UK Pound Collapse 47.99 against the Baht

[FarangBuddha]

It is a dicey situation for allot of the people who derive a UK pound based salary or pension who are living in Thailand. I do feel for them as they have no control over this situation that has so much effect on their lives. That not being in control is very frustrating I'm sure. I do tend to agree with those who have said it's the Pound/Euro that are weak...not that the baht is so strong. Many financial commentators have great fears of the debt that the UK has taken on to spend its way out of the Great Recession and fears are about that the only way the UK (and many other nations) can ever hope to chip away at these massive debts is to inflate it away at some point in the future. Therefore, the reluctance to hold Pounds.

I would hope that at some point, the Thai authorities would make some adjustment of the financial requirements for expat retirees that takes into account the fall in the notational value of many foreign currencies. I mean, sure their buying power has gone down and in baht terms their pensions have been reduced but they are still in actuality collection the same pensions that qualified them to stay a years ago.

Edited March 2, 2010 by FarangBuddha

[BSJ]

Oh dear, it does seem like the good ship England has sprung a leak! No doubt the good Captain Brown and his first mate Darling will have the crew man the pumps sometime soon!

[bkk_mike]

The reason the pound is dropping is because people think a hung parliament won't tighten fiscal policy to pay off the debt.

That whole argument seems bogus as my guess is the LD's Vince Cable is the most likely of any of the political parties financial spokesmen to sort things out...

So long as the hung parliament doesn't include Labour with their increased spending (and increased stealth taxes to attempt to pay for it), Sterling will bounce. The only problems are - although unlikely, a coalition parliament could include Labour - and the election is at least a couple of months away, so it could look very nasty in the meantime.

As for a safe haven - surely CNY looks like a good bet. Worst that happens is it rises slowly against the USD at whatever rate China allows, or if it floats, it could rise quite a bit. There's no downside compared to USD (barring a new cultural revolution obviously).

Edited March 2, 2010 by bkk_mike

[Ricardo]

I understand, from another thread, that village-headmen are appealing for the poor to collect money to send to a former-PM ?

Perhaps this appeal might be extended, and villagers asked to start sending food-parcels, to the starving/freezing/impoverished British !

[Naam]

Right now most US debt is owned by the Chinese....and every time overtures get made towards the Dalai Llama or Taiwan, China threatens to dump the US dollar which woud basically ruin it. This is why the US wants China to float their currency. The moment they do so literally billions in US debt gets wiped out.

is this what the tooth fairy whispered in your ear last night?

for the record (and the not so informed)... CNY floating and revaluating does not take a single cent of U.S. debt. you can dance a mambo on that

True enough...it does not take a cent of the actual debt, it does however takes billions off the repayments and interest that the US pays, and also redresses the trade imbalance. The trade imbalance is what contributes to growing US debt (to China specifically).

A few more years and you will be speaking Mandarin

And if you want to know what your mum whispered to me last night, give her a call. She misses you and always likes to hear from you.

trying to divert from bullshit with bullshit little ignorant boy? that doesn't work with me. as far as finances are concerned i eat people like you on an empty stomach... without a single burp

to loosen up the tight GBP situation, another mambo please

[lannarebirth]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

If USD debt gets paid down (deficits contract) then that is a net contraction in the USD money supply - and if the supply of something drops, it's price goes up.

Everyone is busy shorting the dollar because of the deficits, perfect set up for a rally.

Similar scenario for GBP but i'd say wait a bit - whichever gov't gets in will have to address the deficits but it won't happen til after the election.

...Though I could be completely wrong

Jeez I like your optimism but it borders on outright lunacy.

Right now most US debt is owned by the Chinese....and every time overtures get made towards the Dalai Llama or Taiwan, China threatens to dump the US dollar which woud basically ruin it. This is why the US wants China to float their currency. The moment they do so literally billions in US debt gets wiped out.

hmmmm

Would you care to give an illustration of what you're talking about? Always eager to learn.

[Stjohnm]

The Government will have to address the strength of the Baht as so much of the Thai economy is Tourist & Export Driven.

[Naam]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

If USD debt gets paid down (deficits contract) then that is a net contraction in the USD money supply - and if the supply of something drops, it's price goes up.

Everyone is busy shorting the dollar because of the deficits, perfect set up for a rally.

Similar scenario for GBP but i'd say wait a bit - whichever gov't gets in will have to address the deficits but it won't happen til after the election.

...Though I could be completely wrong

Jeez I like your optimism but it borders on outright lunacy.

