Us Dollar Vs. Baht

[bunta71]

Can't help but notice the recent rise of the dollar against the baht. Since payday for me is around the 2nd of the month I expect the Baht to conveniently rise again before my miniscule payday. Uncanny how that seems to happen. This month though it may not. Any of you money experts have an idea why the dollar is rising so quickly?

[ableguy]

Could be tied in with the election and the chaos that will ensue, hope I am wrong on the chaos just my opinion love to see the dollar back to 35.

[Naam]

next weeks elections, foreign investors pulling out of the SET and repatriatring cash.

[bunta71]

Seems reasonable enough...thanks for the answers :jap:

[PatOngo]

Could it be that America has anounced a long awaited drawdown of troops in Afghanistan that has elevated the value of the dollar?

[Darrel]

next weeks elections, foreign investors pulling out of the SET and repatriatring cash.

If so, the GBP and the EUR would also be rising (unless one assumes that only USD are invested in Thailand, which seems unlikely). They aren't.

The EUR has fallen against the THB over the last month, so has the GBP.

The USD has also risen against the EUR and GBP over the same time and clearly that has nothing to do with the Thai elections. More likely to do with general unease in Europe, I suspect, and these moves are just mirrored in the THB/USD rate.

[inthepink]

next weeks elections, foreign investors pulling out of the SET and repatriatring cash.

If so, the GBP and the EUR would also be rising (unless one assumes that only USD are invested in Thailand, which seems unlikely). They aren't.

The EUR has fallen against the THB over the last month, so has the GBP.

The USD has also risen against the EUR and GBP over the same time and clearly that has nothing to do with the Thai elections. More likely to do with general unease in Europe, I suspect, and these moves are just mirrored in the THB/USD rate.

You answered your own question. The GBP and EUR would indeed also be rising against THB were it not for the fact that they were falling against the USD. If you look at the GBP/THB exchange rate right now though, it's better than you might expect, given the GBP/USD rate.

(28th/29th March was the last time GBP was at todays levels against USD. At that time, GBP/THB was around 48.4, now it is nearly 49.4)

Unease in Europe will be mirrored in EUR/THB rate, not in USD/THB rate - you are thinking back to front.

Edited June 27, 2011 by inthepink

[Darrel]

I was trying to point out that the reasons behind current movements of the USD are mostly large global ones, and not small local ones due to elections etc.

Unease about (not in) Europe makes the USD stronger generally, and this affects the USD/THB rate as the THB is not a global currency to be bought in and out of like the EUR or GBP or SFR etc.

The THB lost 10% of its value against the EUR in the few months after Christmas, but that didnt coincide with large stockmarket sales or other capital flight (at least not in any reports that I saw). This was a much bigger movement than we are seeing now.

[inthepink]

I was trying to point out that the reasons behind current movements of the USD are mostly large global ones, and not small local ones due to elections etc.

Unease about (not in) Europe makes the USD stronger generally, and this affects the USD/THB rate as the THB is not a global currency to be bought in and out of like the EUR or GBP or SFR etc.

The THB lost 10% of its value against the EUR in the few months after Christmas, but that didnt coincide with large stockmarket sales or other capital flight (at least not in any reports that I saw). This was a much bigger movement than we are seeing now.

You're still not looking at things correctly. All currencies are primarily traded against USD. Unease in Europe has led to EUR (and GBP) to fall against USD. This does not necessarily lead to the USD strengthening against THB. The fact that THB is not as widely traded as GBP/EUR/CHF/JPY is a reason for it to be affected more by local conditions, not a reason against it.

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

From 10th January 2011 to 5th May 2011, EUR/THB went from 39.07 - 44.5 (a rise of 13.89%). At the same time, EUR/USD went from 1.2894 - 1.4828 (a rise of 14.9%). In the meantime, the baht actually strengthened slighty against the US Dollar - from 30.30 - 30.02, (a rise of just under 1%), which would account for the reason that the Euro appreciated a little more against USD than it did against THB.

