Thai Currency (THB) Strongest In 21 Months

[sokal]

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 Much of Thai business practise is outdated, inexperienced in terms of world trade, and highly inefficient.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

I happened to make the exact same prediction a couple days ago in the Pound thread. I figured about 25 bht to the pound too. I wonder what will happen with the commodity currencies though....

[Naam]

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

GOODNESS GRACIOUS my good man! are you aware of the fact that from now on you will be persona non grata? a zillion TV-members will hunt you down, tar and feathers will applied before you are skinned, quartered and the remnants of your body given to the soi dogs to feed on them.

[Naam]

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.

you can compensate your lack of USD income with some cash in the bank to achieve a combination which is satisfactory for immigration. what is more important for you is a well in advance evaluation how far the dollar can fall till you find it financially impossible to live here.

[churchill]

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

I think you're right / I think those planning to stay in thailand , with pensions or funds from Europe or US , need to start to think about protecting their savings , in anticipation of currency movements /

[chiang mai]

And I think that SGD is a good choice for that kind of thing.

[Naam]

And I think that SGD is a good choice for that kind of thing.

why?

[chiang mai]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies - SGD is a major traded currency, is less USD centric than many of the alternatives, it's a significant regional economy plus I'm holding a whole bunch of them at present.

Edited March 21, 2010 by chiang mai

[paquito]

Public Debt and Budget Deficits play an important part in the depreciation of western currencies against the Baht.

Have a close look at this chart that shows one reason why the Baht and other emerging market currencies are doing well against developed countries' currencies. I'm sorry to say that I don't see this trend changing anytime soon.

Public Debt and Budget Deficits in Developed and Emerging Economies

Most economists consider max 3% budget deficit and max 60% public debt to GDP sustainable. That's the first 3 squares in the top row. You'll find the US, UK, Japan and several EURO-countries in the ugly bottom right part of the chart.

To complete the picture one would also need to look at private dept levels (high in US, UK, Spain; low in Japan), future growth potential, demographics (Population is young in India and aging rapidly in Japan and Europe). public debt funded domestically (like in Japan vs. by foreign investors like in the US), and if the countries can issue their bonds in domestic currency (e.g. US, UK. Euro) or do they run up high debt in foreign currencies (most developing and emerging countries).

Marc Faber (and others) said recently that there are only 2 ways out of high public debt:

1. Print money and create inflation (works only if the debt is in domestic currency)

2. Default on your debt (1998 Russia, 2001 Argentina; in 1997 Thailand and other Asian countries were bailed out by the IMF, Dubai was recently bailed out by Abu Dabi, Greece will be bailed out by the Euro-Zone eventually - but who could possibly bail out the US, the UK, or the PIIGS if they should default at the same time because they can't find fresh money to pay the interest on their old bonds and sell new ones to finance their budget deficit?)

There is of course the remote possibility that politicians start acting economically responsible, balance state budgets and start reducing debt levels through higher tax revenue due to high GDP growth like in the 1960ies. Start praying for a miracle!

We surely live in interesting times...

Source (Article in German language)

[paquito]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies - SGD is a major traded currency, is less USD centric than many of the alternatives, it's a significant regional economy plus I'm holding a whole bunch of them at present.

I second that. One more reason is that the SG government gets a lot of things right economically - unlike most governments around the world. That, plus political stability, should help the SG$ to appreciate over time.

A century ago someone said, 'Politicians see economists like drunks do street lights. They don't look for light, but for something to hold on to.' True to this day.

[PCA]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies - SGD is a major traded currency, is less USD centric than many of the alternatives, it's a significant regional economy plus I'm holding a whole bunch of them at present.

I second that. One more reason is that the SG government gets a lot of things right economically - unlike most governments around the world. That, plus political stability, should help the SG$ to appreciate over time.

A century ago someone said, 'Politicians see economists like drunks do street lights. They don't look for light, but for something to hold on to.' True to this day.

Well I would say thats simply rubbish and Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come. Maybe you could list some of SGPs economic strenghts beyond its reputation as a global financial center(which is not a real backup).

[paquito]

Well I would say thats simply rubbish and Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come. Maybe you could list some of SGPs economic strenghts beyond its reputation as a global financial center(which is not a real backup).

Well I would say thats simply rubbish. Maybe you could substantiate your claim that Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come.

There were no significant, if any, bank failures in Singapore since the crisis started 2 1/2 years ago. Quite a difference to the western world, don't you think? So that should actually boost the financial industry in SG. And how about SGs substantial role in world trade, it's competitive electronics industry, the young and educated population, and so on? SG is not just a financial centre, far from it. No-one was saying that everything is perfect in SG. But in a world where everything seems to go wrong in most countries, SG is one of the better places to put your money in. Go down there and have a look for yourself.

