Strong Thai Baht Only For A Short Period

[webfact]

Strong baht is only for the near term: Porntiva

By PETCHANET PRATRUANGKRAI

THE NATION

BANGKOK: -- Commerce Minister Porntiva Nakasai said the baht would be stronger only for a short period following a flood of investment into the stock market.

She maintains export value can still meet the 14-per-cent growth target previously forecast for this year. In the first quarter alone, exports look set to grow 20 per cent to US$40 billion (Bt1.29 trillion).

However, she admitted export growth could slow in the second quarter if the baht remained too strong for long, because it would create problems for exporters trying to do business.

Thai Rice Exporters Association president Chookiat Ophaswongse said Thai rice exporters faced greater difficulty competing with Vietnamese exports, due to the widening price gap between the two countries' rice.

"Vietnamese rice is much cheaper than Thai rice, by $80 to $100 per tonne. Vietnam's dong is 8-per-cent weaker than the baht. Thailand will definitely lose export share in many countries that prefer cheaper rice," he said.

Phongsak Assakul, vice chairman of both the Board of Trade and the Thai Chamber of Commerce, expressed concern about the baht's appreciation possibly slowing export recovery in the second quarter.

He called for the Bank of Thailand to control the baht, in order to ensure the Kingdom's competitiveness.

The government may not have to announce a weaker unit, but it should ensure the baht is not too strong against other currencies, Phongsak said.

-- The Nation 2010-03-19

[newsfooter][/newsfooter]

[gotlost]

Not short enough!

[mca]

Phongsak Assakul, vice chairman of both the Board of Trade and the Thai Chamber of Commerce, expressed concern about the baht's appreciation possibly making TVF poster mca changing his mind about buying a new car and instead simply sticking a new set of tyres on his current one.

Right On!

[bellagrego]

It is incredible that you folks thing the BOT can "control" the exchange rate of the baht. Economics 101 or a short course on currencies would enlighten you obviously over-inflated ideas of Thai power in that arena. The markets call the shots. Thailand and the BOT don't have enough reserves to buy and sell any quantity of currencies to cause a shift up nor down. Dream on. The answer is not Thailand's actions but the devaluation of the power currencies , The US DOLLAR and EURO, due to gross overspending and debt. Thailand, even though it too has economic woes, s just too insignificant a player in GDP, vs debt, that it has not felt the pressure against its baht. Lucky for Thailand. Your strong baht is killing my finances but that too shall pass from normal fluctuations and shifts. Thailands non-stop, head in the sand, non-competitive practices, will at some point cause loss of market share in many areas and the rise of stock in it's neighbors economy.

[bonobo]

Thailand has strong reserves, and that tends to prop up currencies.  However, it has political uncertainty and neighbors who are become more attractive for FDI, and those tend to drive down currencies.

With weakening of the dollar, pound, and euro, the baht has gained against them.  But against the yen and yuan, it has weakened a little.  But it probably should still be a little weaker yet when future economic viability is considered.  

[Gobbledoc]

BOT does control the Baht.

Edited March 19, 2010 by Gobbledoc

[lovelomsak]

I didnot know this thread was here and started one in general what has been moderated as same topic so I will simply copy and poste what i had said in other thread Thank You.

I was reading the Nation today and an article that interested me was about the baht being strong for the short term.

I am not sure if it will be short term.

They gave an example . The rice in Vietnam . I will quote a short part of the article that helps explain.

Vietnamese rice is much cheaper than Thai rice, by $80 to $100 per tonne. Vietnam's dong is 8-per-cent weaker than the baht. Thailand will definitely lose export share in many countries that unquote

In this senario I can see the thai boughts strengh as a plus.

If the baht is strong and the rice is cheap in Vietnam I feel the Thais can purchase the majority of Vietnam rice at a premium price.. Then resell the rice to other nations that are dependent on rice or have a market for rice Thailand if possible gets trade agreement for Vietnam rice. The competitiveness of the lower dong in the rice market is no longer a problem to Thailand but an advantage.

