Night of the Iguana: Old Fogies with young Thai Nubiles. Do they mix?

[webfact]

THB strongest in 21 months

BANGKOK (NNT) – The Thai currency strengthens to 32.36 THB against the US dollar, the strongest in 21 months as cash continues to flow into the market in spite of the anti-government protest.

At the market opening this morning, Thai baht stood at 32.41 THB against the US dollar, appreciated further from 32.44 THB at yesterday’s market closing, before moving down to 32.36 THB.

The trend is likely to continue for the rest of the day as the political demonstration is expected to end soon while the pressure has started to ease.

A recent announcement of the finance minister, which resolved not to claim for indemnity to the amendment of the past concession contracts, is also another factor contributed to the appreciation trend.

Today, Thai baht is forecasted to shift within 32.30-32.45 THB range.

-- NNT 2010-03-17

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[Pib]

And my guess is the baht will continue to appreciate this year but the appreciation rate will slow down. Course this assumes the current government stays in power.

P.S. But I hope my guess is wrong about the baht appreciation.

[RedCardinal]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

[NADTATIDA1]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

I after agree with your description there very accurate!

[Pib]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

Well, when it comes to Thailand social programs I would pretty much agree with you. But on the economic side, Thailand seems to have its act together "when compared," repeat, when compared to the HIGH spending/deficit of many western nations." Of course, most of the high spending/deficit is due to the cost of social programs.

[sokal]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

Actually no, Thailand is not an economic basketcase. They had their crisis in 1997 and they have rebuilt. A stronger currency is welcomed, it makes energy, food and material imports cheaper.

[RedCardinal]

Actually no, Thailand is not an economic basketcase. They had their crisis in 1997 and they have rebuilt. A stronger currency is welcomed, it makes energy, food and material imports cheaper.

Well, perhaps my basket case comment is harsh, but I don't know of any major exporting economy in the world that wants an appreciation of their currency. A stronger currency may make imports cheaper, but when export-led industries are important large currency appreciations are somewhat counter-productive. I came up with "basket case" since it appears to be an official move to allow Baht to appreciate. Maybe the peg was too expensive to maintain. I don't know. Perhaps even a political move.

The other main reason I mention basket case is the political turmoil - most sane people would have expected an increased risk attitude to Thailand arising from political risk, which in turn would hurt Baht. Maybe speaks more about my analysis skills (or lack of?) than anything else I suppose...

Anyone know if China is a large export market for Thailand? 2% move THBCNY in less than a month has got to be painful for exporters if so:

http://finance.yahoo.com/q/bc?t=3m&s=C...mp;c=CNYUSD%3Dx

BTW - I'm not saying that many major western economies haven't themselves become basket cases of late..

[sokal]

Actually no, Thailand is not an economic basketcase. They had their crisis in 1997 and they have rebuilt. A stronger currency is welcomed, it makes energy, food and material imports cheaper.

Well, perhaps my basket case comment is harsh, but I don't know of any major exporting economy in the world that wants an appreciation of their currency. A stronger currency may make imports cheaper, but when export-led industries are important large currency appreciations are somewhat counter-productive. I came up with "basket case" since it appears to be an official move to allow Baht to appreciate. Maybe the peg was too expensive to maintain. I don't know. Perhaps even a political move.

The other main reason I mention basket case is the political turmoil - most sane people would have expected an increased risk attitude to Thailand arising from political risk, which in turn would hurt Baht. Maybe speaks more about my analysis skills (or lack of?) than anything else I suppose...

Anyone know if China is a large export market for Thailand? 2% move THBCNY in less than a month has got to be painful for exporters if so:

http://finance.yahoo.com/q/bc?t=3m&s=C...mp;c=CNYUSD%3Dx

BTW - I'm not saying that many major western economies haven't themselves become basket cases of late..

The US was the biggest export nation in the world and it had a strong currency. Exports is the price you pay for imports. Wanting a weak currency is a keynesian theory.

