Still Going Strong

[Semper]

Despite the disaster Thailand have with the flooding, the Baht is as strong as ever. Why is this? Any ideas?

[cdnvic]

So many other currencies and economies are so messed up that investors don't know where to move it to?

[SweRob]

So many other currencies and economies are so messed up that investors don't know where to move it to?

Its because every other country out there is doing its best (printing money) to devalue their own currency, its a chicken race of "the one who can print the most money and lower the value of it, wins". Litterally.

[Gweiloman]

Because whatever sh*t Thailand's in, the rest of the world (US, UK, Europe) is in worse sh*t?

[StreetCowboy]

I think its because foreigners and overseas Thai workers are sending so much money to help out the disaster relief.

SC

[Thongkorn]

Because whatever sh*t Thailand's in, the rest of the world (US, UK, Europe) is in worse sh*t?

I think the above are addressing there problem now, The Thai people will want more pay as the price of food goes up. along with most other Asian Economy's, Everybody is affected because The East sells to the West, and if the West don't have money the East cannot sell its products.

[Jingthing]

I would have thought that it was because the BOT was expected to increase interest rates, but instead I read that the BOT is expected to CUT interest rates to counter expected severe inflation, especially in basic foods like rice. So it likely has something to do with high Thai inflation.

[StreetCowboy]

I would have thought that it was because the BOT was expected to increase interest rates, but instead I read that the BOT is expected to CUT interest rates to counter expected severe inflation, especially in basic foods like rice. So it likely has something to do with high Thai inflation.

I believe Normally banks raise interest rates to counter inflation, sucking money out of circulation and into deposits, or encouraging people to pay off debt rather than spend.

SC

[Jingthing]

I would have thought that it was because the BOT was expected to increase interest rates, but instead I read that the BOT is expected to CUT interest rates to counter expected severe inflation, especially in basic foods like rice. So it likely has something to do with high Thai inflation.

I believe Normally banks raise interest rates to counter inflation, sucking money out of circulation and into deposits, or encouraging people to pay off debt rather than spend.

SC

Just repeated what I read the BOT planned to do and why. Who said the BOT is normal? On foreign exchange, raising interest rates encourages foreign inflows.

Anyway, the baht didn't crash during the Burning of Bangkok, why should it melt now?

[SweRob]

In order to lower the value of your currency you need to lower the interest rate. You need to "inflate" your currency to lower the value of it. If this dont happen no natural distaster will take care of this for you.

[muchogra]

Why is it still going strong?...Because the big boys are keeping them strong by accumulating the bahts.

When the big loan comes in (in the form of foreign currencies), the government needs to buy the bahts to distribute and spend locally. You may also see the capital market will be complimenting in a way to absorb the foreign currencies on their way out. It has already started.

Big boys plan ahead and are always ahead of the curve they draw.

As far as who the big boys might be, you make your own guess.

[pnustedt]

I think it has more to do with the level of foreign currency reserves that Thailand holds - more than either the UK or USA. http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

[CaptHaddock]

Exchange rates are mainly determined by trade balances. Thailand has maintained a strong trade surplus for some time. As of 2010 Thailand was number 22 on the list of countries by trade surplus. Along with an appreciating currency, the accumulation of reserves is another result of this trade surplus.

[aneliane]

Foreign investors in Thailand namely the first one Japan has kept their support.

Even if the production is disrupted they know that in the long term, they will resume production, and it's still more profitable for them than producing cars in Japan.

[farang000999]

The baht is strengthening on the expectation of repatriated funds and investment into Thailand. It happened in Japan after their disaster as well.

As for interest rates... I am not surprised the BOT does not want to raise them very high... Thailand is already on the cusp of a real estate bubble and the flooding can't be helping.

[SweRob]

The baht is strengthening on the expectation of repatriated funds and investment into Thailand. It happened in Japan after their disaster as well.

As for interest rates... I am not surprised the BOT does not want to raise them very high... Thailand is already on the cusp of a real estate bubble and the flooding can't be helping.

Well. If they raise interest rates, they strenghten the value of the bath, if they lower the interest rate they lower the value of the bath, and you are surprcided they aint raising interest rates?

[farang000999]

The baht is strengthening on the expectation of repatriated funds and investment into Thailand. It happened in Japan after their disaster as well.

As for interest rates... I am not surprised the BOT does not want to raise them very high... Thailand is already on the cusp of a real estate bubble and the flooding can't be helping.

Well. If they raise interest rates, they strenghten the value of the bath, if they lower the interest rate they lower the value of the bath, and you are surprcided they aint raising interest rates?

I said I was not surprised.