There are many advantages to Vietnam in this too. Quaranteed buyer at premium price. Easy transport of goods.Dealing in Asian markets good for investments.Dealing in Asian money. Possibly quick payment for goods due to the fact delivery time is so quick.

Edited March 19, 2010 by camerata
Formatting cleaned up.

[scotbeve]

BOT does control the Baht.

BOT does indeed control the baht but not the FOREX internationally.... Let's not forget what the baht shore-up attempt in 1997 led to (BRING IT ON!!!!)

[mommysboy]

BOT does control the Baht.

BOT does indeed control the baht but not the FOREX internationally.... Let's not forget what the baht shore-up attempt in 1997 led to (BRING IT ON!!!!)

It's an oddball currency and you can't really guage whether it's strength is truly merited as Thai figures are so unreliable. The most plausible explanation is that Thai factories are going through a production boom and the economy is growing fast. Who knows!

What is indisputable is that it is the 'most expensive' Asean currency. It's no good comparing it with Japan which has the Asian reserve currency, or the RMB for that matter.

With UK,Eurozone, and US ailing, I don't see any short term change for a year or 2, economically speaking, why shold there be?

That will destroy tourism as we know it IMHO, and Thai agriculture will continue to suffer badly.

[99BigLad99]

In the past no matter what currency or country when the government of the day let the currency get too strong against its neighbours there comes a time when a massive fall takes place ~ it is just a matter of time and waiting now I think

[BlueSmurf]

BOT does control the Baht.

Yes you are 100% right! The BOT does not allow currency speculation on the baht thats why it is kept on a par with the dollar and there are 2 different rates ..Yes one in country and one out....A better tourist in country rate and a <deleted> rate abroad..

When will we hear"The Baht is dead"! Long live the baht!

[grantbkk]

I think the government bought stocks this week to perpetuate the myth that all is well in the Kingdom. Probably used the money normally used to stabilize the Baht. It depends on what set of criminals are running the show when it comes to economic priorities. The government thinks everybody is not as smart as they are and no one would not see through the manipulation and bs press releases.

[Stjohnm]

I mentioned that the Government were going to have to take measures to guard against the strength of the Baht in a previous thread. Exports are coming under fire from all corners & after the red shirts eventually go home the last thing tourists need to see is a country where the currency is so strong it makes their holiday 30% more expensive than they thought.

[Stjohnm]

BOT does control the Baht.

Yes you are 100% right! The BOT does not allow currency speculation on the baht thats why it is kept on a par with the dollar and there are 2 different rates ..Yes one in country and one out....A better tourist in country rate and a <deleted> rate abroad..

When will we hear"The Baht is dead"! Long live the baht!

That's the same in every country though, #1 rule of travelling is exchange your money when you get there not before you leave.

[bdenner]

Two BIG problems with this report:-

1. The Nation

2. Porntiva Nakasai

Both have about the same creditability!

The wishful thinking on behalf of the larger percentage of members here will not come to a happy end in the short term. I have stated this ad nausea and stick by it.

Edited March 19, 2010 by bdenner

[yanga]

Below a long term graphic took on loobiz.com :

www.loobiz.com/chart/baht+euro

I suppose that the bath is going to the 0.024 ...

[mobiryder]

last i checked it was 1 dollar to 35.3 baht... a few weeks ago it was 1:32 so maybe i'm missing something

[ableguy]

I didnot know this thread was here and started one in general what has been moderated as same topic so I will simply copy and poste what i had said in other thread Thank You.

I was reading the Nation today and an article that interested me was about the baht being strong for the short term.

I am not sure if it will be short term.

They gave an example . The rice in Vietnam . I will quote a short part of the article that helps explain.

