Weak US Dollar Is A Big Threat To The Baht And Thai Economy

[tomyummer]

It just makes me laugh when the Thai government tries to appear like they know what they're talking about trying to look 'official' and intellectual when announcing Thailand's monetary policies, statistics on tourism, blah, blah, blah. There is no way in h.e.l.l. that their figures can ever be accurate, true or legitimate with all the corruption and 'off the books' dealings that go on. Especially for government contracts, military and police and inter departmental pyramid distribution of 'commissions' and such.

A thought: Could you just imagine if all the tea money, currently at 30%, were actually put back into the coffers? The Thai government and country would be that much better off. 30% richer!! That goes for all civil projects, military acquisitions,etc. Just think if your bank accounts had 30% more in it, what a difference and impact it would make.

Although for me, 30% of zero, is still zilch.

[paully]

this story is a red herring. A strong baht is what Thailand needs

That would be true if Thailand was a strong economy. Unfortunately it isn't.

[12DrinkMore]

It just makes me laugh when the Thai government tries to appear like they know what they're talking about trying to look 'official' and intellectual when announcing Thailand's monetary policies, statistics on tourism, blah, blah, blah. There is no way in h.e.l.l. that their figures can ever be accurate, true or legitimate with all the corruption and 'off the books' dealings that go on. Especially for government contracts, military and police and inter departmental pyramid distribution of 'commissions' and such.

A thought: Could you just imagine if all the tea money, currently at 30%, were actually put back into the coffers? The Thai government and country would be that much better off. 30% richer!! That goes for all civil projects, military acquisitions,etc. Just think if your bank accounts had 30% more in it, what a difference and impact it would make.

Although for me, 30% of zero, is still zilch.

Just replying to this post because it is the last in a line up of mostly <deleted>.

Do you think that western governments are not in the business of massaging their figures? And actually I think that the Thai figures are reasonable, when compared to any bunch of interpreted statistics.Let's take your set in concrete 30%. Where on earth do you get that figure, or was it conjured up out of some beer froth?

The world economic situation is undergoing a major change. It is affecting every person on the planet. But, to put it simply, the UK and US plus a few southern European countries, do not produce very much anymore. They have been living it up over the last decade on increasing debt and bubbling asset prices.

The bills now have to be paid. Real estate inflation does not, at the end of the day, provide real wealth.It has to be purchased with wages earned through production.

I can see no real brakes on a reversion to the currency rates of a mere 12 years ago. The Asians had their crisis and learned the lesson. Ever since the US decided to come off the gold standard the USD has been the world's reserve currency, requiring the US to run deficits in order to supply the rest of the world with USD's so that trade goes on. Look up "Triffin".

This is now slowly, or quickly, heading to an end. But the US is basically handcuffed until an alternative is found.

The writing is surely written very large on the wall, the Asian currencies are going to appreciate and the Asians are going to be wealthier and have more influence. Accept this, you cannot fight it.

[12DrinkMore]

That would be true if Thailand was a strong economy. Unfortunately it isn't.

Why do you say that?

Growth at 8%, the Bank of Thailand has been active to keep the THB from appreciating because of inward investment.

Jeeze, it Thailand hasn't got a strong economy, then there is no economy on the planet that is strong.

[Jingthing]

The USA deficit issues are way overstated mainly by the blowhard teabagger movement, which doesn't have any serious economists behind it. It is quite easily solvable with more reasonable taxation of the American rich. A teabagger political victory will be an economic disaster, causing a massive crash in the US stock market, which has actually done quite well under Obamanomics.

"US deficit overstated". Can you justify that statement? I"m a Labour supporter (democrat in US) but taxing the rich won't work as there is not enough of them to provide reasonable support. I suppose it's just about austerity measures versus 'spend your way out' and at this pointit appears US took the wrong gamble.