The appreciation of the Euro against the Baht during this period is directly attributable to its rise against USD, as you can see from these figures. The reason the Euro has not risen against THB recently is due to its (the Euro's) fall against USD, as I mentioned in my earlier post.

Edited June 27, 2011 by inthepink

[pomchop]

I was trying to point out that the reasons behind current movements of the USD are mostly large global ones, and not small local ones due to elections etc.

Unease about (not in) Europe makes the USD stronger generally, and this affects the USD/THB rate as the THB is not a global currency to be bought in and out of like the EUR or GBP or SFR etc.

The THB lost 10% of its value against the EUR in the few months after Christmas, but that didnt coincide with large stockmarket sales or other capital flight (at least not in any reports that I saw). This was a much bigger movement than we are seeing now.

You're still not looking at things correctly. All currencies are primarily traded against USD. Unease in Europe has led to EUR (and GBP) to fall against USD. This does not necessarily lead to the USD strengthening against THB. The fact that THB is not as widely traded as GBP/EUR/CHF/JPY is a reason for it to be affected more by local conditions, not a reason against it.

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

From 10th January 2011 to 5th May 2011, EUR/THB went from 39.07 - 44.5 (a rise of 13.89%). At the same time, EUR/USD went from 1.2894 - 1.4828 (a rise of 14.9%). In the meantime, the baht actually strengthened slighty against the US Dollar - from 30.30 - 30.02, (a rise of just under 1%), which would account for the reason that the Euro appreciated a little more against USD than it did against THB.

The appreciation of the Euro against the Baht during this period is directly attributable to its rise against USD, as you can see from these figures. The reason the Euro has not risen against THB recently is due to its (the Euro's) fall against USD, as I mentioned in my earlier post.

Since you seem to understand international exchange rates way better than I do I'd like to get your take on a few questions:

1. If the Thai election results in violence/burning/closed airport type situation again how do you see that impacting the baht/dollar excang rates? Seems to me the last time it happened the baht did not weaken against the dollar which I thought kinda strange.

2. IF IF US congress passes a semi major spending cut bill along with raising the debt ceiling wouldn't that likely cause the US dollar to strengthen vs baht and most other currencies?

3. If China devalues their currency how do you think that would impact baht/dollar rates?

4. When the USA economy finally "recovers" , unemploy rates go down etc do you think that would result in a much stronger dollar?

Anyway...I know you don't have a crystal ball and there are many factors involved but just curious re some of the above possible events.

Thank you for sharing your knowledge/predictions.

[maxman71]

A month or two ago I predicted the USD would rise against the THB. The economic turmoil in the EU (Greece) as well as a WW slowdown in general is fueling the rise of the USD. Not that the US is in much better shape than the EU, but for now, it's sort of the "best of the worst" in terms of currencies.

Also, Fed Chairman Bernanke has not indicated a QE (Quantitative Easing) #3; at least not yet.

Also the political tensions in Thailand with a crucial election upon us is probably driving some capital outflows.

But the long term macro picture still holds:

1) The THB was trading in a range of about 23-28 THB/USD prior to the 1997 Asian Financial Crisis which was spurred by a Thai banker who got strung out with a series of "domino" loans throughout Asia. The USD spiked to a high of over 50 THB/USD as a result.

2) Thailand and other Asian countries instituted banking reform and other austerity measures.

3) The US has been on a debt orgy since over the last 10+ years and continues to do so.

4) The US is still printing USD's like crazy. Even though QE2 ends June 30, the US Fed Reserve is still keeping interest rates near zero.

5) I expect the US to continue money printing.

Exactly how far the USD will rise against the THB, I don't know for sure. But I am looking in the THB 32-33 range to bring over some more USD's to THB. This is a "technical retracement" of the USD to some extent.