Right now most US debt is owned by the Chinese....and every time overtures get made towards the Dalai Llama or Taiwan, China threatens to dump the US dollar which woud basically ruin it. This is why the US wants China to float their currency. The moment they do so literally billions in US debt gets wiped out.

hmmmm

Would you care to give an illustration of what you're talking about? Always eager to learn.

here's your illustration LRB:

[Naam]

The Government will have to address the strength of the Baht as so much of the Thai economy is Tourist & Export Driven.

perhaps the government is not aware of the strength? shouldn't we address the government and make those in power aware of the problem?

[mamborobert]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

If USD debt gets paid down (deficits contract) then that is a net contraction in the USD money supply - and if the supply of something drops, it's price goes up.

Everyone is busy shorting the dollar because of the deficits, perfect set up for a rally.

Similar scenario for GBP but i'd say wait a bit - whichever gov't gets in will have to address the deficits but it won't happen til after the election.

...Though I could be completely wrong

Jeez I like your optimism but it borders on outright lunacy.

Right now most US debt is owned by the Chinese....and every time overtures get made towards the Dalai Llama or Taiwan, China threatens to dump the US dollar which woud basically ruin it. This is why the US wants China to float their currency. The moment they do so literally billions in US debt gets wiped out.

hmmmm

Would you care to give an illustration of what you're talking about? Always eager to learn.

There is a good article from Reuters today at

http://www.reuters.com/article/idUSTOE61B01A20100302

And also the Washington Post

http://washingtontimes.com/news/2010/mar/0...than-indicated/

[owengeary]

Hi,

My source for my comment comes from watching the financial melt down of Greece.

It commented that the USA and the UK central banks are printing money to get out of debt but the second tie countries can't do that.

Therefore, if you print your money based on NO increase in wealth you de-valuing your own currency. Eg, the country is valued at 1 trillion dollars and over one year the central bank prints 500,000,000 dollars where there has been no increase in the value of the value of the country. The dollar is only worth half of the value as it did last year. (Not a real example)

The brits and yanks are printing like hel_l. The pound and the dollar will go down.

owen

[Stjohnm]

It was this low a couple of years ago and rebounded to the mid 50's. Leaving aside the worldwide economic situation, the Red vs Yellow battle could be a factor, lobbing a grenade at the HQ of the Country's largest bank & the uncertainty of what will happen mid March given the mini war last time at Victory Monument can't help along with the Travel advisories posted my foreign governments.

Looking on the Bangkok Bank Websites all currencies are down against the Baht, but the GB£ vs the US$, AU$ & the EU€ are normal in the gospel according to the For-ex sites.

[bwalker1973]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

If USD debt gets paid down (deficits contract) then that is a net contraction in the USD money supply - and if the supply of something drops, it's price goes up.

Everyone is busy shorting the dollar because of the deficits, perfect set up for a rally.

Similar scenario for GBP but i'd say wait a bit - whichever gov't gets in will have to address the deficits but it won't happen til after the election.

...Though I could be completely wrong

That was last year, everyone is buying back into the dollar and gold as a safehaven.

[lucjoker]

Just looking for a place to tie my rope.

Tie it to the "bell" in your bar ,

so other people can drink one free !

If you do it good ,you dont have to pay !

[chiang mai]

It was this low a couple of years ago and rebounded to the mid 50's. Leaving aside the worldwide economic situation, the Red vs Yellow battle could be a factor, lobbing a grenade at the HQ of the Country's largest bank & the uncertainty of what will happen mid March given the mini war last time at Victory Monument can't help along with the Travel advisories posted my foreign governments.

Looking on the Bangkok Bank Websites all currencies are down against the Baht, but the GB£ vs the US$, AU$ & the EU€ are normal in the gospel according to the For-ex sites.

There's a big difference between what happened a year ago and what's happening today. A year or so ago the Pound was hugely overvalued against USD and it fell from around $2.10 down to $1.35 before settling again around $1.54. This time around, the debts of the UK are known, the outcome of the forthcoming election remains very uncertain and there is no plan in place to deal with the UK's massive debt, in fact there is not even a hint about how that debt might be dealt with or even it will be dealt with at all at this stage! As we are all aware, markets don't like uncertainty and now after much patient waiting it seems to me, the markets are going to punish the Pound. Yes indeed there may well be momentary upturns in the course of a week but make no mistake, the Pound is heading down against USD and in the US alone there are a record 85,000 open short positions to confirm that. Now, whether or not USD decides to hiccup and itself turn down against all the other majors, I have no idea.

[dansavestheday]

Swings and roundabouts for me i guess as someone looking to move to Thailand to set up a business. Obviously start up costs (mine are very minimal) and initial ongoing costs relying on GBP money means I will get less baht. However, once we start earning in THB then this will equate to more when I convert it back. In the long term I see this as a good thing for myself. But hopefully it rises before I move over in the summer.

