Is There A Simple Plain Answer

[Gonzo the Face]

As the country is on the verge of exploding, can someone give a simple , plain answer as to why the baht is gaining strength vs the dollar, euro, pound ???

Simple minds would like to know

G

[gotlost]

When you find out let the rest of us know, PLEASE.

[Gonzo the Face]

When you find out let the rest of us know, PLEASE.

Jeeeezzee Gotlost....... scared the he*l out of me..... when I saw you replying to my post I just had to check to see it things stilled worked.....

Yea ! ! ! it does....... at least so far.

Gonzo

Edited March 11, 2010 by Gonzo the Face

[Carib]

It`s the others which are losing strenght.......

[gotlost]

When you find out let the rest of us know, PLEASE.

Jeeeezzee Gotlost....... scared the he*l out of me..... when I saw you replying to my post I just had to check to see it things stilled worked.....

Yea ! ! ! it does....... at least so far.

Gonzo

I promise not to break our little toy again. I hope.

On the topic I agree with Caribs assessment of the situation.

[kalbo123]

The BOT has billions of dollars in stock, and just control their own relatively small currency..

Edited March 11, 2010 by kalbo123

[neilrob]

The answer to the OP's question seems rather obvious. Thailand has a healthy current account surplus (ie. it exports more than it imports) and sizeable foreign exchange reserves. By contrast, the US has a huge current account deficit. The only way to finance this is to print and export dollars (not necessarily literally---much by selling government bonds abroad, but it comes to the same thing). There is only so much of this that you can do before people begin to tire of the over-supply. Thus the dollar drops and a currency with sound fundamentals (see above) appreciates by comparison. Certainly the Thai government manipulates the exchange rate, as Kalbo points out, but the BOT generally intervenes to keep the baht down, not to make it stronger. They do this to avoid the damage to the export and tourist business that a strong baht produces. If they did not intervene, then the baht would probably be stronger now than it is.

[Drew Aitch]

The answer to the OP's question seems rather obvious. Thailand has a healthy current account surplus (ie. it exports more than it imports) and sizeable foreign exchange reserves.....

Agreed, but there has to be a bit more to it than just that one would assume.

The UK and the USA (and a few others) are actively and heavily engaged in a global war on terror with no resolve in sight as they they pursue to rid the world of those they deem 'evil'. They have been actively at war for many years now!

There's also regular reports of collateral damage (innocent men, women, and children massacred or maimed for life by aggressive air and land attacks), and as a consequence the stability and safety of their respective homelands and infrastructure is constantly under the potential threat of attacks from MANY extremists from MANY countries around the planet earth. And what's more, these threats are increasing with each passing incident that misses, or extends outside, of its target(s).

Thailand, on the other hand, has a few 'local' issues. There's a handful of soldiers passing time and sharing cigarettes at that border thingamajig, and an awful local insurgence right down there in the south fighting over 'local issues' as it has been for a good many years.

So on the face of it, Thailand is relatively peaceful and prosperous (see top quote), on the global stage wouldn't you say? Hence this must be at least one contributing factor to the current strength of its currency.

But hey, I don't really have a clue, as I (like most others), only know what I read in newspapers, find online, listen to on the radio, and watch on TV, all of which are reported by people whom I don't know, have never met, and can therefore only make a 'personal' decision as to whether to trust their coverage on such issues or not.

SUMMARY: Any country actively engaged in and losing multiple billions of dollars and daily casualties in a physical war with no end in sight, and especially one in which they don't seem to be winning, surely can't expect their currency to be fit and strong as it rewards its nationals (including expats living abroad) with great exchange rates as they peacefully and enjoyably live and holiday around the world! All the above is of course, just IMHO.

Might also be interesting to hear back from some folks of the warring counties as to why they think their currencies should be doing better? after all, are they not under the constant threat of global and home-grown attacks, in recession or a fragile recovery, and laden with generations of humongous debts? Hmm! Why should such currencies from these countries be dancing all the way to the Bkk Bank?

Aitch

[Bill97]

I do not believe that the answer is obvious or that it is based on Thailand's advertised macro economic situation. A friend was wondering about it and got some information that there is big money moving out of Thailand and the big guys who control things want to do that at the best rates, which they can influence. If this is the case the baht will weaken after they get their transfers out completed.

The Baht is a relatively thinly traded currency and speculators/financers can move it significantly without much effort.

[mcgriffith]

The simple answer is that there are huge foreign currency inflows right now into Thailand.

USD, renminbi, EUR, yen.

Which is bidding up the baht price.