If one looks at a long term THB/USD chart, one will see a series of USD lows vs. the THB at just below 30 going back to mid-2007.

Once these lows are punctured in a strong thrust move, I believe the THB will strengthen back to it's trading range of 23-28 THB/USD it had prior to the 1997 Asian Financial Crisis.

Just my USD 0.02.

[IMA_FARANG]

Yes. Simple answer. The Baht has been kept unreasonably high against many currencies lately...and maybe also part of that is an unreasonabale negative rating of the Dollar, Euro, and Pound againt the Baht that is also a factor.

I believe, depending on the results of the upcoming elections, and especially if there is a violent reaction, we are likely to see a weakening of the Baht against those other currencies.

I believe that if you really thought about it, the Thai economy is not really strong enough to support the current high Baht against those other currencies rate.

For that reason I expect the Baht to decline...especially if there is any post election violence or signifigant disruprtion of the Thai economy.

But that is just my personal opinion based on my assesment.

And I could very well be wrong.

P.S. Or to put it another way...more Baht for your Dollars/Euro/Pounds in the future.

Edited June 27, 2011 by IMA_FARANG

[Naam]

next weeks elections, foreign investors pulling out of the SET and repatriatring cash.

If so, the GBP and the EUR would also be rising (unless one assumes that only USD are invested in Thailand, which seems unlikely). They aren't.

The EUR has fallen against the THB over the last month, so has the GBP.

The USD has also risen against the EUR and GBP over the same time and clearly that has nothing to do with the Thai elections. More likely to do with general unease in Europe, I suspect, and these moves are just mirrored in the THB/USD rate.

EURTHB was 43.34 on june 1 and is now trading at 44.05 - do you call the EURo's appreciation of 1.6% vs. THB "fallen"?

[inthepink]

Yes. Simple answer. The Baht has been kept unreasonably high against many currencies lately...and maybe also part of that is an unreasonabale negative rating of the Dollar, Euro, and Pound againt the Baht that is also a factor.

I believe, depending on the results of the upcoming elections, and especially if there is a violent reaction, we are likely to see a weakening of the Baht against those other currencies.

I believe that if you really thought about it, the Thai economy is not really strong enough to support the current high Baht against those other currencies rate.

For that reason I expect the Baht to decline...especially if there is any post election violence or signifigant disruprtion of the Thai economy.

But that is just my personal opinion based on my assesment.

And I could very well be wrong.

P.S. Or to put it another way...more Baht for your Dollars/Euro/Pounds in the future.

Why do you think it is unreasonably high and what do you mean by "kept unreasoanbly high"? Take a look at GDP growth, inflation and subsequent interest rate rises for Thailand vs those of the other economies that you mention. Also look at the extent to which US, UK and European economies are exposed to the possibility of debt defaults in Europe and how the Thai banking system isn't. I don't think there's anything unreasonable about the value of the Baht.

[inthepink]

I was trying to point out that the reasons behind current movements of the USD are mostly large global ones, and not small local ones due to elections etc.

Unease about (not in) Europe makes the USD stronger generally, and this affects the USD/THB rate as the THB is not a global currency to be bought in and out of like the EUR or GBP or SFR etc.

The THB lost 10% of its value against the EUR in the few months after Christmas, but that didnt coincide with large stockmarket sales or other capital flight (at least not in any reports that I saw). This was a much bigger movement than we are seeing now.

You're still not looking at things correctly. All currencies are primarily traded against USD. Unease in Europe has led to EUR (and GBP) to fall against USD. This does not necessarily lead to the USD strengthening against THB. The fact that THB is not as widely traded as GBP/EUR/CHF/JPY is a reason for it to be affected more by local conditions, not a reason against it.

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

From 10th January 2011 to 5th May 2011, EUR/THB went from 39.07 - 44.5 (a rise of 13.89%). At the same time, EUR/USD went from 1.2894 - 1.4828 (a rise of 14.9%). In the meantime, the baht actually strengthened slighty against the US Dollar - from 30.30 - 30.02, (a rise of just under 1%), which would account for the reason that the Euro appreciated a little more against USD than it did against THB.