Yes, let Warren Buffet, second richest man in the world do that.

http://thehill.com/homenews/senate/58129-buffett-to-meet-with-senate-dems

Buffett tells Dems rich need to pay more

By Alexander Bolton - 09/10/09 05:40 PM ET

Warren Buffett, the renowned investor and the world’s second richest man, told Senate Democrats that wealthy Americans need to pay higher taxes, giving Democrats something to mull as they address healthcare reform and soaring federal deficits.

Senate Democrats met with Buffett for more than an hour over lunch Thursday, peppering him with questions about the economy, said lawmakers in attendance.

“He said rich people are not paying enough taxes,” said Sen. Claire McCaskill (D-Mo.). “It was interesting to see someone who is such an aggressive capitalist, who believes so much in our capitalist system, saying we’ve got the scales way too heavily toward people who are very, very wealthy.”

Buffett told lawmakers that because of the cuts to the capital gains tax passed under former President George W. Bush, he pays taxes at a lower rate than some of his company’s employees.

[Spee]

The USA deficit issues are way overstated mainly by the blowhard teabagger movement, which doesn't have any serious economists behind it. It is quite easily solvable with more reasonable taxation of the American rich. A teabagger political victory will be an economic disaster, causing a massive crash in the US stock market, which has actually done quite well under Obamanomics.

I have to agree with you. I bumped into an acquaintance of mine the other day who was over from the US on business. Unusually the story turned to economics and he stated to me that on his salary of over 100k USD he paid 10.2% income tax when all the allowances, deductions and cash for clunkers for his new car etc was deducted. It might not solve all the issues for the deficit, but I was astonished when I heard this number.

Even he stated that when he didn't believe it when his accountant calculated his tax bill.

Your friend has probably been working overseas for the recent calendar year, which exempts the first $90k or so of his income, as allowed by tax law. But he is surely paying more in other taxes, such as FICA, Medicare, etc., which are not exempt from overseas work. But your friend need not worry, the overseas income tax exemption is directly in the cross-hairs of those would want to raise income taxes still higher yet.

For what it's worth this tax problem isn't unique to the US. The UK government wants employers to send paychecks to the government first, and then the government will decide how much money should be deposited into the workers' bank accounts. This is one of many examples of a power-drunken government running amok with the freedoms of its citizens. So much for the right to one's property, I guess.

http://www.moneynews.com/StreetTalk/UK-Tax-Office-Paychecks/2010/09/21/id/370994

As for JT and the usual delusional far left skewing of US politics, taxing the rich more heavily is not the solution and has never been the solution. It is a well known fact that 40% of the US population pays absolutely no federal income tax at all. The top 1% of all wage earners pay 39% of all federal income tax. The top 25% of all wage earners pay 86% of all federal income tax.

As for taxing the rich more heavily, the US government could tax the top 25% of wage earners at 100%, that is, take each and every cent that they earn, and it still wouldn't put so much as a small dent in the US debt. So obviously, and what every sane and pragmatic person knows, taxing the rich is not the solution.

As I said earlier, in the last twenty months under the stewardship of Obama, Pelosi and Reid, the US has accummulated more additional debt than has been built up over the entire 200+ years of US history. So clearly, the problem is one of spending not one of taxation. This fact, combined with the years of Fed mismanagement of the national currency (during both the Bush and Obama administrations) and more recent attempts to monetize the debt, are the core reasons for the dollar being in the toilet.

So how does all of this impact Thailand? Others have suggested (correctly IMHO) that the poor exchange rate will eventually impact tourism, although this isn't necessarily Thailand's fault. Going back to my earlier example of imported shrimp, the inevitable result is higher prices in the stores. For many people, an $8 bag of frozen shrimp that is now $10 or $11 dollars, may now be too expensive. Put into a larger scale, this results in fewer imports and possibly fewer jobs back in Thailand due to lower production being needed. Maybe Thai businesses can find other markets to keep up their production needs, and maybe they can't.

If I were in the Thai government, I would be strongly petitioning the US and other western government to get their shit together fiscally, to make Thai imports and Thai tourism more affordable.

