The Baht Under Red Power

[manarak]

The tourism sector is a huge employer of labour

Accounts for approx. 6% of GNP.

[Naam]

on Globex trading which started a few hours ago THB strengthened 0.5% vs. USD, 06.% vs. EUR, 0.9% vs. GBP, 0.5% vs. AUD and 0.45% vs. JPY.

[Moonrakers]

PTP are going to do the same thing they did last time they were in power. (Pedants - bore off. We know PTP had a different name(s) back then)

They are going to dedicate their time and resources into getting Thaksin off the hook, that's what Thaksin means by 'reconciliation'. Thaksin's idea of reconciliation is an amnesty, for himself.

The yellows will come back out. They don't need seats in government to cause trouble, they were not even a political party the last time they caused trouble. If they achieve only a fraction of the mayhem they did last time, the money would flow out of Thailand quickly.

There is no way the army are going to be happy. Even of they have no intention of staging a coup, when PT start making noises about bringing Thaksin back the economy will wobble due to speculation alone. It'll probably (maybe) run smoothly for a while until Thaksin starts getting impatient and his arrogance means he can no longer wait. His party will try to force through an amnesty regardless of the objections they will face.

If the reds actually make a genuine effort to do their job and try to look after their country, as opposed to looking after their dear leader, then I will be wrong. However I very very much doubt that will be the case.

I make USD and GBP, I'm looking forward to getting more baht to my money by the end of the year.

[MAJIC]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

I doubt that many voted red thinking it would lead to instant riches; that really is naive. As is your assessment of Thai economic fundamentals and the "need" for the baht to be devalued.

Oh but that is just it,IMO they most certainly do expect instant riches! why else do you think they voted for Thaksins PT?

And please spare me the the fight for Democracy claptrap,it doesn't exist.

Edited July 3, 2011 by MAJIC

[ExpatJ]

PTP are going to do the same thing they did last time they were in power. (Pedants - bore off. We know PTP had a different name(s) back then)

They are going to dedicate their time and resources into getting Thaksin off the hook, that's what Thaksin means by 'reconciliation'. Thaksin's idea of reconciliation is an amnesty, for himself.

The yellows will come back out. They don't need seats in government to cause trouble, they were not even a political party the last time they caused trouble. If they achieve only a fraction of the mayhem they did last time, the money would flow out of Thailand quickly.

There is no way the army are going to be happy. Even of they have no intention of staging a coup, when PT start making noises about bringing Thaksin back the economy will wobble due to speculation alone. It'll probably (maybe) run smoothly for a while until Thaksin starts getting impatient and his arrogance means he can no longer wait. His party will try to force through an amnesty regardless of the objections they will face.

If the reds actually make a genuine effort to do their job and try to look after their country, as opposed to looking after their dear leader, then I will be wrong. However I very very much doubt that will be the case.

I make USD and GBP, I'm looking forward to getting more baht to my money by the end of the year.

As naam has already posted above, you are already getting less thai bahy for your USd/GBP since the results yesterday- and i think the scale of the win will make it v hard for the yellow shirts to stage mass protests--- the resulting stability will only strengthen the baht..

[EnhancePlus]

PTP are going to do the same thing they did last time they were in power. (Pedants - bore off. We know PTP had a different name(s) back then)

They are going to dedicate their time and resources into getting Thaksin off the hook, that's what Thaksin means by 'reconciliation'. Thaksin's idea of reconciliation is an amnesty, for himself.

The yellows will come back out. They don't need seats in government to cause trouble, they were not even a political party the last time they caused trouble. If they achieve only a fraction of the mayhem they did last time, the money would flow out of Thailand quickly.

There is no way the army are going to be happy. Even of they have no intention of staging a coup, when PT start making noises about bringing Thaksin back the economy will wobble due to speculation alone. It'll probably (maybe) run smoothly for a while until Thaksin starts getting impatient and his arrogance means he can no longer wait. His party will try to force through an amnesty regardless of the objections they will face.

If the reds actually make a genuine effort to do their job and try to look after their country, as opposed to looking after their dear leader, then I will be wrong. However I very very much doubt that will be the case.

