PM Abhisit Warns Thai Baht May Rise Even Further

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STRONG BAHT

PM Abhisit warns baht may rise even further

By The Nation, Agencies

BANGKOK: -- Prime Minister Abhisit Vejjajiva hinted that the baht could strengthen even further after rising to Bt30.84 per dollar yesterday, breaking a 13-year record.

The baht's rapid appreciation prompted the University of the Thai Chamber of Commerce economic forecasting centre to caution that the country could lose an estimated Bt100 billion in export and tourism revenues.

Opposition MP Suraphong Tovichakchaikul, chairman of the House committee on finance, money, banking and financial institutions, urged the government to intervene.

If the baht rose to 29 to the dollar, exports in the fourth quarter of this year would be badly hit, he said.

Kasikorn Bank yesterday issued a revised forecast that the baht would likely appreciate to 30.2 per dollar by year-end and to 29.5 per dollar next year.

Kiat Sithi-amorn, president of the Office of Thai Trade Representatives, said exporters should adjust themselves to the prevailing exchange rate, rather than expecting the baht to stay weak all the time.

"The private sector has to adapt and boost competitiveness," he said, citing the example of Singapore whose currency had appreciated over the past decade from Bt10 per Singapore dollar to the present Bt24 per dollar.

However, Samphun Eamrungroj, the acting president of Export-Import Bank, said many clients have been facing losses due to the baht's rapid rise.

"Fortunately, exporters have made profits in the first half of this year, so they should still be alright considering the whole-year operation, even though they would likely suffer losses in the second half."

"The outlook is worrisome for next year if the baht continues its up-trend," said Samphun, adding that most Thai exporters had already slowed taking new foreign orders due to the baht's rise.

Thiti Tantikulanan, head of capital markets at Kasikornbank, said the baht had risen in line with other regional units, up 7 per cent this year so far, while the Malaysian ringgit is up 9 per cent and currencies in Indonesia, the Philippines and Singapore have seen a 4.5 per cent increase.

Thiti said around $2.5 billion had flooded into Thai markets, while a positive balance in trade driven by strong exports and a weaker dollar - as the US recovery appears to falter - had also helped boost the currency.

Federation of Thai Industries chairman Payungsak Chartsuthipol expressed concern about the impact on Thai exporters if the currency accelerates past regional neighbours, according to an AFP report.

-- The Nation 2010-09-10

[alant]

fact of life, baht up £/$/euro down. cant compensate with saving interest rates so have to spend less to make money go further. as many in tourist industry are fairly transient is wont effect official thai figures. some exports will suffer but demand for rice will ensure stability for thailand

[Sateev]

This is beginning to appear like some kind of badge of honor for Abhisit, something he seems to be pointing out with pride. Drawing comparisons with Singapore is laughable.

When the delayed downside hits, and exporters feel the pain, woe betide the current government.

I think...

[Roota]

This is beginning to appear like some kind of badge of honor for Abhisit, something he seems to be pointing out with pride.

Reading his statement in Thai, I didn't get that impression at all. He seemed to be expressing his concern, and in fact added that he had instructed the BOT on measures they should take if the baht continues to rise. I think he mentioned Singapore simply as an example of just how far and fast a currency can rise.

[Jose]

PM Abhisit warns baht may rise even further.

All this talk about rising currencies is smoke and mirrors.

Due to the constant printing of $, all currencies are falling in real terms over the long term - it's just that some fall at a slower pace.

Comparing falling currencies to each other is a dangerous distraction. It is like the joke about the two guys who jump to their death from a tall building. As the first guy falls past the 10th floor, he says "so far so good". At the same time the other falling guy compares his trailing progress to the faster-falling guy two floors below and says "well, I'm doing great - falling upwards".

Relative to gold (which keeps it's purchasing value over the long term), the USD has fallen 76.8% since 1/1/2000,

In the same period the Thai Baht has fallen 71.8%, and the Singapore Dollar has dropped by 71.3%.