The appreciation of the Euro against the Baht during this period is directly attributable to its rise against USD, as you can see from these figures. The reason the Euro has not risen against THB recently is due to its (the Euro's) fall against USD, as I mentioned in my earlier post.

Since you seem to understand international exchange rates way better than I do I'd like to get your take on a few questions:

1. If the Thai election results in violence/burning/closed airport type situation again how do you see that impacting the baht/dollar excang rates? Seems to me the last time it happened the baht did not weaken against the dollar which I thought kinda strange.

2. IF IF US congress passes a semi major spending cut bill along with raising the debt ceiling wouldn't that likely cause the US dollar to strengthen vs baht and most other currencies?

3. If China devalues their currency how do you think that would impact baht/dollar rates?

4. When the USA economy finally "recovers" , unemploy rates go down etc do you think that would result in a much stronger dollar?

Anyway...I know you don't have a crystal ball and there are many factors involved but just curious re some of the above possible events.

Thank you for sharing your knowledge/predictions.

1. If you look at the figures for the Thai economy, it was still performing much better than the US economy after the violence, burning etcetera. I can't remember what the USD was doing at the time - if you check how it performed against JPY/EUR/GBP during the same period and look at the cross rates, i.e. GBP/THB, EUR/THB, it may give you a better picture of what was happening.

2 really depends on what the rest of the world is doing, how much of what the US government does is already priced into the exchange rates and the major economic releases that occur at the time...also many other variables so it is inpossible for me or anybody else to say with any authority.

3 would possibly see you get more baht for your dollars all other things being equal.

4 also depends on the relative strengths and weaknesses of other major economies at the time. China has recently announced that it will buy more European soveriegn debt, which could have a big effect on global exchange rates in the long run. Their heavy footprints can be seen in the market already.

I'm sorry those are very vague and non-commmital answers - also that they are rather brief. I'm a little short of time right now and macro economics is not my strong point. To be honest with you, I have no idea what the dollar is going to do today, far less what it will do over the next few months. It is much easier to assess moves as they happen and then react appropriately. The trading I do involves holding a position anywhere from several minutes to several hours, depending on whether I get it right in the first place or not. Scaling in and out of trades allows me to react to movements as they happen, rather than predict them beforehand.

In the long term, unless something catastrophic happens in Thailand and other emerging economies, I can't see any other result than a weakening of established economies' currencies against those that are developing, it's only natural. Projected growth figures for US, Europe, UK and Japan are not great compared to emerging economies and the debt orgy that maxman71 refers to cannot go on forever without something giving. However, now I'm just making assumptions, I'd never trade on such predictions.

Edited June 28, 2011 by inthepink

[Darrel]

EURTHB was 43.34 on june 1 and is now trading at 44.05 - do you call the EURo's appreciation of 1.6% vs. THB "fallen"?

Try discounting the large increase that happened in the last couple of days and basing your month up to time when the OP asked his question.

[Darrel]

You're still not looking at things correctly. All currencies are primarily traded against USD. .................

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

The EUR appreciating and the THB remaining conveniently pegged to the value of the USD, the currency against which you say all others are primarily traded?

Sorry, we will just have to disagree about that.

I dont think that the USD has anywhere near the importance you seem to place on it.

[Naam]

EURTHB was 43.34 on june 1 and is now trading at 44.05 - do you call the EURo's appreciation of 1.6% vs. THB "fallen"?

Try discounting the large increase that happened in the last couple of days and basing your month up to time when the OP asked his question.

i replied to your "last month" and not to the 4 year old opening post. fiddling around with "discounting" would result in an unprecise answer. and not being precise can have disastrous results when it concerns finance. if i instruct my bank to buy 1mm of asset XS290125391 instead of XS290125394 (an invalid example) could lead to disaster.