I make USD and GBP, I'm looking forward to getting more baht to my money by the end of the year.

As naam has already posted above, you are already getting less thai bahy for your USd/GBP since the results yesterday- and i think the scale of the win will make it v hard for the yellow shirts to stage mass protests--- the resulting stability will only strengthen the baht..

Every Asian market is up and the USD index is plummeting. I don't think this has anything to do with the elections. I'm more concerned with commodities than any fiat currency. Worldwide markets have been on the rise the last week - as they usually are during early summer. You won't be able to judge the baht's rise or fall for at least a month.

[ExpatJ]

Wow- very positive response in the markets to the red party win- the thai stock market has had its biggest opening jump that i can remember- my portfolio is up 5% in the first hour this morning

Thia baht also strengthening.

From Bloomberg "“The majority victory is a very welcome outcome and foreign investors will come back very quickly,” said Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong. “It cleared a part of the uncertainty and sentiment will stabilize.”"

[udonguy]

Different global economic environment last time. When Thaksin rules last time, Donald Duck would have looked good.

So that is the best you can do ?

Maybe Jing in wonderland

I am confused - is this guy Jingthing for real? or is he just a Thaksin hater? the Thai people have spoken and like it or not most Thais think he did pretty well (not condoning the corruption of course)

[SantiSuk]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

Yeah, but the western economies are printing money just as fast to afford to continue to pay bankers and estate agents their vastly uneconomic salaries. Result - no change.

I think the Thaksin underpinning of a disenfranchised class is more righteous than the hideous stuff that has gone on in the so-called civilised developed nations over the last five years. Do you prefer what your US politicians have been up to Jingthing?

[midas]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

Yeah, but the western economies are printing money just as fast to afford to continue to pay bankers and estate agents their vastly uneconomic salaries. Result - no change.

I think the Thaksin underpinning of a disenfranchised class is more righteous than the hideous stuff that has gone on in the so-called civilised developed nations over the last five years. Do you prefer what your US politicians have been up to Jingthing?

Yes indeed SantiSuk………… You mean like this? As they say here in Thailand " same same "

[Moonrakers]

and i think the scale of the win will make it v hard for the yellow shirts to stage mass protests

How so?

And it doesn't just have to be the yellows. There's a lot of people who would very, very angry at Thaksin being allowed to return a free man. Let's forget also that Bangkok is not a red stronghold.

[ExpatJ]

and i think the scale of the win will make it v hard for the yellow shirts to stage mass protests

How so?

And it doesn't just have to be the yellows. There's a lot of people who would very, very angry at Thaksin being allowed to return a free man. Let's forget also that Bangkok is not a red stronghold.

The scale of the majority for the Puea Thai party means its very difficult for any group to stage mass disruptive protests for the "good of the people" or "good of thailand"- if it had been a wafer thing majority then maybe- but with this resounding win not so much. I think the fact that the markets have reacted so positively shows that the people who analyze these things in depth (i.e. the people with big money to lose) have concluded that its likley that thailand is on a path towards some stability...

[Moonrakers]

They don't need to do anything for "the good of the people"

People like the yellow (and red) leaders are entirely self serving. All they need is another catalyst to get the crowds behind them again, the return of Thaksin could easily be that catalyst. The yellows have lost momentum because they've not had much to genuinely gripe about, their momentum is about to start picking up again.

[Moonrakers]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

[ExpatJ]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

As the markets indicate- there are people pumping millions into thailand as we speak who are betting the opposite:)

[Moonrakers]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

As the markets indicate- there are people pumping millions into thailand as we speak who are betting the opposite:)

Well yeah, that was to be expected.

What do you think will happen when they try to bring back Thaksin, do you think the anti-Thaksin brigade will just sit back and let it happen? Not bloody likely. If the PT don't give a reason for mass protests again then things could well tick along relatively smoothly but the chances of that happening are really quite slim.

[ExpatJ]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

As the markets indicate- there are people pumping millions into thailand as we speak who are betting the opposite:)

Well yeah, that was to be expected.

