mouse currency without any international importance (notwithstanding the fact that the exchange rate is of great importance for most of us Farangs).

There are some fascinating points being made by Naam and CM. The article below is well worth a read, and supports my own view:

http://www.telegraph.co.uk/finance/economi...UK-surplus.html

Poster LRB, having some past insight into the workings of Goldmans, will no doubt have a view on the quality of statements issued by GS, I suspect he may tell us (soon I hope) that this is just noise and that the obverse is what will actually happen. On that note, I will be interested to learn from LRB what the short and medium range tea leaves have to say.

[loverboy44]

Just be careful with bank statements at the moment.

Turning facts like 80 % public debts of the GDP. This is not lower than Germany as they will have 60 % of GDP NEXT year.

The finacial sector has a huge lobby in the UK and they are blocking actions from the G 20 to regulate the banks in the future but which is necessary to prevent a next future crash.

If the Brown government carries on like this, the UK will go deeper into the s..t than they can imagine in their wildest dreams and therefore the GBP.

What some people there don't seem to understand is that a solution can only be found together and internationally.

"Britannia rules the world" is over.

[lannarebirth]

GBP is still an important currency, a number of commodities are quoted in GBP whereas THB is an insignificant Micky Mouse currency without any international importance (notwithstanding the fact that the exchange rate is of great importance for most of us Farangs).

There are some fascinating points being made by Naam and CM. The article below is well worth a read, and supports my own view:

http://www.telegraph.co.uk/finance/economi...UK-surplus.html

Poster LRB, having some past insight into the workings of Goldmans, will no doubt have a view on the quality of statements issued by GS, I suspect he may tell us (soon I hope) that this is just noise and that the obverse is what will actually happen. On that note, I will be interested to learn from LRB what the short and medium range tea leaves have to say.

Well, I don't know really. I think those statements from Goldman Sachs are probably factual but I'm not sure if projections based on those facts will come to pass.

My interest in the GBP previously was due to it trading inversely to the $USD and having a chart that was easier to read than the Euro. The top for the GBP was fairly easy to see developing (easier than Euro), even if the timing wasn't exact. The same could be said for the GBP bottom. I haven't been watching it much since, but my sense is that it's holding up pretty well. Better than a would be dollar bull would like anyway.

It's not inversely tracking the $USD so clearly as the Euro is now, so I've turned my attention to that to hedge $USD assets. I'm looking for a $USD turn in the next week to few weeks, but I'm employing a methodology I'm uncertain about. If the turn comes, historically that means EUR and GBP and commodity currencies get hit but I don't take any of that for granted. I think there's some "global currency rebalancing" going on and I'm not even certain what that means.

I will say the fall in the GBP could not really be characterized as anything other than a crash. I mean it plunged. It bounced at it's point of strongest support as would be expected and appears to be consolidating now. The only would be negative I see in it is that it bounced a bit strongly and that one would generally like to see a slower more deliberate rise with backing and filling for a sustained move.

Sorry I can't be more insightful.

[churchill]

Basically your saying a stock market crash in the next 2 weeks or so followed by a strengthening $ , falling commodities gold etc - In this situation perhaps sterling will hold up better than others ?

[lannarebirth]

Basically your saying a stock market crash in the next 2 weeks or so followed by a strengthening $ , falling commodities gold etc - In this situation perhaps sterling will hold up better than others ?

I don't think I said any of that. To clarify, I'm looking for a $USD turn based on my own methodology which I don't have terribly high confidence in, as yet. I have greater confidence in it than following what someone else might have to say however, but that's not saying very much. I said IF it occurs that historically some of those thing you mentioned happen at the same time. Don't know what the GBP will do and I'm not looking for a crash in anything. Like I said I'm not feeling particularly confidant about it and anyone reading this should feel even less so.

[chiang mai]

I'd bet large on equities taking a fall soon but as for the rest of it, unsure.

Thanks for your feedback LRB.

[cyb]

Basically your saying a stock market crash in the next 2 weeks or so followed by a strengthening $ , falling commodities gold etc - In this situation perhaps sterling will hold up better than others ?

