The Baht Under Red Power

[RubbaJohnny]

Interesting comments from Eurocentric thinking

1 A devalued baht versus US$ ,managed decline by BOT will to some extent will encourage exports and help fuel imports

2 The key indicator is the Chinese Kwai trading around 4.5 bahts I think this and The Real,Gulf currencies may rise to 4.75to RMB and 9 baht to SAR which is pegged to US$

3 This will balance the fall in Euro which can only head one way,doesnt matter who pays for Greek mess and following PIIGS the poor country or the German taxpayer all this waste is happening as the BRICS grow

Brazil Russia Idia China S Africa

I may be wrong but used to work at HSBC and suggest end of 2011 baht rates

28-9$

46-48sterling

4.65RMB

and nearer 41 Euro

If you feel you can beat the market pile in online Forex dealing was never easier,remember for the small dealer costs eat up a lot of the gains

[12DrinkMore]

I may be wrong but used to work at HSBC and suggest end of 2011 baht rates

28-9$

46-48sterling

4.65RMB

and nearer 41 Euro

If you feel you can beat the market pile in online Forex dealing was never easier,remember for the small dealer costs eat up a lot of the gains

http://www.bloomberg.com/news/2011-07-04/dbs-s-wee-forecasts-thai-baht-to-rise-8-8-percent-in-12-months.html

I expect the Squib will fall a little bit more than that over the next 12 months, Merv ain't touching the interest rates. The EUR is a difficult call, they are raising rates and China is indicating that it is interested in investing more in the Euro-Area.

[Beechboy]

I only really take an interest in the sterling/baht rates.

The initial drop in the rate of baht per pound a few years ago was caused by out-of-control financial reasons ie. the collapse of the UK banks and the growth of UK debt to unprecedented proportions.

Now that the dust has settled (slightly,) currency values are being controlled by the banks. The Bank of Thailand has bought baht in the last year or so to maintain the value of the currency, just why in an export and tourist driven economy is a puzzle. Some suggest corruption, I doubt it in this case.

The Bank of England has effectively devalued the pound with quantative easing and by keeping interest rates at an all-time low (0.5%.)

For obvious reasons, high interest rates lead to speculatitive interest in that currency, which then passes onto exchange rates.

This was illustrated last week when the Bank of Thailand raised interest rates at the same time as the Bank of England maintained their low rate.

The pound rapidly lost one baht.

Fortunately, this seems a temporary blip, as it has now recovered more than half of this loss.

Only internal troubles or bank intervention will seemingly devalue the baht now as the country has a government with a clear mandate presiding over a healthy economy, especially in terms of exports. The UK has a few years to go before it sees the "green shoots of recovery" once again.

But, this is Thailand.

Edited July 10, 2011 by Beechboy

[12DrinkMore]

I only really take an interest in the sterling/baht rates.

The initial drop in the rate of baht per pound a few years ago was caused by out-of-control financial reasons ie. the collapse of the UK banks and the growth of UK debt to unprecedented proportions.

Now that the dust has settled (slightly,) currency values are being controlled by the banks. The Bank of Thailand has bought baht in the last year or so to maintain the value of the currency, just why in an export and tourist driven economy is a puzzle. Some suggest corruption, I doubt it in this case.

And UK debt is still surging upwards, there have been no cuts in the actual budget, just cuts in the budget increases.

Currency rates are not controlled by the banks. They are determined in the market by the vast amount of forex handling everyday. The BoE has set rates at an historic low and will continue to do so until a green shoot pokes out of the barren earth. Merv is trying desperately to keep a bit of cash in the debtors' pocket so that they can spend it. Unfortunately this aint working, the number of profit warnings in the high street are spiralling upwards.

The BoT has been SELLING THB to keep the value DOWN by buying forex. The aim of the BoT is to keep the THB more or less stable in the Asian region. There is no corruption I can see in this.

The Bank of England has effectively devalued the pound with quantative easing and by keeping interest rates at an all-time low (0.5%.)

For obvious reasons, high interest rates lead to speculatitive interest in that currency, which then passes onto exchange rates.

This was illustrated last week when the Bank of Thailand raised interest rates at the same time as the Bank of England maintained their low rate.

The pound rapidly lost one baht.

Fortunately, this seems a temporary blip, as it has now recovered more than half of this loss.

Only internal troubles or bank intervention will seemingly devalue the baht now as the country has a government with a clear mandate presiding over a healthy economy, especially in terms of exports.

I think you'll find that Thailand's exports are doing just fine and that the economy is growing at a rate the west debtors can only dream about. There will be no BoT intervention to dramatically drop the THB. This would be stupid, as Thailand is doing very well, there are increasing numbers of Asian tourists heading to Thailand, and it would cause fuel prices to rise. By letting the Asian currencies appreciate, the fuel price inflation can be mitigated.