[Puccini]

Editorial: "Weak US dollar is a big threat to the baht and Thai economy"

-- The Nation, 2010-09-26

News headline: "PM: Foreigners see bright future of Thai econ"

-- NTT, 2010-09-26

[Chunky1]

ur right. the ideal scenario for an export economy where only 10% of the people can afford to buy anything other than food or a 200b tshirt is a very strong currency. that is why China keeps the Yuan as strong as possible. that is why nobody buys us dollars or tries to strengthen the dollar.

[ralston3057]

...Thailand...should concentrate on their own economy and weaken THB if they do not want to go into the biggest crisis of 20th-21st century...

There have been riots and terrorism, there is a dismal telecommunications infrastructure, etc. What more can Thailand do to try and weaken the Baht? Exports have increased by 30%, tourist arrivals by 13%, foreign companies continue to invest in Thailand.

The Thai Baht is so much stronger because the dollar is weak and getting weaker due to the fed monetizing our debt (print more money). The same is true in Europe.

The Fed will push the dollar down to allow exports of US goods and to pay off US debt to foreign countries with a lesser valued dollar (thus paying less b/c of weak dollar).

So, what do we do? Invest in Thai real estate, short the dollar and play the American stock market. That is my plan

[Jimi007]

I think someone mentioned fuel prices here earlier. Well gasoline, not gasahol is $3 a gallon in an expensive area of California the US, I think I just paid close to $4 a gallon here for gasahol So what good is the strong Baht doing again? And for who?

[Chunky1]

1 United States United States 8,133.5 68.7%

6 People's Republic of China China 1,054.0 1.5%

the first is gold tons, the 2nd is % of foreign reserve.

BUY GOLD

[Hardie]

More red herrings here than a fish processing plant, mainly because: USD is NOT weak, at 1.58 and 1.35 against GBP and EUR, respectively, not bad at all, much better than the weakest highs of 2.05 and 1.58 in recent years and only a little above the strongest lows of 1.50 and 1.25. But what about the THB @ 30+: $1us? And JPY @ 84? Ah, there's a pattern forming here- Asia- probably China buying anything that likes half-stable.... and politically advantageous, diversifying away from US T-bills. What can Thailand do? BUY FOREIGN, INVEST, REBUILD! Some poor villagers might appreciate the work... Either that, or flood the market with baht, like Japan is doing with yen...

[jazzbo]

So my take on all this: The US Federal Reserve as led by Dr. Bernanke is real stupid; a bunch of guys herein are real smart.

[electau]

Read this, AUD /USD. In 2001 AUD was $0.47 to the USD. Now over $0.96

http://www.smh.com.a...tml?autostart=1

AUD sell buy THB rate 29.10 Source BBL 27/09/2010.

[gotlost]

Todays great news.......... 30.23 USD 47.72 GBP 40.66 EUR

[brahmburgers]

Big opportunity for rich Thais who want to purchase properties in the States. Double advantage, actually. Property values there are still sagging, and the baht has more bang for the dollar.

Of course, rich Thais are free to purchase properties in their names overseas, but they don't allow farang to do the same in Thailand.

Thais can also purchase businesses, start businesses, buy vehicles in their own names. Over here in Thailand, a farang can't even get a phone line or a simple electrical hook-up in his own name. Welcome to the 'Land of Double Standards.' Xenophobia is alive and well in Thailand.

[SamritT]

Did the Baht strengthen or did the Dollar weaken? Please blame the correct parties.

[OOTAI]

[

Let's also keep in mind that the drooping dollar is driving the cost of gold through the roof. Haven't checked lately but it's probably close to 20k ThB for 1 baht gold. Many Thai people use gold as both savings and currency, not to mention sinsod and other aspects of the culture. People that have gold as savings may be inclined to sell it now while it is high. Some people that want to buy gold perhaps now cannot afford it. Not saying this is totally good or totally bad. It's just another way the weak dollar indirectly affects Thailand.

