How Long Will The Bhat Last

[rizla]

Looking at the SET , it appears that the B.O.T is proping it up every day with injections of reserves, how long will the reserves last..read somewhere they had 285 bn baht..with international investment surely dropping off, it wont last for ever ??

[evanson]

They'll make bloody sure it does. Sod the people, money is GOD.

[Langsuan Man]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

[bmwbloch]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

and where exactly do you spot the difference to the US ?

[impulse]

How long will the baht last? I don't know about yours, but I expect mine to last for about 10 minutes after I meet a good looking woman. That goes for my USD, too.

Edited October 28, 2011 by impulse

[IMA_FARANG]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

------------------

Yeah, and I bet they tried to tell you that economics was a rational science based on logical rules.

That's just not true.

Economics is an endevour of human beings...and human beings are NOT logical.

And that's especially true in currency exchange rates.

But if you want...it's not hard to understand.

The Thai government will have to borrow baht to finance the reconstruction.

That assumes interest rates will be rising to give investors an incentive to loan that money to the government.

Those "investors"....I call them professional buzzards feeding on death and misery, but that's just my personal opinion...are expecting to profit from those higher interest rates in the short term.

(An investor is a person who would pimp his daughter...but only for a good rate of return on his investment... better than market rate.)

[FalangBaa]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

------------------

(An investor is a person who would pimp his daughter...but only for a good rate of return on his investment... better than market rate.)

There are a lot of very savvy investors in the villages of Issan...

[w11guy]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

Your comment shows that you have no understanding of currency movements. You have a very naive and over-simplistic view of currency movements.

[Naam]

read somewhere they had 285 bn baht

you either need reading glasses or you read most probably rubbish wrong information.

Looking at the SET , it appears that the B.O.T is proping it up every day with injections of reserves,

it also appears that some people possess a wealth of no idea as far as market psychology is concerned

-reserves are never held in domestic but in foreign currency including gold.

-latest balance of reserves are valued at US-Dollars 188 billion ( $ 188,000,000,000) equivalent Thai Baht 5 trillion 717 billion 80 million (฿ 5,717,080,000,000)

source: International Monetary Fund dated october 11. 2011

-the Baht goes up because of more demand than offer.

-the teachings of a wellknown U.S. university or any wellknown university on this planet are not only nowadays but since many years irrelevant. the latter not only as far as currency movements are concerned but in all respects. it is also a wellknown fact that most egghead lecturers are always a few decades behind following different 'schools' which agree to disagree in most aspects.

An investor is a person who would pimp his daughter... but only for a good rate of return on his investment... better than market rate.

that's the view of a poor man who has neither a daughter to pimp nor money to invest

and where exactly do you spot the difference to the US ?

bingo!

[ianguygil]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency. Also, the use of these borrowed funds will stimulate the local economy. So it is not at all unusual for the local currency to appreciate, at least in the short term. This is my personal opinion not related to my employment.

Ian

[Naam]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

that is correct Ian but fact is that since years Thailand has not borrowed from abroad. i am referring to sovereign, not corporate, debt. whether compensating for the flood damage requires borrowing in foreign currency remains to be seen.

needless to say that i am surprised too about THB strength and the recent performance of the SET.

[TwentyBaht]

Ian,

Thank you for your comment. I have been curious about this.

And, after thinking a moment, I remember also that the Japanese currency appreciated after the tsunami.

[pkrv]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency. Also, the use of these borrowed funds will stimulate the local economy. So it is not at all unusual for the local currency to appreciate, at least in the short term. This is my personal opinion not related to my employment.

Ian

Insight - Philip

[malcolminthemiddle]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

Conversely, should the government pay for the foreign currency loan using local currency, that will put downward pressure on the local currency.

Any guesses when the Thai Baht will start to depreciate on the basis of this fictitious scenario?

[pkrv]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

Conversely, should the government pay for the foreign currency loan using local currency, that will put downward pressure on the local currency.