:jap:

[inthepink]

You're still not looking at things correctly. All currencies are primarily traded against USD. .................

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

The EUR appreciating and the THB remaining conveniently pegged to the value of the USD, the currency against which you say all others are primarily traded?

Sorry, we will just have to disagree about that.

I dont think that the USD has anywhere near the importance you seem to place on it.

Look at the foreign exchange reserves of the BOT and you will see they have been active in the market buying dollars, not selling them, to try and stem the appreciation of the Baht.

You don't think the USD has anywhere near the importance I "seem" to place on it?? I'm wasting my time talking to you. The USD is the reserve curency of the world. I'm British so don't think it gives me any pleasure to say that. If you are not aware that all currencies are primarily traded against the dollar then you know absolutely nothing about the foreign exhange market. The baht is a floating currency, it is not pegged to the dollar. Don't be sorry that we disgree about that, just never speculate in the currency markets because you don't even have a basic understanding of what is going on.

If I wanted to sell 5m gbp for Baht in the spot forex market, the actual transaction would involve selling GBP for USD then buying THB with USD. This is the way the market works. I really can't be bothered to try and explain any more though because you are obviously trying to post to score points and prove to yourself (if nobody else) that you know what you are talking about. You don't. I sincerely hope you never trade currencies because with an ego the size of yours, you will be cut to shreds within minutes.

[Darrel]

i replied to your "last month" and not to the 4 year old opening post.

The post in question was made on June 27 2011. If that is 4 years ago for you then that may well explain some of the things you say. It should certainly give you some remarkable insight.

For the rest of us mere mortals the post was made yesterday and referred to the period since June 2 2011, and if you concentrate on the period in question (June 2 - June 26) the EUR has indeed fallen. It is only since then that it has gained back what it had lost.

[Darrel]

I'm wasting my time talking to you.

OK. Probably best to give someone else the benefit then.

[el jefe]

I'm wasting my time talking to you.

OK. Probably best to give someone else the benefit then.

Naam's charts are accurate and pertinent to the OP and your comments. Despite some large moves in the EUR/THB trade at the beginning and end of this month, it's basically flat. but that's meaningless if you're going to pick and choose your start and end dates using hindsight.

Inthepink's analysis is pretty good too.

[pomchop]

I was trying to point out that the reasons behind current movements of the USD are mostly large global ones, and not small local ones due to elections etc.

Unease about (not in) Europe makes the USD stronger generally, and this affects the USD/THB rate as the THB is not a global currency to be bought in and out of like the EUR or GBP or SFR etc.

The THB lost 10% of its value against the EUR in the few months after Christmas, but that didnt coincide with large stockmarket sales or other capital flight (at least not in any reports that I saw). This was a much bigger movement than we are seeing now.

You're still not looking at things correctly. All currencies are primarily traded against USD. Unease in Europe has led to EUR (and GBP) to fall against USD. This does not necessarily lead to the USD strengthening against THB. The fact that THB is not as widely traded as GBP/EUR/CHF/JPY is a reason for it to be affected more by local conditions, not a reason against it.

During the time that you mention (after Christmas), you have conveniently overlooked the fact that the Baht did not depreciate against the USD at all, so no, it would not have had anything to do with an outflow of capital from Thailand. If that was the case then it would have depreciated across the board. Instead, what you witnessed was the Euro appreciating, not the Baht depreciating.

From 10th January 2011 to 5th May 2011, EUR/THB went from 39.07 - 44.5 (a rise of 13.89%). At the same time, EUR/USD went from 1.2894 - 1.4828 (a rise of 14.9%). In the meantime, the baht actually strengthened slighty against the US Dollar - from 30.30 - 30.02, (a rise of just under 1%), which would account for the reason that the Euro appreciated a little more against USD than it did against THB.