This statement shows why it is important for people reading these forums, to not place too much credence on the expertise of the posters. Early last December gold in Thailand was B18600 when it peaked (at the time) at US$1180. Gold right now is US$1298 but is only B18700 so while gold has gone up in US$'s it is relatively stable in Thai baht due to the efect of the currency depreciation/appreciation. Why is/was the Bank of Thailand buying gold? To prevent its reserves from depreciating because they are US$'s?

I carry a $50,000,000 dollar note around in my wallet to remind me of what happens when a government turns on the money printer. Mugabe tried to print his way out of trouble and did he succeed? If people want to live beyond their means then they must borrow and then default. Does that sound like what happens regularly in Thailand? Whenever someone asks to borrow some money from my wife all I hear is "can you give me" as it rarely comes back.

[tomyummer]

It just makes me laugh when the Thai government tries to appear like they know what they're talking about trying to look 'official' and intellectual when announcing Thailand's monetary policies, statistics on tourism, blah, blah, blah. There is no way in h.e.l.l. that their figures can ever be accurate, true or legitimate with all the corruption and 'off the books' dealings that go on. Especially for government contracts, military and police and inter departmental pyramid distribution of 'commissions' and such.

A thought: Could you just imagine if all the tea money, currently at 30%, were actually put back into the coffers? The Thai government and country would be that much better off. 30% richer!! That goes for all civil projects, military acquisitions,etc. Just think if your bank accounts had 30% more in it, what a difference and impact it would make.

Although for me, 30% of zero, is still zilch.

Just replying to this post because it is the last in a line up of mostly <deleted>.

Do you think that western governments are not in the business of massaging their figures? And actually I think that the Thai figures are reasonable, when compared to any bunch of interpreted statistics.Let's take your set in concrete 30%. Where on earth do you get that figure, or was it conjured up out of some beer froth?

The world economic situation is undergoing a major change. It is affecting every person on the planet. But, to put it simply, the UK and US plus a few southern European countries, do not produce very much anymore. They have been living it up over the last decade on increasing debt and bubbling asset prices.

The bills now have to be paid. Real estate inflation does not, at the end of the day, provide real wealth.It has to be purchased with wages earned through production.

I can see no real brakes on a reversion to the currency rates of a mere 12 years ago. The Asians had their crisis and learned the lesson. Ever since the US decided to come off the gold standard the USD has been the world's reserve currency, requiring the US to run deficits in order to supply the rest of the world with USD's so that trade goes on. Look up "Triffin".

This is now slowly, or quickly, heading to an end. But the US is basically handcuffed until an alternative is found.

The writing is surely written very large on the wall, the Asian currencies are going to appreciate and the Asians are going to be wealthier and have more influence. Accept this, you cannot fight it.

Nice reply. Totally agree. But my post was to state that Thailand is so inefficient in their statistics gathering and mixed in with missing information due to undeclared dealings or lack of record. I would love to dissect how the AOT or TAT get their figures and divide their visitors. Like someone had posted earlier, he most likely contributed to the numbers traveling in an out of the country multiple times this year therefore bumping up the numbers. Genuine visitors versus expats or foreign permanent residents. If the AOT/TAT are still using the departure/arrival cards to count heads leaving a mass pile of paper trash in the wake, then the figures are definitely way off as I cannot possibly see a detailed Thai statistician analyzing the figures in a back room. Also, the immigration computers only record passport information upon departure and arrival and possible 'red flag' individuals. Not for statistical reasons. If it were a truly efficient program, it would have caught my various 'overstays' over the past years upon entering my dates.

As for the 30%? I've been there and still there. Can't name the agencies, but sorry to say that's the rate. Plus the pyramid's gotten bigger, more to spread out. 10 years ago it was between 10-15% depending on the contract size and how many agencies involved.

I wish it were due to the 'beer froth' but it isn't.

[freedom4life]

Not good for Tourism. Leave it to the criminal bankers and their criminal political yes-man to manipulate and destroy.

[aitch52]

The EU is pretty much in the same boat and came near to dumping the euro, which in the end they will even after multi billion euro prop ups expire.

