Stronger Thai Baht Affects Economy

[webfact]

Stronger Thai baht affects economy

BANGKOK (NNT) -- The baht appreciation will affect the economic growth by up to 2.7 percent. Meanwhile, the Ministry of Finance has predicted that that US Dollar might get weaker, and urged entrepreneurs to be ready to cope with it.

According to The Fiscal Policy Ofiice (FPO) Finance Minister Korn Chatikavanij said that stability of the nation’s economy is partly influenced by inflation. The higher the inflation rate, the more the people and businesses will be affected. Thailand has been so used to low inflation rates in the past ten year that it does not realize the true effect of inflation.

As for MR. Pridiyathorn Devakula’s suggestion that the government impose a “Tobin tax” as a means to curb capital inflows, the Minister said the government was ready to listen to suggestions from all parties and would discuss them with the Central Bank. As for the 15% tax imposed on capital gains and interests earned from government and pubic enterprises’ bonds, Korn said the measure was effective given the amount of purchases had decreased. He also advised that entrepreneurs increase their production efficiency as he believed the greenback would depreciate further against the baht and other regional currencies.

As regards the concept of “Tobin tax”, which is aimed at reducing or removing the incentive for short-term financial speculation in the currency markets and allowing authorities to control capital flows, Naris Chaiyasoot, the Director of Fiscal Policy Office (FPO), said the Office was studying it; however, whether the concept will be applied depends on the top-level-management’s decision.

The appreciation of the baht, to the tune of 10% during the past nine months, has affected the country’s economic growth by 2.7 percent, which, in turn, might cause the GDP to grow less than 7%, as earlier expected.

-- NNT 2010-10-20

[kuffki]

It took them all this time to figure it out????

What happened to all the warnings on that exact same topic months ago?

so the 15% tax worked and purchases have decreased-great, what happens if it keeps decreasing? or they do not think that far ahead?

[givenall]

It took them all this time to figure it out????

What happened to all the warnings on that exact same topic months ago?

so the 15% tax worked and purchases have decreased-great, what happens if it keeps decreasing? or they do not think that far ahead?

It is like a good rush. Everyone is looking to invest their money someplace and since US is not a good place they are putting their money in emerging market in Asia, including Thailand (stock market, property, etc.). But they don’t know that what they have discovered in Thailand is not real gold it is only fool’s gold

Edited October 20, 2010 by givenall

[scotinsiam]

It took them all this time to figure it out????

What happened to all the warnings on that exact same topic months ago?

so the 15% tax worked and purchases have decreased-great, what happens if it keeps decreasing? or they do not think that far ahead?

It is like a good rush. Everyone is looking to invest their money someplace and since US is not a good place they are putting their money in emerging market in Asia, including Thailand (stock market, property, etc.). But they don’t know that what they have discovered in Thailand is not real gold it is only fool’s gold

Thailand is'nt somewhere I would rush to invest in currently - but it makes for interesting reading.

[Skywalker69]

Big surprise!!!

[mommysboy]

Low inflation over the past decade!!! Is that right? I remember at one point it was about 10% and It's up around 4% now I think.

Ok I'll tell that to Lotus, next time the checkout rings up ever higher:lol:. ,eg, LIptons tea bags 45bt when I arrived a few years ago, yesterday 68bt. I think it is about double the price of Cambodia.

2.7% is a big drop in GDP and only a Thai report could paint over this as if it were a trifling insignicance. Imagine what would happen if US, UK, Euroland, came out with such a dire drop in forecast, stock prices would plunge off the graph and about 20% would be wiped off currency price.

Thailand seems to work on reverse universal laws, bet baht will jump another 20%.

[nekorn]

Low inflation over the past decade!!! Is that right? I remember at one point it was about 10% and It's up around 4% now I think.

Ok I'll tell that to Lotus, next time the checkout rings up ever higher:lol:. ,eg, LIptons tea bags 45bt when I arrived a few years ago, yesterday 68bt. I think it is about double the price of Cambodia.