[lucjoker]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

If USD debt gets paid down (deficits contract) then that is a net contraction in the USD money supply - and if the supply of something drops, it's price goes up.

Everyone is busy shorting the dollar because of the deficits, perfect set up for a rally.

Similar scenario for GBP but i'd say wait a bit - whichever gov't gets in will have to address the deficits but it won't happen til after the election.

...Though I could be completely wrong

That was last year, everyone is buying back into the dollar and gold as a safehaven.

For those who believe in printed paper ,

it is just paper ! There is no logic to their value !

It's only worth wat the big -goeroes say it is !

If you 're not rich (more than 40 milj bht) dont bother ,

you never will be , just enjoy and keep working.

If you do have money, buy land and houses, they never go down in value,

live in it ...rent it out....and when you need money sell some.

If you like games: keep money in USD,EU,Pounds,THB,.........

when one goes down buy it ,en visa versa............you dont win or loose ,

just play games.

[termad]

The Government will have to address the strength of the Baht as so much of the Thai economy is Tourist & Export Driven.

You have to remember that Thailand is an exporting country so the higher that the Baht climbs the harder it is going to be to sell Thai goods and that's going to have a huge effect on the Thai economy.

Tourism is another huge sector of the Thai economy. I can remember the times that the US Dollar fell against the pound and American tourists simply stopped going to London. As it is at the moment I would think that any EU resident would now be thinking of spending their holidays in the EU especially the Eastern European countries which are still cheap and have so much to offer and EU residents can get there by train.

The other thing is the ongoing political struggle especially the coming Red Shirt march in Bangkok. I think that they could get a million supporters taking part if they can overcome the huge logistical problems involved. It's certainly going to have a big effect in respect of foreign investment - and there is the possibility of huge social strife and disruption.

I'm on a fixed pension paid from the UK but I'm not in a panic because the way things are looking in Thailand I think that the Baht will drop in the coming months maybe even further than the Pound Sterling.

Edited March 2, 2010 by termad

[12DrinkMore]

From a contrarian perspective, sentiment against the USD is so extreme that you have to bet on a rally.

Funny, most opinions seems to be thinking the USD will get stronger over the next few months.

[mommysboy]

It was this low a couple of years ago and rebounded to the mid 50's. Leaving aside the worldwide economic situation, the Red vs Yellow battle could be a factor, lobbing a grenade at the HQ of the Country's largest bank & the uncertainty of what will happen mid March given the mini war last time at Victory Monument can't help along with the Travel advisories posted my foreign governments.

Looking on the Bangkok Bank Websites all currencies are down against the Baht, but the GB£ vs the US$, AU$ & the EU€ are normal in the gospel according to the For-ex sites.

There's a big difference between what happened a year ago and what's happening today. A year or so ago the Pound was hugely overvalued against USD and it fell from around $2.10 down to $1.35 before settling again around $1.54. This time around, the debts of the UK are known, the outcome of the forthcoming election remains very uncertain and there is no plan in place to deal with the UK's massive debt, in fact there is not even a hint about how that debt might be dealt with or even it will be dealt with at all at this stage! As we are all aware, markets don't like uncertainty and now after much patient waiting it seems to me, the markets are going to punish the Pound. Yes indeed there may well be momentary upturns in the course of a week but make no mistake, the Pound is heading down against USD and in the US alone there are a record 85,000 open short positions to confirm that. Now, whether or not USD decides to hiccup and itself turn down against all the other majors, I have no idea.

You don't think one element is merely shorters targeting the pound- the explanations we use seem quite flimsy really! And in fact there has been some good news today via rising factory ouput. Soros and Co.

[chiang mai]

The Government will have to address the strength of the Baht as so much of the Thai economy is Tourist & Export Driven.

You have to remember that Thailand is an exporting country so the higher that the Baht climbs the harder it is going to be to sell Thai goods and that's going to have a huge effect on the Thai economy.

Tourism is another huge sector of the Thai economy. I can remember the times that the US Dollar fell against the pound and American tourists simply stopped going to London. As it is at the moment I would think that any EU resident would now be thinking of spending their holidays in the EU especially the Eastern European countries which are still cheap and have so much to offer and EU residents can get there by train.

The other thing is the ongoing political struggle especially the coming Red Shirt march in Bangkok. I think that they could get a million supporters taking part if they can overcome the huge logistical problems involved. It's certainly going to have a big effect in respect of foreign investment - and there is the possibility of huge social strife and disruption.

I'm on a fixed pension paid from the UK but I'm not in a panic because the way things are looking in Thailand I think that the Baht will drop in the coming months maybe even further than the Pound Sterling.