...Singapore whose currency had appreciated over the past decade from Bt10 per Singapore dollar to the present Bt24 per dollar.

The present: 23 Baht to the Singapore Dollar. Ten years ago: 24 Baht to the Singapore Dollar.

The Thai Baht has never fallen below 19.5 Baht to the Singapore Dollar in the past ten years.

[Suradit]

This is beginning to appear like some kind of badge of honor for Abhisit, something he seems to be pointing out with pride.

Reading his statement in Thai, I didn't get that impression at all. He seemed to be expressing his concern, and in fact added that he had instructed the BOT on measures they should take if the baht continues to rise. I think he mentioned Singapore simply as an example of just how far and fast a currency can rise.

Happens so often. A Thai politician or government official or police spokesman says something in Thai. A reporter then records the gist of that in Thai with a little of his/her biases included. Then someone who is fluent in basic English, but not the nuances or subtleties, will translate that into English. Then English speaking people will read that and inject the adultered version of what was actually said with their own prejudices and VOILA an expression of concern over the direction of the baht is delcared to be chest-thumping hubris.

Anything that is reported in English should be read with some allowance for interpretation-creep and certainly reading between the lines is not warranted.

PM Abhisit warns baht may rise even further.

All this talk about rising currencies is smoke and mirrors.

In broad economic terms, yes, but for those of us whose income is in another currency the relative values is an important factor in our cost of living and for exporters/importers it can be a significant headwind or tailwind.

Edited September 10, 2010 by Suradit

[Hardie]

PM Abhisit warns baht may rise even further.

All this talk about rising currencies is smoke and mirrors.

Due to the constant printing of $, all currencies are falling in real terms over the long term - it's just that some fall at a slower pace.

Comparing falling currencies to each other is a dangerous distraction. It is like the joke about the two guys who jump to their death from a tall building. As the first guy falls past the 10th floor, he says "so far so good". At the same time the other falling guy compares his trailing progress to the faster-falling guy two floors below and says "well, I'm doing great - falling upwards".

Relative to gold (which keeps it's purchasing value over the long term), the USD has fallen 76.8% since 1/1/2000,

In the same period the Thai Baht has fallen 71.8%, and the Singapore Dollar has dropped by 71.3%.

...Singapore whose currency had appreciated over the past decade from Bt10 per Singapore dollar to the present Bt24 per dollar.

The present: 23 Baht to the Singapore Dollar. Ten years ago: 24 Baht to the Singapore Dollar.

The Thai Baht has never fallen below 19.5 Baht to the Singapore Dollar in the past ten years.

As far as I know currencies rise and fall only in relation to each other; that's the currency market. Gold is a commodity, though I suppose it retains some sentimental value from its previous life as currency. I think oil's increased more in price- 'held its value' if you prefer- over the last decade than gold.

[newermonkey]

Do what the Chinese are doing and control the rate. Thais run Thailand, they can do whatever they want.

[orpheus454]

Do what the Chinese are doing and control the rate. Thais run Thailand, they can do whatever they want.

Mmmm, that's what the Bank of England thought.

George Soros had other ideas.

[rubl]

Do what the Chinese are doing and control the rate. Thais run Thailand, they can do whatever they want.

The Thai government did just that up to 1997 and managed to lose all foreign reserves in a last ditch defence against speculators who knew better. Result: drop from 25B/1US to 50B/1US AND official start of an economical crisis in the region, by some called the 'Thai disease'

[SamritT]

Watch out for de-valuation of the Baht. The Vietnamese has already done theirs.

[Somnambulist]

As far as I know currencies rise and fall only in relation to each other; that's the currency market. Gold is a commodity, though I suppose it retains some sentimental value from its previous life as currency. I think oil's increased more in price- 'held its value' if you prefer- over the last decade than gold.