Not sure what planet you are on, but the EU has never considered or come close to dumping the Euro. The Euro has had its ups and downs, as have most currencies, but that is no reason to dump it.There would be more to lose than to be gained by dumping it. It's possible that a country like Greece could leave the Eurozone, but the Euro would still continue. The Euro mostly brings stability to the Eurozone because businesses that import and export to other Eurozone countries don't have to worry about wildly fluctuating exchange rates. The EU is mostly a single market, so needs a single currency.

I doubt the US would have been as successful as it has been over the past century if it had a different currency in every state.

One day most Asian countries will also have a single currency. Maybe 20-50 years away, but it will happen.

If it were just the big 6 in the Euro then sure it would be stable, however there are far too many weak economies within it and Germany and France will tire of pumping more and more of their citizens potential wealth to keep other nations afloat. Soveriegn Governments are also up in arms having terms dictated by a bunch of unelected beaurocrats in Brussels. I think the Euro is a dead duckling, which ever way you look at it for us struggling citizens, it is a giant sanwich contaiining something extremely unpleasant and we're all gonna have to take a bite.

[Spee]

This statement shows why it is important for people reading these forums, to not place too much credence on the expertise of the posters. Early last December gold in Thailand was B18600 when it peaked (at the time) at US$1180. Gold right now is US$1298 but is only B18700 so while gold has gone up in US$'s it is relatively stable in Thai baht due to the efect of the currency depreciation/appreciation.

Are you quoting the buy or selling price? Are you referring to baht gold, which is 22k (96%) or bullion, which is 24k (99.9%)? And I beg to differ on the relative stability of baht gold vs. baht currency. As recently as a few years ago, 1 baht gold was about 12,500 baht currency (about 1/3 less than today). My partner tells me of days when it was less than that. While I might be mistaken, aren't gold prices are on a worldwide basis, regardless of currency?

[taurus88]

We made it sound like currency can be manupulated and we can decide on its exchange rate. Perhaps rich nations can use their reserves to buy or sell but only momentary and for political reasons. Currencies will yield to market forces. Well unless you peg your currency but that carry a high risks. Even if China de-value double digit tomorrow, that will not have any influence on USA economy and will cause China enormous problems. If Thai companies don't take advantage of its strengthened baht by improving productivity and by hedging smartly and stop hoping for intervention; we will be better off and more competitive in the long run.

[OOTAI]

This statement shows why it is important for people reading these forums, to not place too much credence on the expertise of the posters. Early last December gold in Thailand was B18600 when it peaked (at the time) at US$1180. Gold right now is US$1298 but is only B18700 so while gold has gone up in US$'s it is relatively stable in Thai baht due to the efect of the currency depreciation/appreciation.

Are you quoting the buy or selling price? Are you referring to baht gold, which is 22k (96%) or bullion, which is 24k (99.9%)? And I beg to differ on the relative stability of baht gold vs. baht currency. As recently as a few years ago, 1 baht gold was about 12,500 baht currency (about 1/3 less than today). My partner tells me of days when it was less than that. While I might be mistaken, aren't gold prices are on a worldwide basis, regardless of currency?

Spee

What I was trying to point out was the error of your statement see below.

"Let's also keep in mind that the drooping dollar is driving the cost of gold through the roof. Haven't checked lately but it's probably close to 20k ThB for 1 baht gold. Many Thai people use gold as both savings and currency, not to mention sinsod and other aspects of the culture."

While the weak American dollar means that an "American ounce of gold is now priced at US1298. The strong Thai baht means that one Thai Baht of gold (bullion not jewellery) now costs B18700. In aerly december the prices were US1180 and G18600 respectively. So you are wrong in saying that the price of goldis going through the roof, it may well be doing so in US$'s but not in Thai baht. And if you understood the pricing of Thai gold and the fact that it reflects the currency exchange element you would undertsand why, after all this thread is aboutthe "weak American dollar and its impact on Thailand".