In the last 5 years the SG$ gained against the

US$ about 15% http://finance.yahoo.com/q/bc?t=5y&s=U...amp;c=sgd%2Fusd

GBP about 30% http://finance.yahoo.com/q/bc?t=5y&s=G...amp;c=sgd%2Fgbp

EUR about 13% http://finance.yahoo.com/q/bc?t=5y&s=E...amp;c=sgd%2Feur

Never mind, my dear PCA. Arguing on the internet is like competing in the Paralympics. Even if you win you're still a [insert word of your choice]. Have a good night.

[chiang mai]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies - SGD is a major traded currency, is less USD centric than many of the alternatives, it's a significant regional economy plus I'm holding a whole bunch of them at present.

I second that. One more reason is that the SG government gets a lot of things right economically - unlike most governments around the world. That, plus political stability, should help the SG$ to appreciate over time.

A century ago someone said, 'Politicians see economists like drunks do street lights. They don't look for light, but for something to hold on to.' True to this day.

Well I would say thats simply rubbish and Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come. Maybe you could list some of SGPs economic strenghts beyond its reputation as a global financial center(which is not a real backup).

Which part of the things I wrote is rubbish in your view? Also, I've said that Singapore has a strong currency whilst you're suggesting it could be bubble like, you can't have it both ways, you either think it's strong or you do not, which is it or are you just being generally bad tempered?

[Abrak]

I happened to make the exact same prediction a couple days ago in the Pound thread. I figured about 25 bht to the pound too. I wonder what will happen with the commodity currencies though....

I think commodities must coming to the end of their run. This is just a theory, Commodities dont yield anything so they do well with low nominal yields and very low real yields. I would have thought one should assune that negative real rates are an aberration. Why save? Surely there must be some compensation for sacrificing current spend for future spend. Average real rates are 2.5% over the last century and current -1%. While they continue to fall it should be good for commodities - they reached -6% in 1979. AT -6% real it is surprising that anyone saves but real yields do eventually turn positive. Nominal rates are as low as they can.

All Government Central Banks seem to be in Bernake mode of trying to crucify their currency whis further inflationary So real yields good fall further to -4%. With potential to rise from 2% to 8.5 percent as real yields reassert.

[MAJIC]

Could it be the strength of the Bhat indicates the present political strife is of no consequence to the money markets i.e no panic selling on the horizon?

[Naam]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies -

1. SGD is a major traded currency,

2. is less USD centric than many of the alternatives,

3. it's a significant regional economy plus I'm holding a whole bunch of them at present.

1. objection Your Honour.

2. 20year long term charts show rather big swings vs. USD (1.91 / 1.40 / 1.86 / 1.35 / 1.40).

3. agreed, though lion share of GDP is not based on goods but services.

i rather prefer holding THB onshore as well as offshore to hedge my local expenses (minimum 5 years) instead of SGD as a proxy for THB.

[chiang mai]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies -

1. SGD is a major traded currency,

2. is less USD centric than many of the alternatives,

3. it's a significant regional economy plus I'm holding a whole bunch of them at present.

1. objection Your Honour.

2. 20year long term charts show rather big swings vs. USD (1.91 / 1.40 / 1.86 / 1.35 / 1.40).

3. agreed, though lion share of GDP is not based on goods but services.

i rather prefer holding THB onshore as well as offshore to hedge my local expenses (minimum 5 years) instead of SGD as a proxy for THB.

Yes all valid points - but as an existing holder of THB assets I think some diversification is healthy and using SGD as a proxy for THB is one of my objectives although I had not considered the THB offshore aspect you describe.

[Naam]

Simply because the Baht tends to move within a fairly narrow band relative to SGD and this reflects the BOT policy to maintain the strength of the Baht in line with an average of a basket of regional currencies -

1. SGD is a major traded currency,

2. is less USD centric than many of the alternatives,

3. it's a significant regional economy plus I'm holding a whole bunch of them at present.

1. objection Your Honour.

2. 20year long term charts show rather big swings vs. USD (1.91 / 1.40 / 1.86 / 1.35 / 1.40).

3. agreed, though lion share of GDP is not based on goods but services.

i rather prefer holding THB onshore as well as offshore to hedge my local expenses (minimum 5 years) instead of SGD as a proxy for THB.

Yes all valid points - but as an existing holder of THB assets I think some diversification is healthy and using SGD as a proxy for THB is one of my objectives although I had not considered the THB offshore aspect you describe.

undeniably a valid point!

[khunjake]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

[Naam]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

versus USD yes, but USD is not the center of the universe.

Edited March 22, 2010 by Naam

[khunjake]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

versus USD yes, but USD is not the center of the universe.

USD is still the "World's Reserve Currency" and the last time I checked continues to command 65% of Global Central Bank Reserves.

[PCA]

Well I would say thats simply rubbish and Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come. Maybe you could list some of SGPs economic strenghts beyond its reputation as a global financial center(which is not a real backup).