Obviously, you have a profound lack of understanding of what a currency is, and is for. It's used to buy real things (hence the term, "in real terms"), such as gas, food, clothing, services, etc. If you've seen no drop in the purchasing power of your currency over the last ten years, whichever it is, you must have been in a coma. Gold, on the other hand, buys just as much stuff now as it did ten years ago, and is obviously more portable, divisible and accepted by vendors, wives, etc. than 55 gallon drums of oil.

[Renbe]

Obviously, you have a profound lack of understanding of what a currency is, and is for. It's used to buy real things (hence the term, "in real terms"), such as gas, food, clothing, services, etc. If you've seen no drop in the purchasing power of your currency over the last ten years, whichever it is, you must have been in a coma. Gold, on the other hand, buys just as much stuff now as it did ten years ago, and is obviously more portable, divisible and accepted by vendors, wives, etc. than 55 gallon drums of oil.

Gold buys a whole lot of more stuff now than it did ten years ago. Eight years I bought Krugerrands for 320 euro a piece, they're worth now more than 3 times that amount.

[asiawatcher]

Which ever way you look at it, it is not the strength of the Thai Baht - it is the devaluing USD and other currencies controlled by the FED. But if the Baht holds and US drops further - Thailand will have to smarten up. I don't see the PM's message as a gloat - more fear for his country. The Bank of Thailand can sort a lot of this out but I doubt it due to national pride, which, like all others, goes before a fall.

Thailand is strong in so many aspects bt failure to continue Exports will hurt the low income earners further and I think that is what the PM sees in all this. Interesting times.

[chainarong]

Do what the Chinese are doing and control the rate. Thais run Thailand, they can do whatever they want.

The Thai government did just that up to 1997 and managed to lose all foreign reserves in a last ditch defence against speculators who knew better. Result: drop from 25B/1US to 50B/1US AND official start of an economical crisis in the region, by some called the 'Thai disease'

Others called it the Thai tantic

[LaoPo]

fact of life, baht up £/$/euro down. cant compensate with saving interest rates so have to spend less to make money go further. as many in tourist industry are fairly transient is wont effect official thai figures. some exports will suffer but demand for rice will ensure stability for thailand

Really?...with a rice export drop of -30% in the first 6 months in this year alone, it will ensure stability for Thailand ?

Other exports WILL drop too. If a(ny) product becomes too expensive for whatever reason it becomes harder to sell and buyers go elsewhere; ask Vietnam who devalued their currency times already 3 times since last year and took the main share of the rice exports, away from Thailand.

LaoPo

Edited September 10, 2010 by LaoPo

[mommysboy]

Which ever way you look at it, it is not the strength of the Thai Baht - it is the devaluing USD and other currencies controlled by the FED. But if the Baht holds and US drops further - Thailand reewill have to smarten up. I don't see the PM's message as a gloat - more fear for his country. The Bank of Thailand can sort a lot of this out but I doubt it due to national pride, which, like all others, goes before a fall.

Thailand is strong in so many aspects bt failure to continue Exports will hurt the low income earners further and I think that is what the PM sees in all this. Interesting times.

"Whichever way you look at it......"

About 70% true, but the Thai baht is also outperforming local currencies.

During the crisis a few months ago, we barely saw the baht flicker, and I guess we can glean the exchange rate here is highly controllable.

But generally, yes I agree. It does no good to go against the tide too much. Fact is people want to invest in Thailand, and US is in a whole heap of brown stuff, via its extraordinary level of debt.

[eurasianthai]

The Thai baht exchange rate to US$ was 25 for more years that I care to remember.

Before the Asian crisis in 1997, that is.

So why should it be a problem if it is at 31 now?

Edited September 10, 2010 by eurasianthai

[Hardie]

As far as I know currencies rise and fall only in relation to each other; that's the currency market. Gold is a commodity, though I suppose it retains some sentimental value from its previous life as currency. I think oil's increased more in price- 'held its value' if you prefer- over the last decade than gold.