Vietnamese rice is much cheaper than Thai rice, by $80 to $100 per tonne. Vietnam's dong is 8-per-cent weaker than the baht. Thailand will definitely lose export share in many countries that unquote

In this senario I can see the thai boughts strengh as a plus.

If the baht is strong and the rice is cheap in Vietnam I feel the Thais can purchase the majority of Vietnam rice at a premium price.. Then resell the rice to other nations that are dependent on rice or have a market for rice Thailand if possible gets trade agreement for Vietnam rice. The competitiveness of the lower dong in the rice market is no longer a problem to Thailand but an advantage.

There are many advantages to Vietnam in this too. Quaranteed buyer at premium price. Easy transport of goods.Dealing in Asian markets good for investments.Dealing in Asian money. Possibly quick payment for goods due to the fact delivery time is so quick.

You are forgetting one thing the Thai government is sat on a mountain of rice it cannot sell bought under the guaranteed rice purchase scheme, Why would say the gulf states or any state buy rice from Thailand when they can buy direct from Vietnam. Are you aware of the millions of tons involved?

[ableguy]

I didnot know this thread was here and started one in general what has been moderated as same topic so I will simply copy and poste what i had said in other thread Thank You.

I was reading the Nation today and an article that interested me was about the baht being strong for the short term.

I am not sure if it will be short term.

They gave an example . The rice in Vietnam . I will quote a short part of the article that helps explain.

Vietnamese rice is much cheaper than Thai rice, by $80 to $100 per tonne. Vietnam's dong is 8-per-cent weaker than the baht. Thailand will definitely lose export share in many countries that unquote

In this senario I can see the thai boughts strengh as a plus.

If the baht is strong and the rice is cheap in Vietnam I feel the Thais can purchase the majority of Vietnam rice at a premium price.. Then resell the rice to other nations that are dependent on rice or have a market for rice Thailand if possible gets trade agreement for Vietnam rice. The competitiveness of the lower dong in the rice market is no longer a problem to Thailand but an advantage.

There are many advantages to Vietnam in this too. Quaranteed buyer at premium price. Easy transport of goods.Dealing in Asian markets good for investments.Dealing in Asian money. Possibly quick payment for goods due to the fact delivery time is so quick.

You are forgetting one thing the Thai government is sat on a mountain of rice it cannot sell bought under the guaranteed rice purchase scheme, Why would say the gulf states or any state buy rice from Thailand when they can buy direct from Vietnam. Are you aware of the millions of tons involved?

And also the cost of storing rice in Thailand has just had a major price hike

[yanga]

last i checked it was 1 dollar to 35.3 baht... a few weeks ago it was 1:32 so maybe i'm missing something

I guess for the USD we are going to test the 2007 bottoms under the 30 baths.

Souce : loobiz.com/chart/us-dollar+baht

[mobiryder]

last i checked it was 1 dollar to 35.3 baht... a few weeks ago it was 1:32 so maybe i'm missing something

I guess for the USD we are going to test the 2007 bottoms under the 30 baths.

Souce : loobiz.com/chart/us-dollar+baht

im confused.. this 35+ bath to the dollar is expected to dip to sub-30 or go higher?

edit: hmm xe.com seems to show 32 as opposed to my dashboard widget which shows over 35

Edited March 19, 2010 by mobiryder

[Foggy Bottom]

In the first quarter alone, exports look set to grow 20 per cent to US$40 billion (Bt1.29 trillion).

However, she admitted export growth could slow in the second quarter if the baht remained too strong for long, because it would create problems for exporters trying to do business.

I've watched the seasonal swings in the exchange rates for more than a decade, and if TV would relax it's rules about linking to other sites, I could link to articles I had published about it back in 2002-4 to support what I say next.

Her statement about the Q1 and Q2 differences is no more than a reporting of what has happened EVERY year since 1998, and did prior to 1997 - 1997 was an unusual year that culminated in the Asian Financial crisis.