2.7% is a big drop in GDP and only a Thai report could paint over this as if it were a trifling insignicance. Imagine what would happen if US, UK, Euroland, came out with such a dire drop in forecast, stock prices would plunge off the graph and about 20% would be wiped off currency price.

Thailand seems to work on reverse universal laws, bet baht will jump another 20%.

[/quote

The rich hand full of thais or chinese in bkk do not care about what they can purchase here, i know they are investing in the fallen markets in America, getting in on the forclosures. If i had money like them i know i would want a strong Baht so i can buy more in land and properties in America. Buy cheap sale high later. maybe i am off base on this

[nong38]

Well its certainly hit my economy, when I came in July I was getting 51 bts to the gbp now its just a shade over 46. I have less money to spend in the local economy. I expect some are doing very well out of it (Tesco, although dont now how, they had no sugar for sale but a delivery had arrived, I could see it under the rice, well we wont put that out yet, we will the rest of the shop first-I kid you not) power and importers. for a start who will no doubt be telling anyone who is listening that things are good. Exporters will tell a different story to anyone who will listen, the listeners will really be stumped now with what to do and whilst they ring their hands, Thailand floods and the bhat continues to rise. Perhaps if they bought Wayne Rooney................mmmmmmmmmmmmmmmm ghosh thats another tuffy, could miss the ransfer window!

[baruto]

"the 15% tax imposed on capital gains and interests earned from government and pubic enterprises' bonds"

-----

I wonder, do they mean massage parlours' or go-go bars' bonds under this definition?

[rawairunner]

ohh the teacher tea bag price index again .

Low inflation over the past decade!!! Is that right? I remember at one point it was about 10% and It's up around 4% now I think.

Ok I'll tell that to Lotus, next time the checkout rings up ever higher:lol:. ,eg, LIptons tea bags 45bt when I arrived a few years ago, yesterday 68bt. I think it is about double the price of Cambodia.

2.7% is a big drop in GDP and only a Thai report could paint over this as if it were a trifling insignicance. Imagine what would happen if US, UK, Euroland, came out with such a dire drop in forecast, stock prices would plunge off the graph and about 20% would be wiped off currency price.

Thailand seems to work on reverse universal laws, bet baht will jump another 20%.

[rawairunner]

AHHHhh i see we are back on the teacher Tea bag scale of inflation

Life is good if you are earning baht .

Edited October 20, 2010 by rawairunner

[moskito]

ohh the teacher tea bag price index again .

Ok, whats with sugar then. 13.-Baht 5 Years ago and now 23.-Baht for a kg, makes sweets not taste same anymore

Anyway, when the Euro was 1.36 against the USDollar we had an exchange rate of 48-50 Baht two years ago. Not atm the EURO ist 1.37-1.38 against the Dollar but we get only 41.-Baht when we change Euros may be somebody can explain that to me.

I always thought a high currency exchange rate is bad for exports, obviously not in Thailand. The Baht is much too expensive atm.

BTW, same goes for the tourist industry, tourists doesnt spend much money anymore with that exchange rate :jap: (except for the germans, they never spend much before too )

[mommysboy]

AHHHhh i see we are back on the teacher Tea bag scale of inflation

Life is good if you are earning baht .

I'm not a teacher (anymore) and I'm not earning in baht!

But anyway what hasn't that got to do with the price of eggs? if you see what I mean:blink:

[passon]

AHHHhh i see we are back on the teacher Tea bag scale of inflation

Life is good if you are earning baht .

I'm not sure what that means. You can be earning baht, but it does not mean life is good if you are not earning a lot of baht. The Thai government said not too long ago that an appreciating baht was good for the economy because imported goods would cost less and make everyday items more affordable, but they have since moved on and are now saying that it causes inflation, which is bad for the economy, but not specifically bad for those who are exchanging foreign currencies for (local) baht. The social mediocrity that is advancing remunerations for the new middle class are probably experiencing little effect on their discretionary income, and life for this classification of baht earners is probably, at the very least, good! Everyone else however feels the incremental effects of their income depreciating as the baht becomes stronger; however at some point the effects of inflation can begin to integrate into those who are earning higher wages; and, as the old saying goes, the more you have, the more you pay; and if all you do is spend and never save, the less you will have for a rainy day. Inclement weather is not the only thing effecting the flooding in Thailand, and once a flood begins to breach the levels of restraint, it can suddenly overflow into diverse directions that can no longer be predicted and thereby create a path of disaster that could have otherwise been repelled with proper mitigation. But who needs a plan? Life is good, right?