[RedCardinal]

Never mentioned wanting a weak currency. My observation is around rapid appreciation. 2%+ move in under 4 weeks is a fairly rapid.

I'm also trying to understand why BOT would peg for so long and then decide to let THB appreciate so suddenly.

[sokal]

China's currency appreciated 20% from 04 to 08 yet US imports from China increased by 39%. The BHT appreciation is not as hard on exports as people think and if it is, it just means that Thailand can afford to export less and import more.

[khunjake]

THB gains are on track with moves made in other Southeast Asian currencies as well like the MYR and IDR. This is not just a phenomenon related to Thailand but rather demand for regional currencies as a whole.

[chiang mai]

And hopefully this lays to rest all the dreamer conspiracy theories that the BOT has been keeping the Baht artificially high and has spent loads of money doing so.

[Jonathanpattaya]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

[chiang mai]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

You seem to think the Baht will fall, why do you think that?

[Naam]

I think things will change for the Baht soon. After all, the odds are very much stacked against it.

You seem to think the Baht will fall, why do you think that?

because the odds are with him

[Thanyaburi Mac]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

You seem to think the Baht will fall, why do you think that?

31.97 now!! Ouch!!!

http://www.scb.co.th/html/exchange/bk-txtexchange.htm

Mac

[xylophone]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

I am also at a loss to understand why the Baht is appreciating, even against stronger currencies like the A$.

Sure it exports rice but that isn't exactly a high priced commodity, it does have the car undustry and tourism, however the political uncertainty coupled with an expected change in the monarchy, bombings down south, drought and an almost dry Mekong river surely don't bode that well for the future........please tell me what I'm missing (no not a few brain cells)!!

[chiang mai]

I think things will change for the Baht soon. After all, the odds are very much stacked against it.

You seem to think the Baht will fall, why do you think that?

because the odds are with him

Tee hee, but I was actually hoping the OP might provide something more tangible other than it's time now for "red" or "black" at the roulette wheel.

[chiang mai]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

I am also at a loss to understand why the Baht is appreciating, even against stronger currencies like the A$.

Sure it exports rice but that isn't exactly a high priced commodity, it does have the car undustry and tourism, however the political uncertainty coupled with an expected change in the monarchy, bombings down south, drought and an almost dry Mekong river surely don't bode that well for the future........please tell me what I'm missing (no not a few brain cells)!!

Hard to imagine I know but there's more to Thailand's economic sector than rice tourism and and the car "undustry", Google is your friend.

[sokal]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

I am also at a loss to understand why the Baht is appreciating, even against stronger currencies like the A$.

Sure it exports rice but that isn't exactly a high priced commodity, it does have the car undustry and tourism, however the political uncertainty coupled with an expected change in the monarchy, bombings down south, drought and an almost dry Mekong river surely don't bode that well for the future........please tell me what I'm missing (no not a few brain cells)!!

The BOT has been going out of its way to depreciate the BHT. Last January, Thailand was the biggest gainer in US treasury purchases on a % basis in the world. It seems like the BOT is coming to its senses and has slowed down the purchase of US debt and we are seeing the result. Regardless of the political unrest, the BHT has been undervalued.

[chiang mai]

I think things will change for the Baht soon.

After all, the odds are very much stacked against it.

I am also at a loss to understand why the Baht is appreciating, even against stronger currencies like the A$.

Sure it exports rice but that isn't exactly a high priced commodity, it does have the car undustry and tourism, however the political uncertainty coupled with an expected change in the monarchy, bombings down south, drought and an almost dry Mekong river surely don't bode that well for the future........please tell me what I'm missing (no not a few brain cells)!!

The BOT has been going out of its way to depreciate the BHT. Last January, Thailand was the biggest gainer in US treasury purchases on a % basis in the world. It seems like the BOT is coming to its senses and has slowed down the purchase of US debt and we are seeing the result. Regardless of the political unrest, the BHT has been undervalued.