What do you think will happen when they try to bring back Thaksin, do you think the anti-Thaksin brigade will just sit back and let it happen? Not bloody likely. If the PT don't give a reason for mass protests again then things could well tick along relatively smoothly but the chances of that happening are really quite slim.

True, that point may come - but i think they are smart enough not to do it for the next year or so by which time things may have stabilized considerably- but who knows.

[Moonrakers]

I reckon his bags are packed already

[thaimate]

Buy the Thai baht ,sell in 2 months ,thats what some international financeer was saying on Bloomberg,

[BEENTHEREDONETHAT]

From Bloomberg News

• Yingluck Government May Hurt Thai Consumers With Inflation, Stronger Baht Efforts by Thailand’s incoming government to spur growth and boost incomes may accelerate inflation, forcing interest rates higher and increasing business costs even as a rising baht threatens exports.

[NALAK]

Jing, isn't the situation you are describing "Such as promising raising wages fivefold when the people don't have to education and skills to justify that', just politicians talking to get votes ?

And everyone knows what happens with Politicians promises after they got elected.

Here's where I think you are very wrong.

PT promised the moon. Thailand can afford peanuts. The people who "won" today expecting instant riches are going to need to be placated with much more than peanuts. Which Thailand does NOT have the economic fundamentals to really afford. Thus the baht will need to be devalued.

Jing thing you talents are wasted here, you should go back home and be an economist, you would surpass Warren Buffet in no time. fact is you have no idea whats going ti happen, the only thing is that its a stong goverment not a coalition and thats good. the last coalition was a wishy washy set up just like the UK have now. you are negative about everthing Peua Thai, they won democartically and more importantly won desivley. your comaprisions to it now going to be like north korea were ridiculas, last time Thaskin was in charge it was not like North korea. North Kore is a single part state, communist and a dictatorship. thaskin was never any of these. people can come and go freely and have prity well freedom of speech. if your that hacked off just leave, suggest india maybe not a good choice.

accept what the people wanted has happened, not edcuacted well whats education they can bring up families on 4000 baht per month, that makes them great ecomists for a start. could you do that, no does that make you uneducated then.

[gregb]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

As the markets indicate- there are people pumping millions into thailand as we speak who are betting the opposite:)

Well yeah, that was to be expected.

What do you think will happen when they try to bring back Thaksin, do you think the anti-Thaksin brigade will just sit back and let it happen? Not bloody likely. If the PT don't give a reason for mass protests again then things could well tick along relatively smoothly but the chances of that happening are really quite slim.

This is about the economy, so it helps to put political bias behind us for a second. Everyone knows I think Thaksin is the worst thing to populate this planet since Adolf Hitler, but try and forget that for a second. What will actually happen?

The PT will likely start off slow. They have to. They won't jump immediately to amnesty. In fact, many of the moderate PT politicians would rather simply forget the whole amnesty thing altogether.

But Thaksin is not patient. He will not wait long until he starts demanding loyalty and threatening party members if they don't bend to his will. So they will bend. They will start pressing the amnesty issue despite the pressure not to do it.

Whether you like the PAD or not, whether you think they are as bad as Thaksin or a force for good, the simple fact is that a general amnesty makes a mockery of the rule of law. Nobody wants general amnesty. They want amnesty for their presumed good guys, and want to see the other side fry for their crimes. This is not an environment where amnesty can be made to work. By trying it (and the PT will try) a large group of people unhappy with the idea will mobilize. If it is amnesty only for Thaksin, then it will predominantly yellow. If it is a general amnesty, the group might even include current supporters of the government. The fact is, proposing to override the rule of law will appear to many people that the PT has become an illegitimate government. A government must respect the rule of law in order to govern. When it throws that to the wind, votes don't matter. You can believe that or not. Up to you. But what you have to accept is there are many people in Thailand who will accept that logic, and will not simply sit at home while Thaksin is pardoned for his crimes.

There will be protests, and there will be no solution. If they PT doesn't give up (and they won't) then there will be pressure exerted. The airport closures will look mild by comparison. This will be the final round for both sides with nothing to lose. Everyone will go for broke.