[Seanextra]

Peraonally I would prefer to keep earning AUD more stable and its worth more than a Baht!

[Suradit]

Thailand is'nt somewhere I would rush to invest in currently - but it makes for interesting reading.

I don't think it's the amateur small scale retail investor that is creating the temporary imbalance in exchange rates, so I guess we can assume such sentiments won't lead to a massive outflow of cash - but it makes for interesting reading.

It took them all this time to figure it out????... or they do not think that far ahead?

I wonder how many of the resident economic wizards here at TV topped up their bank accounts when the topping was good. It seemed the prevailing wisdom was that one should bring over one's precious dollars, pounds or Euros only on an as-needed basis because Thai bank accounts paid such a poor rate of interest. Of course, it's still possible to have invested in something back in farang land that grew by more than the 10% or so devaluation of curriences against the baht, but if everyone here at the ThaiVisaBrainTrust did get ahead of the big drop, we should all be using baht that we got at 32 or 31 to the dollar ... right?

Edited October 20, 2010 by Suradit

[nong38]

Now I know the meaning of Life, what the thai economy is built upon Liptons Tea Bags and sugar and of course efficient running of Tesco Lotus.

[nong38]

It just ocured to me that maybe the lipton tea bag could rival the baht one day but I think I would put my money into Yorkshire tea bags

[swerver]

It took them all this time to figure it out????

What happened to all the warnings on that exact same topic months ago?

so the 15% tax worked and purchases have decreased-great, what happens if it keeps decreasing? or they do not think that far ahead?

…

As for the 15% tax imposed on capital gains and interests earned from government and pubic enterprises’ bonds, Korn said the measure was effective given the amount of purchases had decreased. …

This is nothing new. I have been charged this 15% for a long time – Years.

As for selling Gov. Savings bonds it should be taken out of the hands of the banks who are not interested to see the money being mopped up so they (banks) can no longer manipulate it and paying their ridiculous low interest rate while loaning it out at sky high, compared to what they pay – 4.5 to 7 percent and sometimes higher, interest rate.

The last time Gov. Savings bonds were available I went to the bank and nobody, including the Assistant Manager said he had no knowledge of it. Upon my insistence he finally relented and phone HQ. Then he didn’t know how to proceed. Phone HQ which faxed the procedure. Next the application form. Phone HQ again to have it faxed. I went through this charade at more than one bank.

This money is out of the bank’s hands for the 3-year bonds and 6-years for the last batch sold.

[mommysboy]

It just ocured to me that maybe the lipton tea bag could rival the baht one day but I think I would put my money into Yorkshire tea bags

It occurs to me I'd be better off moving over to Jasmine tea, at least in part. For a modest investment in a small pot I could get my 20 cups a day for more cheaply.

It's great that some posters don't need to worry about finances. Must be great being a millionaire:lol:

[Randee]

Now I know the meaning of Life, what the thai economy is built upon Liptons Tea Bags and sugar and of course efficient running of Tesco Lotus.

you are mistaken nong - it is the british economy that depends on the effecient running of Tescos (Lotus in thailand). tesco is a very successful british company.

[fiercesnake]

It took them all this time to figure it out????

What happened to all the warnings on that exact same topic months ago?

so the 15% tax worked and purchases have decreased-great, what happens if it keeps decreasing? or they do not think that far ahead?

It is like a good rush. Everyone is looking to invest their money someplace and since US is not a good place they are putting their money in emerging market in Asia, including Thailand (stock market, property, etc.). But they don’t know that what they have discovered in Thailand is not real gold it is only fool’s gold

"Fool's Gold!" Oh YES! Good ol' iron pyrite; can see you been living here a while!