And if you hadn't noticed, there are a vast numbers of tourists coming from Sweden, Norway, Denmark and Australia. Countries whose governments seem to do a much more efficient job at running the respective economies and taking pride in the value of the national currency.

The UK has a few years to go before it sees the "green shoots of recovery" once again.

You are definitely correct in that observation.

With just 12% of the UK GDP in production, actually making stuff, and over 50% of the GDP government spending ie taxation and overspending, I wonder just where any green shoot is going to sprout from?

[Heng]

All they need is a few bad things to happen and then blame it on whoever they want to blame it on and oh, temporary appointed gov't for about 2 years again and then elections. Sorted.

Kinda of like, oh, Iran is behind this, so we better go ahead and take their oil fields.

[a99az]

Can you please give a full and detailed description of how and why you think this will happen.

International vote of NO confidence in Thaksin's over the top populist agenda which can't be backed up with actual high skilled human capital OR resources. Sure Thailand has some cards to play, but nothing like endless money tap of OIL that Chavez can work with. The money tap here is very limited and Thailand and it's currency is floating in the INTERNATIONAL market. I feel the world is going to punish Thailand for this irrational political choice.

Sorry I don't agree, I think some one will declare the election void long before the newly elected government get a chance to do anything.Then place some general in power until the people finally except the only way forward is to stick with the money men.

[12DrinkMore]

Can you please give a full and detailed description of how and why you think this will happen.

International vote of NO confidence in Thaksin's over the top populist agenda which can't be backed up with actual high skilled human capital OR resources. Sure Thailand has some cards to play, but nothing like endless money tap of OIL that Chavez can work with. The money tap here is very limited and Thailand and it's currency is floating in the INTERNATIONAL market. I feel the world is going to punish Thailand for this irrational political choice.

Sorry I don't agree, I think some one will declare the election void long before the newly elected government get a chance to do anything.Then place some general in power until the people finally except the only way forward is to stick with the money men.

Thaksin in that case.

Punish Thailand for a democratic election? Leave it out. Any ramifications will be based on how much profit the foreign businesses can make, be it manufacturing in Thailand or importing Thai manufactured goods. And the Chinese ruling elite in Thailand will not allow their personal wealth to be hit.

Please tell me which western government hasn't pandered to the over-wealthy on one hand and uttered populist socialist policies on the other?

Edited July 10, 2011 by 12DrinkMore

[khaowong1]

Don't you just love economic talk. Here's an idea. Flip a coin. Heads or Tails.

[janverbeem]

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

You figured this out all by yourself?This is the same for every country in the world.

But just my opinion,their plans to raise the salary's will make products made in Thailand more expensive,so one more reason to devaluate the Baht to be able to export anything.

On another note,this government will be declared illegal in the next few months which will result in protests by the red shirt terrorists and maybe accelerate to a civil war and which in return will make the baht plunge as investors are fed up with the situation of the past 5 years.

[12DrinkMore]

But just my opinion,their plans to raise the salary's will make products made in Thailand more expensive,so one more reason to devaluate the Baht to be able to export anything.

Having a minimum wage has never been a barrier to paying less.

On another note,this government will be declared illegal in the next few months

Oh really, on what grounds?

The Thai people have voted for their government in a fully legal process. If that process were to be declared illegal I reckon there would be even more and much bigger issues.

which will result in protests by the red shirt terrorists and maybe accelerate to a civil war and which in return will make the baht plunge as investors are fed up with the situation of the past 5 years.

Investors are still investing, the considerable majority that the ruling party now has is seen as a stabiliser.

I think you should be a bit more positive. Just because you might have a few moral issues with Thaksin I don't think that is any reason to think this is all going tits up in a few months. The Chinese businessmen who run the economy are certainly not stupid and although there will be a bit of positioning, in the end they are all have the same goal. To make money and enjoy living here.

I may be totally wrong, if so, send me a hat so I can eat it, but I am very positive about Thailand's future.

[gregb]

On another note,this government will be declared illegal in the next few months which will result in protests by the red shirt terrorists and maybe accelerate to a civil war and which in return will make the baht plunge as investors are fed up with the situation of the past 5 years.

The only scenario where they may be declared void is if the courts can genuinely prove that the law means Thaksin's actions in the latest voting were illegal. I don't actually think they can. A weak legal argument isn't going to cut it in this case. They are going to need something obvious and undeniable, and that is going to be difficult if it can be done at all.

But if they do find the PT guilty, let's examine what would likely happen:

The Democrats basically admitted defeat the day Yingluck was announced as the candidate for PM. There were enough women straddling the fence at that time who voted for the PT specifically because of this. The Democrats were foolish for not seeing this tactic coming.

They may hope that by removing Yingluck they can recover some of those lost voters. I don't think so personally. I think that the people who did vote for PT simply because Yingluck was a woman will be so annoyed by the court decision that they will vote again for the new PT party out of spite. In fact, the outcome might even be worse for the Democrats.

