Thailand In Crisis - What About The Baht?

[luangtom]

Thailand is in crisis. Why is the Thai baht not reflecting this? Business is literally at a standstill, SET is shut due to building attacks and much of retail-trade in Bangkok proper is at a stalemate. How is it that the baht is not impacted in the least by civil disturbances? If the business sectors in the EU, or Japan, or the USA, were under siege, their currencies would be reflecting it. Why is it not happening here?

[brownbear]

I believe this topic has been raised before, albeit in slightly different guises. You do raise a very valid point though. The financial markets remain a mystery to me but I suspect for every 6 who will support one view, there are a half dozen who will support another. After considerable research I personally remain mystified and would welcome some genuine insight (as opposed to pure speculation - which is maybe what the currency markets are all about).

It does now appear apparent, with the stock exchange and the BOT closed (?) for the last day and a half that the Baht is indeed strictly controlled and not subject to 'normal' market fluctuation. Bubble about to burst; pure speculation on a grand scale; misguided economic policy or sound judgement.

I'd be pleased if someone could enlighten me.

[nakachalet]

Thailand is in crisis. Why is the Thai baht not reflecting this? Business is literally at a standstill, SET is shut due to building attacks and much of retail-trade in Bangkok proper is at a stalemate. How is it that the baht is not impacted in the least by civil disturbances? If the business sectors in the EU, or Japan, or the USA, were under siege, their currencies would be reflecting it. Why is it not happening here?

why on earth are many of you saying that THAILAND IS IN CRISIS.... and wonder why ฿ is unsympathetic and unmoved....?

mind you all.... it is mainly.... bkk that is in major crises

the majority of thailand remains somewhat perfectly normal and peaceful....

the redshirt like the communist ideology can only affect the poor.... mostly from geographically very dry, barren and disadvantageous regions....

other regions of thailand are not in any crisis.... not at all....

pls when you have some time.... do travel around thailand....

many major towns and cities.... are very much different from bkk and chiengmai et al....

particularly, the southern provinces, excluding yala, pattanee and narrathivart, remains productive and healthy and inviting.... their livelihood does not depend on farangs nor tourism.... even without farangs and tourism.... these ancient productive towns would continue to survive for many more centuries.... if you never see rubber plantations nor palm plantations before.... you really should go south for a few days to expand your horizon.... so to speak, only if you like.... <be glad to provide you a live tour.... lol.... send me a pm first though>

perhaps.... until then.... you would begin to understand.... why the ฿ remains unsympathetic to the redshirt and the bangkokian plight and demise....?

Edited May 20, 2010 by nakachalet

[marcofunny]

the exchange rate of any currency is dependent on how much foreign currency the country holds in reserve, http://en.wikipedia.org/wiki/Foreign_exchange_reserves

very few people knows that Thailand has more foreign currencies reserves then the USA or UK

the full list is here

http://en.wikipedia.org/wiki/List_of_count...change_reserves

think about it just like a Safe Box with Gold inside it, the more Gold you have the higher your currency appreciate, usually the currency appreciates when the country is exporting more goods then importing and vice versa.

the US dollar for example is the opposite case because the USA is experiencing a huge Trade Deficit(importing more then exporting) thus causing the dollar to weaken.

Thailand s foreign exchange reserves was not spent so far and it s keeping piling up and up thus hurting exports.

they are however some cases where the government prevents its currency from floating freely (eg Vietnam and China )where their currencies should be 25% higher then their current value.

[neil324]

Thailand is in crisis. Why is the Thai baht not reflecting this? Business is literally at a standstill, SET is shut due to building attacks and much of retail-trade in Bangkok proper is at a stalemate. How is it that the baht is not impacted in the least by civil disturbances? If the business sectors in the EU, or Japan, or the USA, were under siege, their currencies would be reflecting it. Why is it not happening here?

why on earth are many of you saying that THAILAND IS IN CRISIS.... and wonder why ฿ is unsympathetic and unmoved....?

mind you all.... it is mainly.... bkk that is in major crises

the majority of thailand remains somewhat perfectly normal and peaceful....

the redshirt like the communist ideology can only affect the poor.... mostly from geographically very dry, barren and disadvantageous regions....

other regions of thailand are not in any crisis.... not at all....

pls when you have some time.... do travel around thailand....

many major towns and cities.... are very much different from bkk and chiengmai et al....

particularly, the southern provinces, excluding yala, pattanee and narrathivart, remains productive and healthy and inviting.... their livelihood does not depend on farangs nor tourism.... even without farangs and tourism.... these ancient productive towns would continue to survive for many more centuries.... if you never see rubber plantations nor palm plantations before.... you really should go south for a few days to expand your horizon.... so to speak, only if you like.... <be glad to provide you a live tour.... lol.... send me a pm first though>

perhaps.... until then.... you would begin to understand.... why the ฿ remains unsympathetic to the redshirt and the bangkokian plight and demise....?