As for your statement about the price of years ago I might ask was that a time of a strong dollar? If you are really serious about understanding the relationship between gold and dollars and baht find a graph showing gold price in US$'s versus one showing gold price of Thai gold in Thai baht it will clearly show the depreciation of the dollar against the baht.

In July 2009 I bought Thai gold (bullion ) at B14900 expecting the price of gold to appreciate with the decline in the dollar and also I expected the Thai baht to depreciate against the Thai baht giving me a double whammy but alas I have to be content with just making a profit I suppose.

For your information the price in Thailand for buying gold, bullion or jewellery can be found at the website "goldtraders.co.th"

Thai bullion is sold as baht per Baht with one Baht of gold being 96% and slightly more than half a troy ounce. It should also be remembered that the exchange rate is taken into account when the Goldtraders Association of Thailand set their price each day but I have yet to determine an exact number to use to convert the price from US$'s to thai baht. The buying rate for 1 Baht of Thai bullion gold is also 100 baht higher than the selling price which is the commision the gold shop makes.

[Lancelot]

I have to smile when I read about countries dependent on exports to grow their economies. Many developing countries need to consume more of their out put but they've become addicted to exporting. Som nam na

[cloudhopper]

In July 2009 I bought Thai gold (bullion ) at B14900 expecting the price of gold to appreciate with the decline in the dollar and also I expected the Thai baht to depreciate against the Thai baht giving me a double whammy but alas I have to be content with just making a profit I suppose.

Thai bullion is sold as baht per Baht with one Baht of gold being 96% and slightly more than half a troy ounce.

Lots of interesting strategies and facts on this thread...

[Naam]

In July 2009 I bought Thai gold (bullion ) at B14900 expecting the price of gold to appreciate with the decline in the dollar and also I expected the Thai baht to depreciate against the Thai baht giving me a double whammy but alas I have to be content with just making a profit I suppose.

Thai bullion is sold as baht per Baht with one Baht of gold being 96% and slightly more than half a troy ounce.

Lots of interesting strategies and facts on this thread...

:lol:

[paully]

Many developing countries need to consume more of their out put but they've become addicted to exporting.

Got to pay for your oil somehow...

[OOTAI]

In July 2009 I bought Thai gold (bullion ) at B14900 expecting the price of gold to appreciate with the decline in the dollar and also I expected the Thai baht to depreciate against the Thai baht giving me a double whammy but alas I have to be content with just making a profit I suppose.

Thai bullion is sold as baht per Baht with one Baht of gold being 96% and slightly more than half a troy ounce.

Lots of interesting strategies and facts on this thread...

:lol:

cloudhopper, naam

The truthful bit that I posted earlier "This statement shows why it is important for people reading these forums, to not place too much credence on the expertise of the posters" is only reinforced by my own stupidity. Maybe if I had said "the Thai baht to depreciate against the US dollar" and "that 1Baht is slightly LESS tahn half a troy ounce" it may have made sense. Just enjoy the laugh at my expense as, because I don't drink I can't blame being drunk as an excuse, so I can only confess to being stupid because I don't check my posts before hitting the "add reply " button.

[damian7000]

In July 2009 I bought Thai gold (bullion ) at B14900 expecting the price of gold to appreciate with the decline in the dollar and also I expected the Thai baht to depreciate against the Thai baht giving me a double whammy but alas I have to be content with just making a profit I suppose.

Thai bullion is sold as baht per Baht with one Baht of gold being 96% and slightly more than half a troy ounce.

Lots of interesting strategies and facts on this thread...

:lol:

cloudhopper, naam

The truthful bit that I posted earlier "This statement shows why it is important for people reading these forums, to not place too much credence on the expertise of the posters" is only reinforced by my own stupidity. Maybe if I had said "the Thai baht to depreciate against the US dollar" and "that 1Baht is slightly LESS tahn half a troy ounce" it may have made sense. Just enjoy the laugh at my expense as, because I don't drink I can't blame being drunk as an excuse, so I can only confess to being stupid because I don't check my posts before hitting the "add reply " button.

or maybe drunk people should look for meaning, as opposed to errors and mistakes in grammar