Well I would say thats simply rubbish. Maybe you could substantiate your claim that Singapore along with its Dollar is one of the next bubbles to burst in the next few years to come.

There were no significant, if any, bank failures in Singapore since the crisis started 2 1/2 years ago. Quite a difference to the western world, don't you think? So that should actually boost the financial industry in SG. And how about SGs substantial role in world trade, it's competitive electronics industry, the young and educated population, and so on? SG is not just a financial centre, far from it. No-one was saying that everything is perfect in SG. But in a world where everything seems to go wrong in most countries, SG is one of the better places to put your money in. Go down there and have a look for yourself.

In the last 5 years the SG$ gained against the

US$ about 15% http://finance.yahoo.com/q/bc?t=5y&s=U...amp;c=sgd%2Fusd

GBP about 30% http://finance.yahoo.com/q/bc?t=5y&s=G...amp;c=sgd%2Fgbp

EUR about 13% http://finance.yahoo.com/q/bc?t=5y&s=E...amp;c=sgd%2Feur

Never mind, my dear PCA. Arguing on the internet is like competing in the Paralympics. Even if you win you're still a [insert word of your choice]. Have a good night.

you are funny. As you claim there were no bank failures in SGP shows that you obviously don't understand the game. Other bubbles have burst and SGP is one of the next. Again you have nothing to offer in SGP wake up! Nobody will escape here not even your little shiny city. The young educated population, hahaha.

Attn. ChiangMai: I didt want to have your post quoted above mine as it is pointless to argue with you. Happened accidentally

[Abrak]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

BTW it is not that surprising about the Ringgit because they have sterilized a greater proportion of their money supply than even Thailand. I think it is over 20%. Well over any sort of level you can justify (I vaguely recall that somebody somewhere said a maximum limit was 13%). At those levels any additional sterilization of X will cost you so much that it attracts 2x X of increased speculation.

Essentially the speculation must be a revaluation of the RMB and by the fact it hasnt happened, China is everyday, costing countries like Thailand about, I guess US$100m in lost competitiveness and costs of previous sterilisation. I am amazed they havent even said anything about it. Clearly the speculators are looking for a 10% revaluation or more rather than a token 3%.

[Naam]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

versus USD yes, but USD is not the center of the universe.

USD is still the "World's Reserve Currency" and the last time I checked continues to command 65% of Global Central Bank Reserves.

for us poor retirees in Thailand who are not "Yooh Ess" Americans the US-Dollar is as insignificant/unimportant as is the uterus of a catholic nun who vowed eternal celibacy

[Naam]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

BTW it is not that surprising about the Ringgit because they have sterilized a greater proportion of their money supply than even Thailand. I think it is over 20%. Well over any sort of level you can justify (I vaguely recall that somebody somewhere said a maximum limit was 13%). At those levels any additional sterilization of X will cost you so much that it attracts 2x X of increased speculation.

Essentially the speculation must be a revaluation of the RMB and by the fact it hasnt happened, China is everyday, costing countries like Thailand about, I guess US$100m in lost competitiveness and costs of previous sterilisation. I am amazed they havent even said anything about it. Clearly the speculators are looking for a 10% revaluation or more rather than a token 3%.

the NDFs show a different picture (2.6% 12 months).

[Abrak]

the NDFs show a different picture (2.6% 12 months).

I did actually know that - hence the token 3%. I am actually surprised and confused why the SE.Asian currencies have had such a big move verses the RMB while the SDFs are so low. There are many hedge funds doing a carry trade on this bet. First they burnt out sterilization now they take the currency gain and I think that many are looking for more inflation through the stockmarkets. What I find particularly irritating is that the hedge funds made it very clear this is what they were going to do. Now the cost benefit sterilization/lower baht has moved to a double cost - loss of competitiveness and forex losses relative to China.

They absolutely could have done something about this six months ago but they didnt. It really does annoy me how China is behaving and abusing it currency controls and it will almost certainly cost Thailand at least 5% of GDP this year in forex and competitiveness. It is a kind of neat strategy by China hollow out your customer base and then destroy your competitors.

[sokal]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

versus USD yes, but USD is not the center of the universe.

USD is still the "World's Reserve Currency" and the last time I checked continues to command 65% of Global Central Bank Reserves.

and 100% of those central banks have lost money on their holdings over the last 10 years.

[Naam]

Best Performing SEA Currency YTD has been the Malaysian Ringgit, then the Indonesian Rupiah, then the Baht. Sing Dollar has not appreciated much at all this year so far actually.

versus USD yes, but USD is not the center of the universe.

USD is still the "World's Reserve Currency" and the last time I checked continues to command 65% of Global Central Bank Reserves.

and 100% of those central banks have lost money on their holdings over the last 10 years.

the problem is that central bankers are uneducated dummies and that central banks cannot afford to hire experienced experts like Sokal to render appropriate advice.