The exchange rate trends come from two very simple factors that still remain stronger than they should do -

Q1 rates cause the Baht to rise in strength because of -

a - the winter rice harvest and the glut of export availability in Q1. By Q2, the stockpiles are reducing and the new harvest is still growing ready for the summer harvest, therefore not yet available to prop up the currency.

b - the winter is the tourism high season for Thailand, and the millions of arrivals are causing the Baht to have higher than normal volumes purchased in other currencies - both pre-travel, as well as on tourist-arrival and whilst here.

The annual trend for every year (except 1997) has been a simple " W " shaped graph plotted across the 12 months from January to December.

i.e. The Baht is strongest in January and gradually declines until late May / early June. It then strengthens again until mid August, when it again weakens through to mid-October, before rising again through to the end of the year. Plot it out - that creates a W shape line.

The amazing thing is that this W also mirrors the monthly tourist arrivals figures, displaying that tourism has a disproportionate effect on the exchange rate in comparison to its percentage of GDP and GNP - remember rice is still Thailand's highest grossing physical export, and that the two prime harvests (which vary slightly from province to province) are January and July. Combination of the two - inbound tourism and rice exports - cause massive requirements for Baht on the part of the tourists, overseas tourism agencies, and rice buyers. This drives the two peaks which occur at the same time.

This year I expect the W to be flatter than normal due to both the pressure on rice prices and global travel caused by exchange rates and the global economic pressures from the US-led recession of 2008, but it will still have a W shape to it as both rice and tourism are still the strongest demand factors on the Baht, and they remain seasonal exports.

As I said, her statement of Q2 exports being slower than Q1 is not a prediction, it is a trend statement based on decades of same-same performance.

It's basically a "No sh1t Sherlock" utterance, yet she will receive massive kudos for it from the Thai population and pundits.

T.I.T.

[Fletcher]

Thai Baht is not necessarily strong, but other currencies are displaying weakness. Watch for the sovereign debt crisis that is brewing in Europe and will eventually hit the US. All fiat paper currencies are in a race to devalue against each other which inevitably leads to the value of the only true currency at a minimum maintaining its value ...i.e. Gold Bullion

[mythBuster]

Manipulating is the word that should have been used. The stock market is manipulated and that is particularly easy in Thailand. The turnover is relatively low so the only thing you need are a few people inside the government and a few rich in the establishment. Given the track record of the DP the baht will soon make a nosedive.

[OZEMADE]

Manipulating is the word that should have been used. The stock market is manipulated and that is particularly easy in Thailand. The turnover is relatively low so the only thing you need are a few people inside the government and a few rich in the establishment. Given the track record of the DP the baht will soon make a nosedive.

The woman is a moron. Other countries have already moved their good and shackles to other countries as it is cheaper for them to manufacture and export their goods.

Why is she still talking about rice, as Vietnam is now the main exporter of rice. The way the Meekong and Dam's are drying up and the fact that the farmers have not put another crop in due to no rainfall etc, they wont have any rice to sell.

Furthermore, it is not hard for other manufacturers to up and leave as seen by the empty huge factories all over Thailand and move into places like Vietnam and Laos.

[elliss]

Thailand has strong reserves, and that tends to prop up currencies.  However, it has political uncertainty and neighbors who are become more attractive for FDI, and those tend to drive down currencies.

With weakening of the dollar, pound, and euro, the baht has gained against them.  But against the yen and yuan, it has weakened a little.  But it probably should still be a little weaker yet when future economic viability is considered.  

it is very obvious there is a swing in economic wealth

which has a direct effect on the currencies , of each individual country .,

the cheaper labour markets of the east . no workers rites , and

where health and safety, and emission controls , are not a serious issue .

are a far more profitable investment option . fords new factory in rayong , etc etc

my humble opinion, is that we are at the beginning of a new era .

the good days ,, a fond memory , the bubble has burst .