Ok then if this was happening in London or New York, what would the FTSE,DOW,$ or £ be doing?

Edited May 20, 2010 by neil324

[Naam]

the exchange rate of any currency is dependent on how much foreign currency the country holds in reserve, http://en.wikipedia.org/wiki/Foreign_exchange_reserves

= pure refined rubbish!

[sarahsbloke]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

[rfukata]

Thailand learned their painful lesson during the 'asian currency crisis', now they have learnt to hedge the baht against

speculative measures which in turn is stable.

But in my guess, I think they will need to re-assess their rates to be

competitive for exports and competing against neighboring countries.

[givenall]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

One need to ask is it Thai Bath too high or the Euro and Dollar too weak. I believe the latter

[Kohdam]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

One need to ask is it Thai Bath too high or the Euro and Dollar too weak. I believe the latter

China has the power now,until she will devalue the yuan nothing change

[Naam]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

One need to ask is it Thai Bath too high or the Euro and Dollar too weak. I believe the latter

China has the power now,until she will devalue the yuan nothing change

[Naam]

i associate a number of comments referring to exchange rates to a bunch of virginal nuns who pledged eternal celibacy but giving each other advice how to conduct hardcore sex.

[seanocasey]

Thailand sovereign bond risk rises.

Baht weakens

source Bloomberg

[Langsuan Man]

Thailand sovereign bond risk rises.

Baht weakens

source Bloomberg

Yes in theory, but not in reality

Live rates at 2010.05.21 04:44:09 UTC

1.00 USD = 32.4350 THB

Live rates at 2010.05.21 04:46:09 UTC

1.00 EUR = 41.0037 THB

Live rates at 2010.05.21 04:47:09 UTC

1.00 GBP = 46.7927 THB

[12DrinkMore]

Thailand sovereign bond risk rises.

Baht weakens

source Bloomberg

Please put a reference to the source so we can all see the entire article.

[12DrinkMore]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

well, I can't be bothered to search for "another post", and maybe you could put a reference rather than state some nonsense.

If the BoT was shorting the THB, namely BORROWING and SELLING the THB and driving the price DOWN, then when the short is covered the THB would RISE dramatically and not COLLAPSE as you suggest. However, the concept of a central bank shorting its own currency is something I can't quite grasp.

BoT policy is to maintain a stable THB against a basket of mostly Asian currencies. They have been quite successful over the last few years and I hope that they continue to do so. There is an upward pressure on the THB due to the trading surplus Thailand has with other countries. Despite the hope of a lot of westerners around here that the THB will collapse against the GBP, EUR, USD or whatever, the trend is definitely in the other direction and the THB will, IMO, continue to gain strength in line and along with other Asian currencies.

[nakachalet]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

I CAN TRULY hardly wait....

pls do let me know.... just about when 60 ฿ to 1 usd is gonna happen....

with extreme gratitude....

[nakachalet]

you make alot more sense here.... LOL

r u from oxford too.... like the pm apisit....?

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

well, I can't be bothered to search for "another post", and maybe you could put a reference rather than state some nonsense.

If the BoT was shorting the THB, namely BORROWING and SELLING the THB and driving the price DOWN, then when the short is covered the THB would RISE dramatically and not COLLAPSE as you suggest. However, the concept of a central bank shorting its own currency is something I can't quite grasp.

BoT policy is to maintain a stable THB against a basket of mostly Asian currencies. They have been quite successful over the last few years and I hope that they continue to do so. There is an upward pressure on the THB due to the trading surplus Thailand has with other countries. Despite the hope of a lot of westerners around here that the THB will collapse against the GBP, EUR, USD or whatever, the trend is definitely in the other direction and the THB will, IMO, continue to gain strength in line and along with other Asian currencies.

[husskydog]

Thailand learned their painful lesson during the 'asian currency crisis', now they have learnt to hedge the baht against

speculative measures which in turn is stable.

But in my guess, I think they will need to re-assess their rates to be

competitive for exports and competing against neighboring countries.

So what after they reassess do you see as a realistic exchange rate to the usd/gbp ?

And what you suggest, it`s asian economies that are their main intrest, and the usd/gbp is only going to gain against the baht if they inturn appreciate...your thoughts please....

[metisdead]

One need to ask is it Thai Bath too high or the Euro and Dollar too weak. I believe the latter

It is not Bath, it is: B a h t .

[seanocasey]

Thailand sovereign bond risk rises.