Ah, a breath of fresh air for a change.

[ThailandLovr]

Goodbye retirement visa :-(

[chiang mai]

Goodbye retirement visa :-(

Not necessarily if you can live with 40 to 45.

[ThailandLovr]

Goodbye retirement visa :-(

Not necessarily if you can live with 40 to 45.

Pardon my ignorance chiang mai, but that went right over my head. Please elaborate. I need at least 32.5 THB/USD come renewal time in a couple of months. No way in hel_l as I see it. 40 to 45 what? Sorry, no comprende. USD dropping like a rock against the THB and none of the ThaiVisa gurus are suggesting an end to that trend any time soon.

Edited March 18, 2010 by ThailandLovr

[chiang mai]

Goodbye retirement visa :-(

Not necessarily if you can live with 40 to 45.

pardon my ignorance chiang mai, but that went right over my head. Please elaborate. I need at least 32.5 THB/USD come renewal time in a couple of months. No way in hel_l as I see it. 40 to 45 what? Sorry, no comprende. USD dropping like a rock against the THB.

The numbers I quoted, 40 to 45, relate to the exchange rate of UK Sterling into Thai Baht, you did not state which country you come from and this topic has been UK centric for most of the time.

[neil324]

Goodbye retirement visa :-(

Not necessarily if you can live with 40 to 45.

You could live with 20 to 25, the question is, would you wan't to.

[Abrak]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

There are a few points to note.

1) Intervention has been incredibly expensive - US$70bn to date. They are well past the point that increased intervention will only lead to increased speculation.

2) Growth is not a big issue now - quite the opposite. 4QOQ SAAR was 15.2%. Exports up 30% YOY. No worries about a less competitive baht putting a dampener on that.

3) There is a trade off between stopping baht appreciation and fiscal policy implementation and the resulting inflation. I think the focus is on maintaining fiscal stimulus.

4) Really it is a case of allowing some appreciation, some inflation rather than raising rates which would only lead to increased capital inflows.

5) There is a sort of on going RMB bet - rather than spend lots pegging and revaluing, you might as well revalue. Six months ago the BoT indicated it was reaching the limits of its sterilization policy.

Note that funds as they see less intervention are swapping their carry trade to the stockmarket. Personally I dont see much upside from here until the RMB makes a move. Will it happen? Will it be tiny? Will it be major? Markets arent looking for much -3%- but I think there will be a bigger move -say 10% by year end. Thai baht could then be Bt30:US$1. Downside is limited by the need to unwind their sterilization. I think that inflation is the key. Thailand's fundamentals are incredibly strong and really the currency hasnt made much of a move over the last two years. Property stockmarket look very vulnerable to an asset bubble.

[12DrinkMore]

And to add to Abrak's post check out

http://www.thaivisa.com/forum/Thai-Exports...eb-t348961.html

Exports were up 23.1 percent year-on-year to 14.4 billion dollars, the ministry said in a statement.

Thailand seems to be doing extremely well, in spite of Western currencies collapsing on the forex merry-go-round.

Can't see any need for Thailand to devalue. In spite of all those hopefuls and disbelievers that Thailand could run a more successful economy than their own governments could even dream of.

I believe the reason is that the Thai economy is owned and run by the Chinese, who have a very long term perspective. There are maybe a few dozen extended families who own most of the big businesses, and they simply will not permit a bit of political squabbling to affect the viability and long term survival of their companies/families.

[sokal]

It looks like Thai central bank stopped intervening around the beginning of March:

http://finance.yahoo.com/q/bc?s=EURTHB=X&a...&c=USDTHB=x

You can clearly see that they were pegged within a very narrow range, and then suddenly they let the Baht appreciate. Wonder what's behind this given some indications of strong growth for Tailand in 2010? With export dependency it seems odd to allow currency to appreciate so rapidly?

