Baht Tomorrow

[afarang]

The THB has been in free float since 1996. Market forces determine the rate; it is not fixed by the Bank of Thailand.

Yes, but they sometimes intervene if it's moving too far in the "wrong direction".

I am sorry, it is not a "free float".Market forces are taken into consideration,However, It is a "managed float:, which is fixed daily by The Monetary Policy Committee of The Bank of Thailand.Who operate it within a very small range(a few satang up or down,daily) and have done so since 1997. It was 1996 that big problems occurred , with regard to Foreign capital in flows, forcing the Bank to ditch its "fixed" rate foreign exchange policy. As I have stated , previously, we stand in awe ,that with respect of all that has happened in Thailand in around the last decade,that there has been so little movement of the Baht. It is fixed in relation to a basket of currencies, with a quite dominant position of Asian currencies, particularly China.

[Richard4849]

I think you are overestimating the control which the BOT can exert over the THB.

Exchange rates are determined entirely by market forces.

Just like the Fed in the US, the BOT can influence market forces via monetary policy (adjusting interest rates, for example), but they cannot directly raise or lower the value of the THB.

From http://intl.econ.cuh...ndex.php?cid=2:

2 July 1997 The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).

Edited July 5, 2011 by Richard4849

[nocturn]

I think you are overestimating the control which the BOT can exert over the THB.

Exchange rates are determined entirely by market forces.

Just like the Fed in the US, the BOT can influence market forces via monetary policy (adjusting interest rates, for example), but they cannot directly raise or lower the value of the THB.

From http://intl.econ.cuh...ndex.php?cid=2:

2 July 1997 The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).

you are quoting, as gospel, a document that is over 10 years old .

[Richard4849]

I'm sure you'll be happy to find us a newer one for consideration.

[afarang]

Absolutely not. The M.P.C. has been intervening virtually on a daily basis. It does set the exchange rate.Particularly since the basket of currencies was instituted. Prior to that it was directly linked to the U>S>$.As the basket is now weighted in favour of Asian currencies, particularly China, The rate of movement is quite small, as most Asian currencies have also remained strong. But intervention is practised regularly. Surely you can see that, particularly when Thailand has "troubles , the exchange rate hardly moves. The G.F.C. caused no major movement in the Baht, but virtually all other currencies "crashed".The AU $ slumped to a low point of B19 to the AU $. Today is running between 32,-32,The Thai Bahr remained strong ,when everything else was in Panic. All your quoted sources are extremely dated , and bear little relevance to todays much changed circumstances. As previously stated , it is called a "Managed Float" not a "free float". Managed means regular intervention , By The Monetary Policy Committee of The Bank Of Thailand.A free float certainly is solely subject to market forces, A Managed Float tells you that intervention is practiced, the key word being Managed.In this case ,Thailand ,The management is done By The Monetary Policy Committee of The Bank of Thailand.

[harrypatterson]

Yingluck says she will raise minimum wage 40 per cent to fight inflation. I am not economist, but wouldn't this increase inflation? I think that unless there is some big disaster like a major drought, the baht will keep getting stronger and I will keep getting poorer. I am just saying. Not hoping for droughts or disasters.

[StreetCowboy]

I think you are overestimating the control which the BOT can exert over the THB.

Exchange rates are determined entirely by market forces.

Just like the Fed in the US, the BOT can influence market forces via monetary policy (adjusting interest rates, for example), but they cannot directly raise or lower the value of the THB.

From http://intl.econ.cuh...ndex.php?cid=2:

2 July 1997 The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).

you are quoting, as gospel, a document that is over 10 years old .

I suppose that 's the thing about gospels. They're pretty unchanging. How you interpret them is your business.

On the subject of 'managed float' exchange rates, I believe that the monetary board controls the exchange rate by selling or buying at that exchange rate, as required according to market demand, thus effectively clamping the exchange rate to the rate they choose. In order to do so, they need to be able to provide or absorb the currency as required. Now, if I could find a reference for that, I might adopt it as gospel, as it is something that is pretty unchanging, and a basic principle by which I could live my life, were I a monetarist.

SC

[afarang]

I think you are overestimating the control which the BOT can exert over the THB.

Exchange rates are determined entirely by market forces.

Just like the Fed in the US, the BOT can influence market forces via monetary policy (adjusting interest rates, for example), but they cannot directly raise or lower the value of the THB.

From http://intl.econ.cuh...ndex.php?cid=2:

2 July 1997 The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).

you are quoting, as gospel, a document that is over 10 years old .

I suppose that 's the thing about gospels. They're pretty unchanging. How you interpret them is your business.

On the subject of 'managed float' exchange rates, I believe that the monetary board controls the exchange rate by selling or buying at that exchange rate, as required according to market demand, thus effectively clamping the exchange rate to the rate they choose. In order to do so, they need to be able to provide or absorb the currency as required. Now, if I could find a reference for that, I might adopt it as gospel, as it is something that is pretty unchanging, and a basic principle by which I could live my life, were I a monetarist.

SC

Yes S.C.,you are quite correct .The M.P.C. were, maybe are ,still very big traders,very much so of U.S.$, my belief is that they hold a lot of them. This is a mechanism The M.P.C. uses to set the exchange rate . on a daily basis.It was the events of 1977 that forced these changes on Thailand. Subsequent to that is the importance of trade between China and Thailand, a country in which Thailand is a major investor. + the relative importance of trade within ASEAN.