The appreciation of the Euro against the Baht during this period is directly attributable to its rise against USD, as you can see from these figures. The reason the Euro has not risen against THB recently is due to its (the Euro's) fall against USD, as I mentioned in my earlier post.

Since you seem to understand international exchange rates way better than I do I'd like to get your take on a few questions:

1. If the Thai election results in violence/burning/closed airport type situation again how do you see that impacting the baht/dollar excang rates? Seems to me the last time it happened the baht did not weaken against the dollar which I thought kinda strange.

2. IF IF US congress passes a semi major spending cut bill along with raising the debt ceiling wouldn't that likely cause the US dollar to strengthen vs baht and most other currencies?

3. If China devalues their currency how do you think that would impact baht/dollar rates?

4. When the USA economy finally "recovers" , unemploy rates go down etc do you think that would result in a much stronger dollar?

Anyway...I know you don't have a crystal ball and there are many factors involved but just curious re some of the above possible events.

Thank you for sharing your knowledge/predictions.

1. If you look at the figures for the Thai economy, it was still performing much better than the US economy after the violence, burning etcetera. I can't remember what the USD was doing at the time - if you check how it performed against JPY/EUR/GBP during the same period and look at the cross rates, i.e. GBP/THB, EUR/THB, it may give you a better picture of what was happening.

2 really depends on what the rest of the world is doing, how much of what the US government does is already priced into the exchange rates and the major economic releases that occur at the time...also many other variables so it is inpossible for me or anybody else to say with any authority.

3 would possibly see you get more baht for your dollars all other things being equal.

4 also depends on the relative strengths and weaknesses of other major economies at the time. China has recently announced that it will buy more European soveriegn debt, which could have a big effect on global exchange rates in the long run. Their heavy footprints can be seen in the market already.

I'm sorry those are very vague and non-commmital answers - also that they are rather brief. I'm a little short of time right now and macro economics is not my strong point. To be honest with you, I have no idea what the dollar is going to do today, far less what it will do over the next few months. It is much easier to assess moves as they happen and then react appropriately. The trading I do involves holding a position anywhere from several minutes to several hours, depending on whether I get it right in the first place or not. Scaling in and out of trades allows me to react to movements as they happen, rather than predict them beforehand.

In the long term, unless something catastrophic happens in Thailand and other emerging economies, I can't see any other result than a weakening of established economies' currencies against those that are developing, it's only natural. Projected growth figures for US, Europe, UK and Japan are not great compared to emerging economies and the debt orgy that maxman71 refers to cannot go on forever without something giving. However, now I'm just making assumptions, I'd never trade on such predictions.

Thank you for your insights...currency exchange rates sure seem to be complicated and impacted by a ton of variables. I would never even consider trying to figure it all out to the point i would "bet" my money on it. I just sit on the side and sorta hope, for my own selfish reasons, that I might someday see 35 baht to the USD again. But hopefully not as the result of some major violent actions/civil war in Thailand.

[Darrel]

Naam's charts are accurate and pertinent to the OP and your comments. Despite some large moves in the EUR/THB trade at the beginning and end of this month, it's basically flat. but that's meaningless if you're going to pick and choose your start and end dates using hindsight.

It's flat if you ignore the bit in between the beginning and the end, certainly. But that wasnt what the OP was interested in as he was specifically talking about short-term movements during the month.

For the period referred to in the original post (and without the benefit of 4 years' hindsight) the EUR dropped during that time. Only in the first two days of this week did it get back what it had lost in the previous 3 weeks, and most of that occurred since we have been talking about it. Who knows where it will go today or by the 2nd when he is paid? I certainly dont.

Personally I dont bother about small changes that occur over short periods, as nearly all (floating) currencies go up and down like yoyos these days, sometimes for no obvious reason, and what they lose today they often get back next week or next month as indeed we saw here. Long term movements are of more interest to me.

[Berkshire]

Referring to the title of this thread....this "rapid rise" sure didn't last very long.