QUOTE

Obviously, you have a profound lack of understanding of what a currency is, and is for. It's used to buy real things (hence the term, "in real terms"), such as gas, food, clothing, services, etc. If you've seen no drop in the purchasing power of your currency over the last ten years, whichever it is, you must have been in a coma. Gold, on the other hand, buys just as much stuff now as it did ten years ago, and is obviously more portable, divisible and accepted by vendors, wives, etc. than 55 gallon drums of oil.

7-11 on my street doesn't accept gold in payment, sorry if that isn't profound enough for you...

Edited September 10, 2010 by Hardie

[mommysboy]

The Thai baht exchange rate to US$ was 25 for more years that I care to remember.

Before the Asian crisis in 1997,

So why should it be a problem if it is at 31 now?

It was a pegged rate that was maybe not reflected in retail prices in the country so a dollar went further.

Just guessing, but I'd say inflation in Thailand has far exceeded that of USA over the course of many years.

Then of course you have to think about whether your salary has gone up in real terms too!

It's not nearly as simple as you presented.

[DMC1]

The Thai baht exchange rate to US$ was 25 for more years that I care to remember.

Before the Asian crisis in 1997, that is.

So why should it be a problem if it is at 31 now?

Yes, I remember but stuff was much cheaper back then (Pound was also always around 38 TBHT)

[tijnebijn]

The Thai baht exchange rate to US$ was 25 for more years that I care to remember.

Before the Asian crisis in 1997, that is.

So why should it be a problem if it is at 31 now?

Yes, I remember but stuff was much cheaper back then (Pound was also always around 38 TBHT)

Much cheaper indeed , remember the amount needed to stay in Thailand was 200k for immigration , go figure .

The problem isn't we cannot do with less money to spend , but it is getting harder and harder to get to the proof of 400k or 800k at immigration .

The Thai baht under 30 will get not only bad for exportes , also for lots of expats ,

especially those who can't scale their expenses back , their savings will deminish rapidly .

[Naam]

The Thai baht exchange rate to US$ was 25 for more years that I care to remember. Before the Asian crisis in 1997, that is. So why should it be a problem if it is at 31 now?

one US-Dollar bought 20 Baht in the mid/end seventies. but then i was paying 60 Baht for six medium sized charcoal broiled rock lobsters, a bowl and a nice serving of prikh nam pla in an airconditioned hotel restaurant in BKK and a young lady was happy to entertain you in BKK for 300 Baht (per working day).

try a wild guess how much rock lobster 60 Baht buy today.

not even one you say? we have a winner!

[fiercesnake]

Depends on what you are comparing it against; in this case the US dollar! Consider all the other local currencies are up to as mentioned above, even other developed nations, such as Australia, against the Baht, then just maybe.....just maybe the US dollar is weakening? Why do all these "experts" always assume the US is number 1 all the time? Think they need to look at places like China more and see what's happening there and look at the global picture. But traditional Thailand always look at everything the same way everyone else does in this country.

Saw on Thai TV ads looking to give awards for local creativeness and technological innovations and then goes through various inventions and developments from other nations, but when it come to the end it shows an empty frame of what did Thais invent or create!? Real good point but will it be enough to make them consider things in a different light? It's a good idea but they will need to improve education and change attitudes before any major changes occur here. Same same here all the time.

The Baht will increase its strength if marked against the weakening US dollar, but economists need to consider markets outside of this and widen there scope to a more international approach.

[Jimi007]

Depends on what you are comparing it against; in this case the US dollar! Consider all the other local currencies are up to as mentioned above, even other developed nations, such as Australia, against the Baht, then just maybe.....just maybe the US dollar is weakening? Why do all these "experts" always assume the US is number 1 all the time? Think they need to look at places like China more and see what's happening there and look at the global picture. But traditional Thailand always look at everything the same way everyone else does in this country.