[bdenner]

im confused.. this 35+ bath to the dollar is expected to dip to sub-30 or go higher?

edit: hmm xe.com seems to show 32 as opposed to my dashboard widget which shows over 35

No need to be confused --- The guy has absolutely NO idea what he on about! 35 --- bath ---- he needs to sober up and try again!

[bushwacker]

Thanks Foggy Bottom for your information and views. I am going to pay close attention to the months and your analysis. If you are correct and I truly hope that you are then the best time to bring in money to the kingdom is during the lower dip. That would be May-June or Oct. So really all of us retired dudes could capitalize on your insight each year by targeting these times to bring in the required retirement money. COOL ... thanks

[TerraPosse]

In the first quarter alone, exports look set to grow 20 per cent to US$40 billion (Bt1.29 trillion).

However, she admitted export growth could slow in the second quarter if the baht remained too strong for long, because it would create problems for exporters trying to do business.

I've watched the seasonal swings in the exchange rates for more than a decade, and if TV would relax it's rules about linking to other sites, I could link to articles I had published about it back in 2002-4 to support what I say next.

Her statement about the Q1 and Q2 differences is no more than a reporting of what has happened EVERY year since 1998, and did prior to 1997 - 1997 was an unusual year that culminated in the Asian Financial crisis.

The exchange rate trends come from two very simple factors that still remain stronger than they should do -

Q1 rates cause the Baht to rise in strength because of -

a - the winter rice harvest and the glut of export availability in Q1. By Q2, the stockpiles are reducing and the new harvest is still growing ready for the summer harvest, therefore not yet available to prop up the currency.

b - the winter is the tourism high season for Thailand, and the millions of arrivals are causing the Baht to have higher than normal volumes purchased in other currencies - both pre-travel, as well as on tourist-arrival and whilst here.

The annual trend for every year (except 1997) has been a simple " W " shaped graph plotted across the 12 months from January to December.

i.e. The Baht is strongest in January and gradually declines until late May / early June. It then strengthens again until mid August, when it again weakens through to mid-October, before rising again through to the end of the year. Plot it out - that creates a W shape line.

The amazing thing is that this W also mirrors the monthly tourist arrivals figures, displaying that tourism has a disproportionate effect on the exchange rate in comparison to its percentage of GDP and GNP - remember rice is still Thailand's highest grossing physical export, and that the two prime harvests (which vary slightly from province to province) are January and July. Combination of the two - inbound tourism and rice exports - cause massive requirements for Baht on the part of the tourists, overseas tourism agencies, and rice buyers. This drives the two peaks which occur at the same time.

This year I expect the W to be flatter than normal due to both the pressure on rice prices and global travel caused by exchange rates and the global economic pressures from the US-led recession of 2008, but it will still have a W shape to it as both rice and tourism are still the strongest demand factors on the Baht, and they remain seasonal exports.

As I said, her statement of Q2 exports being slower than Q1 is not a prediction, it is a trend statement based on decades of same-same performance.

It's basically a "No sh1t Sherlock" utterance, yet she will receive massive kudos for it from the Thai population and pundits.

T.I.T.

That sounds like a no-bulls, sensible explanation that can even be comprehended by the non-economist (like moi).  Thank you for this clear, non-jargon analysis.  Not sure if all the 'experts' will agree with you but I can follow your logic and hence think there is some merit in it. 

[Naam]

BOT does control the Baht.

BOT does indeed control the baht but not the FOREX internationally.... Let's not forget what the baht shore-up attempt in 1997 led to (BRING IT ON!!!!)

1997 was a different animal as there were frantic efforts to avoid a devaluation of the Baht by using and depleting hard currency reserves. what the BoT does is actually weakening the Baht buy selling Baht and buying dollars. for that procedure "reserves" are not used up but built up! take a look how Thailand's dollar reserves virtually exploded during the last 15 months. without that intervention the Baht would have appreciated even more.