Any guesses when the Thai Baht will start to depreciate on the basis of this fictitious scenario?

IMO not in the near future - what else do you do with huge amounts of USD as assets??

[fletchsmile]

Unfortunately there's not much of a meaningful way to answer OP, except point in the direction of places to get more info/ better understanding:

The number given for reserves is way out. BOT's own figures are shown on their website. The magnitude is more like USD 180bio. BOT also set out their policy on exchange rates on this website, as well as other key policies.

http://www.bot.or.th

is full of info

As for the SET, there are many many more factors. A read of any main brokers pages would give some ideas, eg Phillips POEMS

http://www.poems.in.th/home/en/index.htm

Click on "Market Focus.pdf" near the bottom, for some ideas on factors - many of which are external to Thailand

Cheers

Fletch

[KHR1010]

An investor is a person who would pimp his daughter... but only for a good rate of return on his investment... better than market rate.

that's the view of a poor man who has neither a daughter to pimp nor money to invest

spot on!!

[Screws]

I almost want to sue a well known University in the US, since everything they taught me about economics does not apply in the bubble that is Thailand

The government announces that they are going to have to borrow millions (billions) of Baht for reconstruction yet the value of the Baht goes UP

And the SET! ;-?

[Gonsalviz]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

Conversely, should the government pay for the foreign currency loan using local currency, that will put downward pressure on the local currency.

Any guesses when the Thai Baht will start to depreciate on the basis of this fictitious scenario?

My guess would be shortly after they start rebuilding and clean up.

[mommysboy]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

that is correct Ian but fact is that since years Thailand has not borrowed from abroad. i am referring to sovereign, not corporate, debt. whether compensating for the flood damage requires borrowing in foreign currency remains to be seen.

needless to say that i am surprised too about THB strength and the recent performance of the SET.

Thinking about proposing to possibly make a feasibility study in to actually having to spend their own money on flood projects is not the same as doing it. If you forgive the pun, the final amount will be substantially watered down. Kee nio mak.

[chiang mai]

I'm confused, why are the UK banks (Lloyds and HSBC) selling Pounds at THB 44 to the Pound when the onshore rate (local & national banks) is 49 and the offshore rate (oanda etc) is the same, anyone understand this and can explain why/how?

Edited October 31, 2011 by chiang mai

[ianguygil]

Ian,

Thank you for your comment. I have been curious about this.

And, after thinking a moment, I remember also that the Japanese currency appreciated after the tsunami.

Yes, exactly, The JPY appreciated for different reasons (they are self funding for their domestic debt so no real need to raise funds abroad) but they did start to bring back funds from abroad. Also, foreign investors wanted to bet on the huge recovery fund planned at that time. Finally, the other currency options were either lousy (USD etc.) or already richly valued (CHF or AUD).

Edited October 31, 2011 by ianguygil

[ianguygil]

If a government (not just Thailand) borrows large sums from abroad and brings it back home to finance project they sell the foreign currency and buy the local currency. That puts upward pressure on the local currency.

Conversely, should the government pay for the foreign currency loan using local currency, that will put downward pressure on the local currency.

Any guesses when the Thai Baht will start to depreciate on the basis of this fictitious scenario?

The foreign debt is currently very low, so the repayments will be a trickle and it is offset by direct investment, exports and things like tourism. Whereas the initial fund raising will be a huge amount repatriated in a very short time.

I have absolutely no idea when the currency will start to depreciate. I am not smart enough to know that one.......

Also, rather than looking at which currency is going up, you should look at the converse, which is going down. It may just be that the other options are so lousy. The US saying they will keep negative real interest rates for years more.....

Edited October 31, 2011 by ianguygil

[ExpatJ]

The baht will stay strong for the foreseeable future. There is too much cash sloshing around the world economy - and this will flow into emerging markets including the thai stock exchange and thai economy increasing demand for baht .

Personally i am hedged either way- my wife and my salary is the same amount but she gets paid in thai baht, i get paid in US dollars

Edited October 31, 2011 by ExpatJ