I wish I shared your optimism and I hope you are right, however, I don't on either point. We've been around and around on this issue so many times in this forum and never once have we concluded that there's a tangible reason for the Baht to weaken. At one stage the threat of political turmoil was a threatening factor, but now that the Court has delivered its verdict, things seem to be settling down, I believe. When the whole financial crisis was starting to unfold there was a risk that the sudden drop in exports might derail the Thai economy and that hasn't happened, Thailand's exports have recovered reasonably well, their GDP certainly has. A drop in tourist numbers was yet another factor that some people believed would cause upset, certainly tourist numbers were down and the sector is not in great shape but it is recovering well, I refer back to GDP growth.

[12DrinkMore]

If you do have money, buy land and houses, they never go down in value,

:D

That's the attitude that got the western world into the dam_n mess.

[Colabamumbai]

I guess there are too many Brits in Thailand and that is why the pound is dropping. Maybe it would be cheaper living in England right now?

[chiang mai]

I guess there are too many Brits in Thailand and that is why the pound is dropping. Maybe it would be cheaper living in England right now?

It's reaching a point for some where indeed it might be cheaper to return to the UK, but our North American cousins should exercise caution since USD/THB is also falling, not quite as fast but it's falling quite consistently, 1% down in the past three days alone!

[Jonesy99]

From yesterdays FT Alphaville:

http://ftalphaville.ft.com/blog/2010/03/01...rical-claptrap/

‘Talk of a GBP crisis seems like hysterical claptrap’

David Bloom, Global Head of FX Research for HSBC, is none-too-impressed with suggestions the Great British Currency is more krona than sterling.

Here’s his short but scathing note on the matter:

GBP crisis: are you living in cloud cuckoo land?

There is no doubt the UK data is weakening a little more than expected and more than expected compared to the eurozone and the US data. However, the talk of a GBP crisis seems like hysterical clap trap.

Currencies are a relative concept. So who is the UK and GBP going to have a crisis against – the euro? The analysts that are putting the GBP crisis view are the very same analysts who seem to be simultaneously predicting the break up of the euro and a GBP crisis whilst only last year telling us the USD was finished and losing its reserve currency status.

I fail to see who this golden child is that GBP will have this crisis against. I get very worried when I find that I am the voice of reason. Ok let’s indulge in fear and assume a hung parliament – well some economists argued in a recent tit for tat letter that to tighten fiscal policy too soon would be a disaster for the UK economy. Well a hung parliament removes that risk. Of course if the UK goes into a double dipper whilst the whole world recovers, then GBP would fall and the export sector would boom. Is that a crisis or the normal transmission mechanism in action?

[britmaveric]

No reason to worry - jeez you think people would learn by now that currency ups/downs are pretty much cyclic. As for $... looking quite attractive, usually when sh*te hits the fan, people turn to the $ whether its warranted or not is open to debate.

[chiang mai]

From yesterdays FT Alphaville:

http://ftalphaville.ft.com/blog/2010/03/01...rical-claptrap/

‘Talk of a GBP crisis seems like hysterical claptrap’

David Bloom, Global Head of FX Research for HSBC, is none-too-impressed with suggestions the Great British Currency is more krona than sterling.

Here’s his short but scathing note on the matter:

GBP crisis: are you living in cloud cuckoo land?

There is no doubt the UK data is weakening a little more than expected and more than expected compared to the eurozone and the US data. However, the talk of a GBP crisis seems like hysterical clap trap.

Currencies are a relative concept. So who is the UK and GBP going to have a crisis against – the euro? The analysts that are putting the GBP crisis view are the very same analysts who seem to be simultaneously predicting the break up of the euro and a GBP crisis whilst only last year telling us the USD was finished and losing its reserve currency status.

I fail to see who this golden child is that GBP will have this crisis against. I get very worried when I find that I am the voice of reason. Ok let’s indulge in fear and assume a hung parliament – well some economists argued in a recent tit for tat letter that to tighten fiscal policy too soon would be a disaster for the UK economy. Well a hung parliament removes that risk. Of course if the UK goes into a double dipper whilst the whole world recovers, then GBP would fall and the export sector would boom. Is that a crisis or the normal transmission mechanism in action?

Interesting that he chose the EURO in his example and not the US Dollar since this it's against USD that the fall is currently taking place, seems more like a political statement to me than anything else, dunno.

[robert00]

not good... not good at all...

Don't have sleepless nights over it, it will sort it self out. I have seen worse.

[HardenedSoul]

People have been warned about the current slide in sterling for months. If you've still got lots of cash in sterling then you've only yourself to blame.

[chiang mai]

People have been warned about the current slide in sterling for months. If you've still got lots of cash in sterling then you've only yourself to blame.