[Jingthing]

Yingluck says she will raise minimum wage 40 per cent to fight inflation. I am not economist, but wouldn't this increase inflation? I think that unless there is some big disaster like a major drought, the baht will keep getting stronger and I will keep getting poorer. I am just saying. Not hoping for droughts or disasters.

Yes it is generally both stimulative (people will spend more money) AND inflationary. It's rather risky in an environment of ALREADY high inflation in a population that has very low productivity (compared it's regional/global competition). It should make the reds happy though, in the short term, until it most likely backfires.

Edited July 5, 2011 by Jingthing

[StreetCowboy]

I think you are overestimating the control which the BOT can exert over the THB.

Exchange rates are determined entirely by market forces.

Just like the Fed in the US, the BOT can influence market forces via monetary policy (adjusting interest rates, for example), but they cannot directly raise or lower the value of the THB.

From http://intl.econ.cuh...ndex.php?cid=2:

2 July 1997 The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).

you are quoting, as gospel, a document that is over 10 years old .

I suppose that 's the thing about gospels. They're pretty unchanging. How you interpret them is your business.

On the subject of 'managed float' exchange rates, I believe that the monetary board controls the exchange rate by selling or buying at that exchange rate, as required according to market demand, thus effectively clamping the exchange rate to the rate they choose. In order to do so, they need to be able to provide or absorb the currency as required. Now, if I could find a reference for that, I might adopt it as gospel, as it is something that is pretty unchanging, and a basic principle by which I could live my life, were I a monetarist.

SC

Yes S.C.,you are quite correct .The M.P.C. were, maybe are ,still very big traders,very much so of U.S.$, my belief is that they hold a lot of them. This is a mechanism The M.P.C. uses to set the exchange rate . on a daily basis.It was the events of 1977 that forced these changes on Thailand. Subsequent to that is the importance of trade between China and Thailand, a country in which Thailand is a major investor. + the relative importance of trade within ASEAN.

However, the credibility of the exchange rate depends on the value that others believe it should be, and your ability to defend it; and that becomes complicated...

In HK, the currency is entirely backed by foreign reserves, so that the HKMA could effectively absorb all the currency, if necessary; whether the BOT is currently maintaining an exchange rate that it can defend is another matter... I imagine they are being prudent, following their experience of that time.

Over the last five years, the baht has been pretty stable, trading plus or minus about 20% and increasing 5% over five years, according to the last chart I saw against the RMB. In the same time, the US$ has managed a steady devaluation of something like 20%, I think. The pound has devalued about the same amount, and the euro remained pretty stable.

Anyway, if you want to gamble, I would recommend the HK jockey club, as the beer is cheaper than in the stock exchange, and you get a nice day in the sunshine (or an evening in the floodlights, if you go mid-week - 'you win some, you lose some, its all the same to me...')

SC

[thaimate]

Yingluck says she will raise minimum wage 40 per cent to fight inflation. I am not economist, but wouldn't this increase inflation? I think that unless there is some big disaster like a major drought, the baht will keep getting stronger and I will keep getting poorer. I am just saying. Not hoping for droughts or disasters.

If she does raise the minimum rate ,then you will see less staff in the stores ,self service petrol stations , less security guards ,ect ect. all those low paid jobs will dissapear to save money .

when the minimum wage came in Britain we worked for many local authoroties , as prices rose the first thing they did was cut contracts .

be carefull what you wish for folks.

[Jingthing]

Yingluck says she will raise minimum wage 40 per cent to fight inflation. I am not economist, but wouldn't this increase inflation? I think that unless there is some big disaster like a major drought, the baht will keep getting stronger and I will keep getting poorer. I am just saying. Not hoping for droughts or disasters.

If she does raise the minimum rate ,then you will see less staff in the stores ,self service petrol stations , less security guards ,ect ect. all those low paid jobs will dissapear to save money .

when the minimum wage came in Britain we worked for many local authoroties , as prices rose the first thing they did was cut contracts .

be carefull what you wish for folks.

Yes, for sure. This issue has already come up for me personally. The condo where I live is talking about FIRING staff if the wages go this way. Alternative is to raise fees. Funny how nothing is free.

[geriatrickid]

I predict a weaker baht. Not right away, but coming. I also predict more unemployment and inflation. I never predicted a stock market crash. Right now in the US you have a shockingly strong stock market rally going for years, in the middle of a very weak dollar, food price inflation, and brutal unemployment. Please be careful assuming a stronger stock market also means a stronger currency.

I predict the sun will rise tomorrow. I also predict that you will have a bowel movement.

Although there will be an attempt to devalue the baht, the increase in foreign investment, now that Thailand is on the path to political stability will counter the attempts to devalue the baht. Keep in mind that there are some serious crop failures around the world occurring now. I would anticipate that as a major food exporter, Thailand will cash in and the result will bolster the economy.

[lazygourmet]

HOPE ITS GOING BACK OVER 40 AGAIN ..

HOPE IT'S GOING BACK TO 25 LIKE WHEN I MOVED HERE- I WANT A TRIP TO THE USA SOON.

+1

(except the capital letters... just just kidding)