So even if the current government is ruled illegal, I don't see any real chance of keeping the resurrected PT party from controlling the next government. And Thaksin certainly wouldn't make the same stupid blunder twice. The PT were very careful not to pay in the districts where they expected to win anyway, and I think they'll follow the same tactics next time, so getting them for vote buying will be extremely difficult. I think they'll keep a squeaky clean image and still win.

So I think it is a lose/lose for the Democrats either way. And a win/win for Thaksin. My opinion remains. The problems will start when they try to bring Thaksin home. He is not the kind of person who will sit overseas forever controlling things remotely. He eventually wants to assume command personally. We know Thaksin will not admit guilt and so the new government will try and do something to get him declared innocent. They'll have no choice. And when they do that, enough people will find it intolerable that a civil war will likely be inevitable.

I think Thaksin announced the time of the civil war when he said reconciliation in 2 years. This tells me when he realistically thinks he will be returning. I suspect the Thai economy will plug along at about the current level until that time. Inflation is a problem everywhere. Thailand is no worse than the US in this regard. And the Thai government borrowing into infinity to fund social programs is no different than other governments borrowing into infinity to fund social programs and bank bailouts. Relatively, Thailand still looks good. And I don't believe the minimum wage will actually be implemented. They'll worm out of it.

When Thaksin's idea of reconciliation comes to pass though? Then I'd be extremely worried.

[billd766]

I have done a 10 year trend of the UK Sterling vs Thai Baht rate and split it into 2 5 year parts plus the rate for this year so far.

I am not sure what the future holds and would not even try to guess but if they are of any use I have attached them here.

10 year trend 2000 to 2004.xls

10 year trend 2005 to 2010.xls

Forex 2011 v1.xls

2011 rates

[wolfmanjack]

On another note,this government will be declared illegal in the next few months which will result in protests by the red shirt terrorists and maybe accelerate to a civil war and which in return will make the baht plunge as investors are fed up with the situation of the past 5 years.

The only scenario where they may be declared void is if the courts can genuinely prove that the law means Thaksin's actions in the latest voting were illegal. I don't actually think they can. A weak legal argument isn't going to cut it in this case. They are going to need something obvious and undeniable, and that is going to be difficult if it can be done at all.

But if they do find the PT guilty, let's examine what would likely happen:

The Democrats basically admitted defeat the day Yingluck was announced as the candidate for PM. There were enough women straddling the fence at that time who voted for the PT specifically because of this. The Democrats were foolish for not seeing this tactic coming.

They may hope that by removing Yingluck they can recover some of those lost voters. I don't think so personally. I think that the people who did vote for PT simply because Yingluck was a woman will be so annoyed by the court decision that they will vote again for the new PT party out of spite. In fact, the outcome might even be worse for the Democrats.

So even if the current government is ruled illegal, I don't see any real chance of keeping the resurrected PT party from controlling the next government. And Thaksin certainly wouldn't make the same stupid blunder twice. The PT were very careful not to pay in the districts where they expected to win anyway, and I think they'll follow the same tactics next time, so getting them for vote buying will be extremely difficult. I think they'll keep a squeaky clean image and still win.

So I think it is a lose/lose for the Democrats either way. And a win/win for Thaksin. My opinion remains. The problems will start when they try to bring Thaksin home. He is not the kind of person who will sit overseas forever controlling things remotely. He eventually wants to assume command personally. We know Thaksin will not admit guilt and so the new government will try and do something to get him declared innocent. They'll have no choice. And when they do that, enough people will find it intolerable that a civil war will likely be inevitable.

I think Thaksin announced the time of the civil war when he said reconciliation in 2 years. This tells me when he realistically thinks he will be returning. I suspect the Thai economy will plug along at about the current level until that time. Inflation is a problem everywhere. Thailand is no worse than the US in this regard. And the Thai government borrowing into infinity to fund social programs is no different than other governments borrowing into infinity to fund social programs and bank bailouts. Relatively, Thailand still looks good. And I don't believe the minimum wage will actually be implemented. They'll worm out of it.

When Thaksin's idea of reconciliation comes to pass though? Then I'd be extremely worried.

It is the courts job to interpret the law. If they interpret the law to mean that he can not be a real leader as well as the named leader then there is plenty of evidence that he is the real leader. Even if the courts do not decide to remove the party and executives Yingluck will still be the PM unless she gets red carded for serving food at her rally. In any case Thaksin will still get to form the next government just with a diff puppet in place. Then the problem starts. The red propaganda was that Abhisit was responsible for the inflation. They blamed him for all of the high food costs including the high price of rice. How long will the people put up with higher food costs before they start blaming thaksin for it? Some of the red factions are already fighting amongst themselves.