Baht weakens

source Bloomberg

Please put a reference to the source so we can all see the entire article.

flash up on screen and

here

here

[Gambles]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

well, I can't be bothered to search for "another post", and maybe you could put a reference rather than state some nonsense.

If the BoT was shorting the THB, namely BORROWING and SELLING the THB and driving the price DOWN, then when the short is covered the THB would RISE dramatically and not COLLAPSE as you suggest. However, the concept of a central bank shorting its own currency is something I can't quite grasp.

BoT policy is to maintain a stable THB against a basket of mostly Asian currencies. They have been quite successful over the last few years and I hope that they continue to do so. There is an upward pressure on the THB due to the trading surplus Thailand has with other countries. Despite the hope of a lot of westerners around here that the THB will collapse against the GBP, EUR, USD or whatever, the trend is definitely in the other direction and the THB will, IMO, continue to gain strength in line and along with other Asian currencies.

I think that SB is referring to teh USD reserves acquired by BoT from operations selling Baht and buying USD

The latest figures are always published on BoT website which, for anyone who doesn't know, is a great data source.

As Drink rightly points out though, if the BoT hadn't done this, the Baht would be stronger. This combination of currency management and political risk premium is almost certainly the main or entire reason why Baht has been weaker against other Asean countries for some time now (clear trends from 3 months to 2 years depending on the currency and in some cases even longer).

This weakness is helping Thai exports.

I'd agree with Drink in the short term although FDI has been a problem for Thailand relative to other Asean countries and this situation should be expected to worsen now.

BoT does have a great deal of policy flexibility now because of the reserves. So basically, short term moves very difficult to predict and expect some vol next week but after that the Baht should generally strengthen but over time there is a danger of underperforming other Asean/Asian currencies.

Hope that helps!

[Naam]

BoT does have a great deal of policy flexibility now because of the reserves. So basically, short term moves very difficult to predict and expect some vol next week but after that the Baht should generally strengthen but over time there is a danger of underperforming other Asean/Asian currencies. Hope that helps!

no it doesn't Gambles! neither facts nor logical conclusions can convince the rubber-mattress-owners that their unfounded, ignorant and uneducated wishful wet dreams will not come true (anytime from now since nearly five years). it's all "pearls before... poor Farangs" no matter how hard you try.

Edited May 22, 2010 by Naam

[ThaisGood]

Strong global demand for agricultural products (rice, coconut milk, etc). Keeps baht strong.

[Lancelot]

i associate a number of comments referring to exchange rates to a bunch of virginal nuns who pledged eternal celibacy but giving each other advice how to conduct hardcore sex.

Naam, while I might debate some of your economic theories, I love your humor

[sunjunkie56]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

I have lived on Koh Phangan for 10 years now and talking to Thai friends who own Bars, Resorts etc,they allseem very proud of the strong Baht but when I ask them are they better off for it I get a blank Manuel (Fawlty Towers) look

[Naam]

Strong global demand for agricultural products (rice, coconut milk, etc). Keeps baht strong.

another nun

[Time Traveller]

One need to ask is it Thai Bath too high or the Euro and Dollar too weak. I believe the latter

It is not Bath, it is: B a h t .

Actually if you transliterate from thai to english it could be written correctly as "Bath" since the last letter in บาท, "ท" can be written as "th" . In fact, "ท" could also be translitered as "d", in which case "bahd", or even "bad" could be written to mean "Baht". Also, I've seen several finance companies and other institutes write บาท as Bath. Perhaps a little flexibilty for spelling should be given when Thai words (i.e. proper nouns) are written in English.

Edited May 22, 2010 by Time Traveller

[jcon]

According to another post the BoT is shorting the Thai Baht to the tune of 70 billion dollars.

As long as they can keep this up the Baht will remain high ....... run out of funds and it will soon be 60bht to 1 dollar.

Is this backwards-day????????? Or just wrong-conclusions-based-on-wrong-assumptions-and-backward-logic-day?

If the BoT is shorting the THB, they would in fact be trying to quell its strength - and should they 'run out of funds' then the effect would be exactly the opposite of the scenario described above i.e. something more like 25THB/USD instead of something insane like 60.

The 3 sentences in the quoted reply essentially don't make sense in that the 2nd sentence doesn't match with the logic of the 1st, and that the 3rd, doesn't make sense regarding the 2nd... in other words, nonsense.

[brownbear]

Well, thanks all. I didn't start this topic but did make an early plea for responses. I'm probably a little bit wiser now but it still seems that predicting what is likely to happen to the Baht over the next 12 months is anyone's guess and that is simply because there are too many volatile factors coming into play. Glad I don't work in the Forex industry and only have to worry about the GBP v Baht exchange rate. As it stands in that regard I'm not going to panic just yet - nothing I can do about it anyway!