The Baht will likely do fine up until that point. But once the amnesty idea is floated, once the gloves come off, the Baht will crash. Civil war is a very real possibility this time.

It doesn't matter if you like this analysis or not, the fact is you have to accept there is truth in it that transcends whether you love or hate Thaksin. Things will get bad in the future. The election results means that Thaksin is now emboldened enough to demand it. Nothing will stop it now.

[toffo9]

I reckon his bags are packed already

wouldnt surprise me if he is already in the country ... Can do a backdoor job easy and come in unoticed now his party are in power

[12DrinkMore]

well whats education they can bring up families on 4000 baht per month, that makes them great ecomists for a start. could you do that, no does that make you uneducated then.

Great comment!

I would add that in Thailand /Asia there are many many more single person/single family small businesses earning a living the hard way by buying and selling and working long hours.

Don't worry, hard times are coming to the UK and the west, they have debts well above the affordable level and the cushy life based on credit, rising house prices and "benefits" is rapidly drawing to an end.

This thread is about whether the THB will strengthen or not under the new government. Against a background of appreciating Asian currencies supported by competitive exports, rising education levels and the will to be self-sufficient, I fully expect the THB to appreciate against western currencies, along with other Asian currencies.

Yes there will be the usual cronyism and self interest on the part of the leaders. But is it really any different to those politicians, government officials, European parliament members who award themselves huge salaries, expenses and pensions, charging it all to the powerless tax payers? Or those same politicians bailing out their mates in the "too big to fail" banks, using tax payers' money to do it?

Give me a break.

I'd rather be here in Thailand than over there under the increasingly repressive regimes of taxation, policing and austerity.

[manarak]

Not even a day in and noises are already being made about 'justice' from the red shirt protests.

Reconciliation? Stability?

More likely we are looking at unrest and inflation. I'm in no way bitter though because it suits me just fine

As the markets indicate- there are people pumping millions into thailand as we speak who are betting the opposite:)

Well yeah, that was to be expected.

What do you think will happen when they try to bring back Thaksin, do you think the anti-Thaksin brigade will just sit back and let it happen? Not bloody likely. If the PT don't give a reason for mass protests again then things could well tick along relatively smoothly but the chances of that happening are really quite slim.

This is about the economy, so it helps to put political bias behind us for a second. Everyone knows I think Thaksin is the worst thing to populate this planet since Adolf Hitler, but try and forget that for a second. What will actually happen?

The PT will likely start off slow. They have to. They won't jump immediately to amnesty. In fact, many of the moderate PT politicians would rather simply forget the whole amnesty thing altogether.

But Thaksin is not patient. He will not wait long until he starts demanding loyalty and threatening party members if they don't bend to his will. So they will bend. They will start pressing the amnesty issue despite the pressure not to do it.

Whether you like the PAD or not, whether you think they are as bad as Thaksin or a force for good, the simple fact is that a general amnesty makes a mockery of the rule of law. Nobody wants general amnesty. They want amnesty for their presumed good guys, and want to see the other side fry for their crimes. This is not an environment where amnesty can be made to work. By trying it (and the PT will try) a large group of people unhappy with the idea will mobilize. If it is amnesty only for Thaksin, then it will predominantly yellow. If it is a general amnesty, the group might even include current supporters of the government. The fact is, proposing to override the rule of law will appear to many people that the PT has become an illegitimate government. A government must respect the rule of law in order to govern. When it throws that to the wind, votes don't matter. You can believe that or not. Up to you. But what you have to accept is there are many people in Thailand who will accept that logic, and will not simply sit at home while Thaksin is pardoned for his crimes.

There will be protests, and there will be no solution. If they PT doesn't give up (and they won't) then there will be pressure exerted. The airport closures will look mild by comparison. This will be the final round for both sides with nothing to lose. Everyone will go for broke.

The Baht will likely do fine up until that point. But once the amnesty idea is floated, once the gloves come off, the Baht will crash. Civil war is a very real possibility this time.