I don't think I said any of that. To clarify, I'm looking for a $USD turn based on my own methodology which I don't have terribly high confidence in, as yet. I have greater confidence in it than following what someone else might have to say however, but that's not saying very much. I said IF it occurs that historically some of those thing you mentioned happen at the same time. Don't know what the GBP will do and I'm not looking for a crash in anything. Like I said I'm not feeling particularly confidant about it and anyone reading this should feel even less so.

The gbp has started to slide again against the bht, A few days ago it was £1=56bht

today it's 1.00 British pounds sterling = 54.44 Thai baht.

I suspect it's going to fall even further over the next week or two.

[chiang mai]

Basically your saying a stock market crash in the next 2 weeks or so followed by a strengthening $ , falling commodities gold etc - In this situation perhaps sterling will hold up better than others ?

I don't think I said any of that. To clarify, I'm looking for a $USD turn based on my own methodology which I don't have terribly high confidence in, as yet. I have greater confidence in it than following what someone else might have to say however, but that's not saying very much. I said IF it occurs that historically some of those thing you mentioned happen at the same time. Don't know what the GBP will do and I'm not looking for a crash in anything. Like I said I'm not feeling particularly confidant about it and anyone reading this should feel even less so.

The gbp has started to slide again against the bht, A few days ago it was £1=56bht

today it's 1.00 British pounds sterling = 54.44 Thai baht.

I suspect it's going to fall even further over the next week or two.

Cyb, see Post Number 1 in this thread.

[churchill]

Sterling has actually just gone up against the baht following this

King, Miles Opt for Consensus in Unanimous BOE Vote

http://www.bloomberg.com/apps/news?pid=206...id=apAQEXrU79SY

perhaps the $ will take the same route later today ?

[churchill]

He wants it down so Sterling looks as if it is going down !

Sterling falls on BoE King's comments on weak pound

http://www.reuters.com/article/ukPoundRpt/...LO5267120090924

[cyb]

Basically your saying a stock market crash in the next 2 weeks or so followed by a strengthening $ , falling commodities gold etc - In this situation perhaps sterling will hold up better than others ?

I don't think I said any of that. To clarify, I'm looking for a $USD turn based on my own methodology which I don't have terribly high confidence in, as yet. I have greater confidence in it than following what someone else might have to say however, but that's not saying very much. I said IF it occurs that historically some of those thing you mentioned happen at the same time. Don't know what the GBP will do and I'm not looking for a crash in anything. Like I said I'm not feeling particularly confidant about it and anyone reading this should feel even less so.

The gbp has started to slide again against the bht, A few days ago it was £1=56bht

today it's 1.00 British pounds sterling = 54.44 Thai baht.

I suspect it's going to fall even further over the next week or two.

Cyb, see Post Number 1 in this thread.

I have already read post number one, But things can change so just restated that things have not changed and the GBP will fall further. After all it was on the up and up for a few days.

[mommysboy]

I know I said we shouldn't post quotes but the following article in the Telegraph caught my eye and is relevant:

"depreciation is precisely what a country like the UK needs to rebalance and recover. Indeed, as Goldman Sachs economist Ben Broadbent has pointed out, this is exactly what happened in the early 1990s. It seems likely that such a scenario helps explain why the Bank, and its Governor Mervyn King, appear so keen to see sterling drop further. Indeed, there may be an extra push in that direction from today's Bank minutes".

I thought it was appropriate to post it here because you said that you think GBP and USD are at fair value - I reckon however that GBP has further to fall and apparently others do also. Most pundits reckon that GBP will see parity with the Euro and with USD determinedly bearish, that's not good for GBP/THB. After all, if we can get a handle on GBP/USD then the answers on a probable level of GBP/THB is easy.

It has depreciated quite a bit already. But another 5% is possible on average I'd hazard a guess it might happen. But when we look at the Euro and Baht, hasn't it fallen more than 20% ?. And of course against the dollar, shouldn't it have remained much the same after all US is in exactly the same position.