Baht Strength

[alobar]

I have always assumed that market volatility/currency fluctuations, were in part triggered by actual or perceived econo/political daily goings on.

Thailand has been threatened with strike, demonstration, coup, disruption of daily business/commerce/transport, and direct and indirect threats to the safety and convenience of one of it's core industries: tourism. Yet the Baht seems intransigent, and has actually seemed to strengthen, at least to the dollar.

Anyone have thoughts on that? Does the market see through the current political strife and feel impervious to it?, or are my basic suppositions about the inter-relatedness of Baht to events wrong?

[Moonrakers]

I don't know about all that but I just want it to nosedive or at least devalue a bit. I get paid in foreign currency and it hurts, a lot.

[roamer]

Main reason here is that the Thai Central Bank uses its reserves to prop up the currency. In the UK for example they ceased to do that back in the early 90's and the same remains in many of the major economies. Its long ceased to make any economic sense to do so in a situation where world trade is weak but this is Thailand.

[IanForbes]

Main reason here is that the Thai Central Bank uses its reserves to prop up the currency. In the UK for example they ceased to do that back in the early 90's and the same remains in many of the major economies. Its long ceased to make any economic sense to do so in a situation where world trade is weak but this is Thailand.

Bingo! Yes, this is Thailand where you toss good money after bad. When your loyal customers start walking away due to excessively high prices the Thai solution is to RAISE prices.

[johndpoole]

I thought a while back they tied the baht to the dollar. Am I wrong on this and if not, why are we also seeing the dollar vs. baht going down?

[OZEMADE]

I thought a while back they tied the baht to the dollar. Am I wrong on this and if not, why are we also seeing the dollar vs. baht going down?

Because the Yanks haven't learned by the banks going broke by hedging funds. The world economy will crash again unless they bring in legislation to stop them from hedging funds, as predicted before and it has been predicted again.

[whichschool]

Bingo! Yes, this is Thailand where you toss good money after bad. When your loyal customers start walking away due to excessively high prices the Thai solution is to RAISE prices.

But theyve been raising prices for the 10 years ive been going to Thailand and people keep on coming and are willing to pay.

[flying]

It is more about other currencies weakening than about the Baht strengthening

[whichschool]

I thought a while back they tied the baht to the dollar. Am I wrong on this and if not, why are we also seeing the dollar vs. baht going down?

Because it isnt pegged, hence the fluctuations.

[IanForbes]

<br />

I thought a while back they tied the baht to the dollar. Am I wrong on this and if not, why are we also seeing the dollar vs. baht going down?

<br />Because it isnt pegged, hence the fluctuations.<br />

<br /><br /><br />

That is like the Chinese lady who asked the bank clerk... "Why my money worth less?"

The bank clerk told her... "Fluctuations"

To which the Chinese lady replied... "Fluk yu Mericans as well!" and stormed out of the bank.

[IMA_FARANG]

1. The Thai governemt is buying Baht to keep it at or near it's level.

2. Those who have dollare sre selling Baht for dollars...in case theey need access to oversseas currency in case it all goes wrong in Thailand.

These two are working together...which is keeping the Baht at near it's previous level. If the Thai government wasn't buying Baht to prop up the rate, the Thai Baht would be much weaker.

Also, anyone who still believes that currencies are guided by logical pressures doesn't know the facts today. Today international banks can transfer millions of dollars in funds at the push of a few buttons on a computer. Work it out for yourself, if the Euro is selling for $1.36 in New York, and that Euro can be sold for $1.361 Euro in Berlin what is the profit on 50 million dollars buying that Euro bought in New York, then sold again for dollars in Berlin, and the the money transferred back to New York in dollars.

Big banks, international banks, can do that. You or I can't, and we never will be able to.

In case you're wondering it works out to a profit of about 2.6 million dollars. That 1 tenth of a Euro is big money, if you have enough to work with.

[manarak]

Work it out for yourself, if the Euro is selling for $1.36 in New York, and that Euro can be sold for $1.361 Euro in Berlin

err... no.

The FOREX markets have been global for a good while now. Those times are over.

And look at your spread: 1.361 - 1.36 = 10 pips.

Yet, USD/EUR is trading at bid/ask spreads of 0.5 - 1 pip at serious FOREX brokers.

Do you notice a problem with your argumentation?

Big banks, international banks, can do that. You or I can't, and we never will be able to.

Are you done with your commie rant?

With just a few hundred thousands, banks grant you a leverage of 95% or even more (depending on currency) on an intraday basis. That means that with just 100.000 USD you can trade for 20 million worth of FX-forwards.

It has never been easier and cheaper to trade FOREX than today.

In case you're wondering it works out to a profit of about 2.6 million dollars. That 1 tenth of a Euro is big money, if you have enough to work with.

Marx at least got his maths right: 1.361 - 1.36 = 0.001 that's a thousandth, not a tenth.

The profit of ONE deal you describe is 36764,70 USD = peanuts!

Edited March 11, 2010 by manarak