Whats Been Driving Thb Down Against Euro

[corkman]

Over the last week it seems the value THB is slipping against the Euro a little bit - which is great news for me personally, sending reasonably large amounts of money home regularly.

For my education / interest / information, could anyone explain to me what factors may be influencing that?

Its not like I'm going to make any money out of messing around with forex rates or anything, or trying to be clever buying / selling foreign currency - the orders of magnitude simply don't make it worth my while, even if I knew how - and I basically just have to take what I am given, as the money home is not optional...... I'd just like to better understand it.

Many thanks.

[IMA_FARANG]

I'm not sure what you mean exactly by the Thai Baht slipping against the Euro.

I presume you mean it is that you are getting slightly fewer Euro for your Baht now?

Or do you mean you are getting a few more Baht for each Euro?

Exchange rates fluctuate all the time based on the PERCIEVED valuje of the two currencies involved.

Actually it is the Baht getting stronger in relation to the Euro.

Right now with problems with debt and other financial problems in the Euro zone (see the news about such problems in Greece, Spain, and Portugal...not to mention the large bank problems in Iceland) the PERCIEVED value of the Euro against other currencies is dropping. So other currencies, the Thai Baht included LOOK as though they were a better bet to hold for long term stability in Asia than to hold Euros. The end result is that the Baht is regarded as a better currency to have for a long term hold than Euro...at least in Thailand, and it's percieved value is rising. More Asians want to keep funds in Baht, and the relative cost to buy Baht rises. When fewer Asians want to buy Baht to keep their money in for a long-term, the Thai Baht buying rate goes down.

Personally, I think that is wrong or at least a short-sided view...and I expect there to be a correction with the relative value of the Euro rising against the Baht...from your point of view you will getting a few more Euro for your Bhat, or fewer Baht for each Euro...however you look at it.

I think this coming election, and particularly any political problems (i.e. such as the Reds and any such protests as we had about a year ago) will soon bring the value of the Baht down against other currencies...including the Euro.

Of course I don't follow all those changes, because frankly I don't care about them, and I am very far from being an expert in those matters, so I could easily be wrong. But I just personably feel there is no real sound reason why the Thai Baht should be growing stonger against other currencies except what is PERCIEVED to be that way due to relative PERCIEVED value of the two currencies.

So if you are geting a few more Euros for your Baht now...enjoy it while you can. I doubt very much it will last forever...or even for to long.

And I personally think that this upcoming election campaign, and what happens then, could change the PERCIEVED Thai Baht rates against other currencies drastically.

It's all down to the PERCIEVED relative values of the Baht against other currencies, not the REAL values of the currencies against each other.

When you consider the size of the Euro Zone and those nations, and the size of the Thai economy I don't see how anyone can reasonably expect the Thai economy to be "in better shape" than economies in the Euro Zone for very long.

For that reason, in my opinion, the Thai Baht is currently over-valued against many other currencies. But that's another matter.

Edited May 22, 2011 by IMA_FARANG

[Naam]

Actually it is the Baht getting stronger in relation to the Euro

an interesting opinion. does a "stronger" Baht mean one gets less EURos for Baht (as is the case)?

fact: 1 EUR buys presently 42.88 Baht, five months ago one EUR bought 39 Baht.

[muratremix]

Actually it is the Baht getting stronger in relation to the Euro

an interesting opinion. does a "stronger" Baht mean one gets less EURos for Baht (as is the case)?

fact: 1 EUR buys presently 42.88 Baht, five months ago one EUR bought 39 Baht.

1 euro for 39 baht was incompetence of EURO against USD before. Cross rate was as low as 1.25 (1 eur / 1 usd rate) somedays. Nowadays its around 1.43 so EURO is stronger again, or lets say USD is weaker again (which works for the benefit of US economy)

[Darrel]

Over the last week it seems the value THB is slipping against the Euro a little bit

Your post is very unclear.

In fact the Baht has been quite stable against the Euro over the last week, and has increased in value by about 5% over the last month or so, having reached a one-year low at 44.75 in early May.

It is, however, somewhat overvalued in my opinion.

Edited May 22, 2011 by Darrel

[Naam]

1 euro for 39 baht was incompetence of EURO against USD before

neither banks nor money changers care about "incompetence". the same applies to shops who demand to be paid in Baht which you have to buy with EUR, USD or whatever currency if you want to have food on the dining table.

summary: incompetence case closed

next!

[Naam]

Cross rate was as low as 1.25 (1 eur / 1 usd rate) somedays

please define "somedays". the last time we saw EURUSD @ 1.25 was july 5, 2010. we are discussing here recent developments, not ancient history.

[Farang0tang]

1 euro for 39 baht was incompetence of EURO against USD before

neither banks nor money changers care about "incompetence". the same applies to shops who demand to be paid in Baht which you have to buy with EUR, USD or whatever currency if you want to have food on the dining table.

summary: incompetence case closed

next!