It doesn't matter if you like this analysis or not, the fact is you have to accept there is truth in it that transcends whether you love or hate Thaksin. Things will get bad in the future. The election results means that Thaksin is now emboldened enough to demand it. Nothing will stop it now.

Well, that's a bit simplistic.

Thaksin needs better than a pardon.

Yingluck has already announced that she wants Thaksin's case to be re-examined.

That means the case will probably be judged again by the supreme court, incriminating evidence will be discredited, new disculping evidence found, and the previous sentence will be void.

This will have the appearance of a fair trial, the taste of justice for some, but it will just be the new order of the powers in charge at the time.

Democrats in power: Thaksin guilty.

Puea Thai in power: Thaksin innocent.

That's really easy.

If some people protest against that decision, it will be red's turn to say "let's respect the court's decision".

Righteous people they are...

This all really leads to nowhere.

Thai politics are a joke until the government really becomes the highest power in the country - moment that may never come.

Where the baht will go in the meanwhile?

I already expressed my point of view.

I think fears of inflation will prevail, and drive the baht down in the short term (2-3 months), but not much, maybe 5% or 10%.

If after 6 months or a year inflation is confirmed, prepare for a slide.

If any event with the power to deeply destabilize the country happens, that event together with Thaksin's comeback to power will send the baht into a deep dive.

Edited July 7, 2011 by manarak

[Suradit]

All they have to do is find more silly farang ...

At least that's one thing available in abundance ... starting with the person whose last foray into economic thought involved proposing that all farang resort to barter to survive.

It does seem odd, considering the crap economies in the US and Eurozone, that refugees from those fiscal nightmares seem to believe they're in a position to offer advice to Thailand.

If Thailand could put a high import tax on worthless advice from self-styled experts they'd be awash in revenue.

[MrsMills]

All they have to do is find more silly farang ...

At least that's one thing available in abundance ... starting with the person whose last foray into economic thought involved proposing that all farang resort to barter to survive.

It does seem odd, considering the crap economies in the US and Eurozone, that refugees from those fiscal nightmares seem to believe they're in a position to offer advice to Thailand.

If Thailand could put a high import tax on worthless advice from self-styled experts they'd be awash in revenue.

Great post.

[afarang]

All they have to do is find more silly farang ...

At least that's one thing available in abundance ... starting with the person whose last foray into economic thought involved proposing that all farang resort to barter to survive.

It does seem odd, considering the crap economies in the US and Eurozone, that refugees from those fiscal nightmares seem to believe they're in a position to offer advice to Thailand.

If Thailand could put a high import tax on worthless advice from self-styled experts they'd be awash in revenue.

Great post.

Absolutely. If you really want to understand how T'Lands foreign exchange works, read in one of the English language papers , yesterday, headlined "about the abaht " or something like that. The Baht is NOT a "free float " currency . And has never been one. It is a "managed float" currency,since about 1997, and is managed by the Monetary Policy Committee of The Bank of Thailand, not by politicians. Two things to bear in mind, (1) A high Baht is bad for exports.See rice( Central plains rice, not Kaoh Hom Mali). and how it competes(losing) with Vietnam, which has devalued substantially in the last year (2) A high baht is beneficial to T'Land for Imports, especially oil. Which costs T'Land big time.Like to bet on which way it will go? I wouldn't

[Billmont]

Taksin, love him or hate him, I think most farangs are hoping for a devaluing Baht. Wishful thinking?

[mrtoad]

The scale of the majority for the Puea Thai party means its very difficult for any group to stage mass disruptive protests for the "good of the people" or "good of thailand"- if it had been a wafer thing majority then maybe- but with this resounding win not so much. I think the fact that the markets have reacted so positively shows that the people who analyze these things in depth (i.e. the people with big money to lose) have concluded that its likley that thailand is on a path towards some stability...

There were mass demonstrations in 2005 /2006 after Thaksins party had a landslide election win at the beginning of 2005, have you forgotten?

Anyway, I'm not surprised that there has been a rise in the baht after the election - nothing really out of the ordinary in that. Things may change over the next 12 months, if PT can't really get their act together, but I still can't see the pound going back up significantly - best to hope for would be around 52 imo.