Bloody EUR, while picking itself off floor against USD, still losing ground against THB

Actually, the more a see and learn the more I believe Thailand is somewhat of a "basketcase" in both economic and social terms.

There are a few points to note.

1) Intervention has been incredibly expensive - US$70bn to date. They are well past the point that increased intervention will only lead to increased speculation.

2) Growth is not a big issue now - quite the opposite. 4QOQ SAAR was 15.2%. Exports up 30% YOY. No worries about a less competitive baht putting a dampener on that.

3) There is a trade off between stopping baht appreciation and fiscal policy implementation and the resulting inflation. I think the focus is on maintaining fiscal stimulus.

4) Really it is a case of allowing some appreciation, some inflation rather than raising rates which would only lead to increased capital inflows.

5) There is a sort of on going RMB bet - rather than spend lots pegging and revaluing, you might as well revalue. Six months ago the BoT indicated it was reaching the limits of its sterilization policy.

Note that funds as they see less intervention are swapping their carry trade to the stockmarket. Personally I dont see much upside from here until the RMB makes a move. Will it happen? Will it be tiny? Will it be major? Markets arent looking for much -3%- but I think there will be a bigger move -say 10% by year end. Thai baht could then be Bt30:US$1. Downside is limited by the need to unwind their sterilization. I think that inflation is the key. Thailand's fundamentals are incredibly strong and really the currency hasnt made much of a move over the last two years. Property stockmarket look very vulnerable to an asset bubble.

I don`t agree that Thailand is vulnerable to an asset bubble. Its vulnerable to a bull market.

[dressedingreen]

With a little political stability, the Thai economy can grow at an unprecedented rate (for Thailand) over the next 5 years and beyond. What holds this country back is its potty politics. It simply doesn't allow for the vast majority of its people to become productive. The poster who raised the point about Chinese influence here is right on the button. Much of Thai business practise is outdated, inexperienced in terms of world trade, and highly inefficient. Thai politics needs to address inequality, top-down creativity, an education system that doesn't encourage the questioning of authority, and a parochial attitude to world affairs. Attending to these points would start to integrate the national Thai psyche with the rest of the planet. From there, the potential for this country is vast. It has the ingredients, in terms of its labor market, its location and its topography, to be among the top 10 world economies. In fact, economists were predicting it would be in the top 5 or 6 economies, by GDP, back in the 1990's, before the crash in this area of the world. The leadership here, and I don't necessarily include the current regime who, although relatively competent, are still working between a rock and a hard place, lack only the energy that comes from enlightened self interest. Their children are unlikely to make the same mistakes, especially with the influx of mass media information from movies, internet and other routes.

IMO, this economy will boom in the next 10 years. Any westerners who hope to stay here, retire, work here, should seriously consider getting their wealth moved from the dying western economies from which many of us have migrated, and putting them to work here, or in Asia in general. A spokesperson for Goldman Sachs, only yesterday, was talking about the Chinese Renminbi becoming an international currency to rival the USD, in the short term. I don't think most people understand the extent of the shift that is taking place in world markets. There are significant challenges to western dominance, which are unlikely to go unchecked. Western economies simply don't have the affordable capacity to mount a challenge to economies here in Asia, and South America, and in the not too distant future, Africa.

Here's an off-the-wall prediction for you, if you like. By 2015, I would expect the THB to be closer to 25 - 30 to the Pound Sterling. And 15 - 20 to the USD. If your money isn't here, IMO, you're going to lose out big time. The Renminbi will be interchangeable with ASEAN country currencies. And the shift will make it all but impossible for most westerners to retire here.

Wake up and smell the coffee. Things are not going back to the way they were. 40THB/1USD and 70THB/£1 STERLING are a thing of the past. Barring a complete political meltdown here, FOREX will continue going in the opposite direction.

DIG

Edited March 20, 2010 by dressedingreen