I worry about when the time comes that they demand to be paid in GOLD !

[ESB7]

Actually it is the Baht getting stronger in relation to the Euro

an interesting opinion. does a "stronger" Baht mean one gets less EURos for Baht (as is the case)?

fact: 1 EUR buys presently 42.88 Baht, five months ago one EUR bought 39 Baht.

And 18 months ago 50 :D

[Naam]

Actually it is the Baht getting stronger in relation to the Euro

an interesting opinion. does a "stronger" Baht mean one gets less EURos for Baht (as is the case)?

fact: 1 EUR buys presently 42.88 Baht, five months ago one EUR bought 39 Baht.

And 18 months ago 50 :D

we could also go back 38 years when one got (for the value of) one €UR 16 (FOURTEEN) Baht. in 1973 one Deutsche Mark (52% of one EUR) bought 8 Baht.

next!

[NovaBlue05]

Wasn't the USD at 25 bht/$ just before the '97 AFC? It is over 30 now....That an appreciation of 20% !!!!

Edited May 23, 2011 by NovaBlue05

[james24]

Personally I think the euro is a good investment. The one currency for the Americas that is coming aswell as the one currency for Africa which has already started will help it gain strength.

[Naam]

Personally I think the euro is a good investment. The one currency for the Americas that is coming aswell as the one currency for Africa which has already started will help it gain strength.

these "one currencies" are nothing but fairy tales.

[Naam]

Wasn't the USD at 25 bht/$ just before the '97 AFC? It is over 30 now....That an appreciation of 20% !!!!

for many years (until 1985) one US Dollar bought 20 Thai Baht.

[Darrel]

Because the Baht was pegged to the USD, as indeed were many minor currencies in the region and elsewhere. It wasnt a real value though. Even after they "unpegged" the Baht it continued to track the USD extremely closely, for no obvious reason.

[Naam]

Because the Baht was pegged to the USD, as indeed were many minor currencies in the region and elsewhere. It wasnt a real value though. Even after they "unpegged" the Baht it continued to track the USD extremely closely, for no obvious reason.

a ride from THB 55 to THB 30 (plus 45%) = "extremely close tracking"?

[katabeachbum]

Interesting topic

Due to lack of parts from Japan several TH factories output have been reduced with 60-90%. TH export, especially vehicles and vehicle parts, will probably have a dramatic drop for a few months. How will this affect value of Thai baht?

[Naam]

Interesting topic

Due to lack of parts from Japan several TH factories output have been reduced with 60-90%. TH export, especially vehicles and vehicle parts, will probably have a dramatic drop for a few months. How will this affect value of Thai baht?

most probably a negative effect if parts are lacking for products which are exported. to the best of my knowledge this applies to vehicles.

[james24]

Personally I think the euro is a good investment. The one currency for the Americas that is coming aswell as the one currency for Africa which has already started will help it gain strength.

these "one currencies" are nothing but fairy tales.

lol so what exactly is the euro then....?

Regarding Africa are you aware of the EAC...??

Far from fairy tales my friend

[Naam]

lol so what exactly is the euro then....?

Regarding Africa are you aware of the EAC...??

Far from fairy tales my friend

i was of course referring to the "Amero" and the "African" currency.

by the way, the "EAC" (currency) is the dream of five east african beggar nations and therefore without any significance. their combined GDP is 60% of the GDP of bankrupt Greece.

[Darrel]

Because the Baht was pegged to the USD, as indeed were many minor currencies in the region and elsewhere. It wasnt a real value though. Even after they "unpegged" the Baht it continued to track the USD extremely closely, for no obvious reason.

a ride from THB 55 to THB 30 (plus 45%) = "extremely close tracking"?

I was talking about the years immediately following the point when they stopped (officially) pegging it.

[Naam]

Because the Baht was pegged to the USD, as indeed were many minor currencies in the region and elsewhere. It wasnt a real value though. Even after they "unpegged" the Baht it continued to track the USD extremely closely, for no obvious reason.

a ride from THB 55 to THB 30 (plus 45%) = "extremely close tracking"?

I was talking about the years immediately following the point when they stopped (officially) pegging it.

the last pegging stopped july 2, 1997 because the BoT ran out of cash and since then there was "neither extremely close tracking" nor any "close tracking". using the exact date of abandoning the peg the discrepancies are even higher.

[inthepink]

Interesting topic

Due to lack of parts from Japan several TH factories output have been reduced with 60-90%. TH export, especially vehicles and vehicle parts, will probably have a dramatic drop for a few months. How will this affect value of Thai baht?

This is exactly why the baht weakened during the period that the OP was talking about. I can't see how getting less Euros for your baht would help anybody that is sending money home from Thailand though so I am a little confused by what the OP meant.