Saw on Thai TV ads looking to give awards for local creativeness and technological innovations and then goes through various inventions and developments from other nations, but when it come to the end it shows an empty frame of what did Thais invent or create!? Real good point but will it be enough to make them consider things in a different light? It's a good idea but they will need to improve education and change attitudes before any major changes occur here. Same same here all the time.

The Baht will increase its strength if marked against the weakening US dollar, but economists need to consider markets outside of this and widen there scope to a more international approach.

Okay, let's look at China. Here is a chart of the CNY vs Baht:

Hum, so much for that argument...

[rubl]

Depends on what you are comparing it against; in this case the US dollar! Consider all the other local currencies are up to as mentioned above, even other developed nations, such as Australia, against the Baht, then just maybe.....just maybe the US dollar is weakening? Why do all these "experts" always assume the US is number 1 all the time? Think they need to look at places like China more and see what's happening there and look at the global picture. But traditional Thailand always look at everything the same way everyone else does in this country.

Saw on Thai TV ads looking to give awards for local creativeness and technological innovations and then goes through various inventions and developments from other nations, but when it come to the end it shows an empty frame of what did Thais invent or create!? Real good point but will it be enough to make them consider things in a different light? It's a good idea but they will need to improve education and change attitudes before any major changes occur here. Same same here all the time.

The Baht will increase its strength if marked against the weakening US dollar, but economists need to consider markets outside of this and widen there scope to a more international approach.

Okay, let's look at China. Here is a chart of the CNY vs Baht:

Hum, so much for that argument...

9% drop of CNY since begin of this year, 20% drop of Euro since begin of this year.

PS scale of the graph is a bit misleading, suggests a BIG drop of CNY in the last months, where in reality it's only 4.5% out of the 9 this year.

[neverdie]

As far as I know currencies rise and fall only in relation to each other; that's the currency market. Gold is a commodity, though I suppose it retains some sentimental value from its previous life as currency. I think oil's increased more in price- 'held its value' if you prefer- over the last decade than gold.

QUOTE

Obviously, you have a profound lack of understanding of what a currency is, and is for. It's used to buy real things (hence the term, "in real terms"), such as gas, food, clothing, services, etc. If you've seen no drop in the purchasing power of your currency over the last ten years, whichever it is, you must have been in a coma. Gold, on the other hand, buys just as much stuff now as it did ten years ago, and is obviously more portable, divisible and accepted by vendors, wives, etc. than 55 gallon drums of oil.

7-11 on my street doesn't accept gold in payment, sorry if that isn't profound enough for you...

maybe so, but maybe oneday they will accept nothing else .

[Jose]

Thai Baht vs Chinese Yuan

Thai Baht vs USD

Thai Baht vs Gold in % terms

Edited September 12, 2010 by Jose

[whybother]

@Jose,

Do you have USD vs Gold for reference?

[Jose]

7-11 on my street doesn't accept gold in payment, sorry if that isn't profound enough for you...

Wrong view - Gold is not a currency (for now), but a storage of wealth.

You wouldn't shop at to your local 7-11 with your property title deeds or your bank acc passbook either, but that doesn't mean they are not valuable.

Currency's only purpose is the transfer of wealth, not its storage.

Gold's main purpose is the storage of wealth, not its transfer.

A couple of analogies that may help break the common currency paradigm:

Before the advent of pipes, water was transferred from wells to wherever it was needed by leaky wooden buckets. Everyone understood then that these leaky wooden buckets' only purpose were for the transfer of water, and not its storage.

Nowadays styrofoam boxes are often used for the transport of cold/frozen goods, but using them for longer-term storage is a bad idea because heat leaks into the boxes over time.

Fiat currencies "leak" over time due to the constant devaluing by central banksters' legalized counterfeiting. Store your wealth in currencies (i.e. bank deposits) at your financial peril.