Seems counterintuitive, but there is greater appetite for risk right now among foreign investors, particularly as the growth story is in emerging markets- and US Treasuries, and UK Gilts, and Eurobonds are paying diddley-doo-daa.

Forget the ideology and national differences. This is the currency market. Probably the most cut-throat and complicated market in the world.

And those who say it is ruled or swayed by one or 2 factions....are about 2 decades behind current reality.

[Bill97]

The simple answer is that there are huge foreign currency inflows right now into Thailand.

What is being done with that huge amount of money? Does the stock market reflect such an amount of investment or is it going into something else?

Gonzo,

manipulation

Edited March 11, 2010 by Bill97

[mcgriffith]

I misspoke if I seemed to imply it was all foreign currency investment inflows driving up the baht.

But the OP asked a simple question, and I gave a simple answer.

Thailand's export markets have fired up as well. GDP growth for 2010...who knows. But probably north of 4%. So Thai exporters are receiving lots of foreign currency, that gets back into the currency market.

We could go on all day about this, but unfortunately this is not Chiang Mai specific.

Moved to the biz forum, with a connecting link.

[mcgriffith]

I don't personally believe in the term "manipulation".

It implies some deep dark conspiracy.

EDIT: attaching a current graph, showing the switch over between foreign, retail, and institutional investors.

Blue line foreign, red retail local, green institutional local. Purple is the overall trend line.

ytd.bmp

[mcgriffith]

Interesting to see where it all goes.

[Irene]

[

In addition to export quick revival and strangely stable incoming tourists, there have been heavy foreign investment in thailand stock exchange for two or three weeks now being its only net buyers while the locals are net sellers. The hot money helps to strengthen the baht and also helping to raise the stock index when the index should have drastically gone down hill in view of the frenzy red-shirt threatening anarchy. Foreign investors still come in as net buyers because they believe the baht will strengthen further possibly to 31. So, they could end up when the hot money is moved out, not only capital gain will they earn but also exchange gain. Is this reasonable expectation? Greek tragedy and US balance deficits substantiate this belief. This is my humble reading and used as a basis of stock investments in thailand. I certainly welcome any correction.

[annabel]

You don't ??? Wow .... I don't know if this applies to planet earth or not but one thing for sure from my side of this planet "EARTH" is that I do believe it is = " manipulation" it's what is controlling hafl the world right now if not more ..

and we have no control over it whatsoever we and are just the peons in this big chess game ... not a great optimistic person am I right ?? But that is what I see and I wish we could change it !!!

quote name='mcgriffith' date='2010-03-11 23:48:45' post='3406228']

I don't personally believe in the term "manipulation".

It implies some deep dark conspiracy.

EDIT: attaching a current graph, showing the switch over between foreign, retail, and institutional investors.

Blue line foreign, red retail local, green institutional local. Purple is the overall trend line.

ytd.bmp

[mcgriffith]

Sounds fine, all. I'm just reporting the trend, and cannot predict the future.

[pkrv]

[

In addition to export quick revival and strangely stable incoming tourists, there have been heavy foreign investment in thailand stock exchange for two or three weeks now being its only net buyers while the locals are net sellers. The hot money helps to strengthen the baht and also helping to raise the stock index when the index should have drastically gone down hill in view of the frenzy red-shirt threatening anarchy. Foreign investors still come in as net buyers because they believe the baht will strengthen further possibly to 31. So, they could end up when the hot money is moved out, not only capital gain will they earn but also exchange gain. Is this reasonable expectation? Greek tragedy and US balance deficits substantiate this belief. This is my humble reading and used as a basis of stock investments in thailand. I certainly welcome any correction.

Irene - You perhaps should have posted a source, link's?

[basinboy]

I don't think it is so much about the baht being strong rather USD sterling and the Euro falling against most currencies.

They are similarly going down against the AUD.

AUD/THB rate has been relatively stable over the last few months 29-30 THB

[thaibkk]

well if you are smart and rich, it is time to buy a lot of euros now... and just wait till it goes up again...

[Pib]

I do not believe that the answer is obvious or that it is based on Thailand's advertised macro economic situation. A friend was wondering about it and got some information that there is big money moving out of Thailand and the big guys who control things want to do that at the best rates, which they can influence. If this is the case the baht will weaken after they get their transfers out completed.

Let me guess...your friend told you this after his tenth beer and just before he feel off his bar stool. Buy hey, he could be right! But trying to figure out currency trends is like trying to figure the color and style of the next dress that a female (or kratoey)

will buy on an impulse.