Thai Baht - One Of The World’S Most Resilient Currencies?

[sstuff3]

Through the political unrest of 2010, including the burning of major buildings and even the stock exchange, and now through the worst floods (be it natural or political caused) the Thai Baht has remained strong against the US$, Euro, and other major currencies. Most countries faced with these problems experience a drastic decrease in the value of their currency on the world stage. What has made Thailand different? Why does the Thai Baht remain so strong in the face of back-to-back disasters?

[Beechboy]

It could do with a slight devaluation to allow exports to recover from the floods, once the real level of the damage has been revealed. This has been under-estimated by the present government for sure, both for the short-term and the long-term.

Some foreign companies might use this as an excuse to go elsewhere and Cambodia, for one, beckons increasingly, with more enticing labour rates and less internal problems.

Good news for English is that the Eurozone crisis at the moment , the level of the U.S. debt and the UK's austerity measures are combining to make the UK (along with Germany) the two "safest havens" for investors in the Western World. Safer even than the Scandinavian block. This may or may not be temporary, but will inevitably raise Sterling's value, so that the combination of this this with the possiblity of the above happening to the Thai currency , might mean a few more Baht to the Pound sooner rather than later.

Should any Eurozone country actually "go-under," then the eventual rebound on the UK and German economies will shift more investment further East, to India and China and the opposite will happen.

Back to the Baht. It's resilience through the various problems has been quite astonishing and suggests that other influences abound (has BoT been buying again?) Influences that would be unpopular with the rice-growers or those in the tourist industry, for example.

Edited November 16, 2011 by Beechboy

[trevorg]

Most countries faced with these problems?

Which countries and which are the mostest countries that you wish to compare Thailand with? (and before anyone asks, I shouldn't end a sentence with a preposition!)?

[Moonrakers]

The bubble has to burst at some point, and there is a shed load more unrest to come yet.

Perhaps that's just wishful thinking because I earn in foreign currency.

[trevorg]

The bubble has to burst at some point, and there is a shed load more unrest to come yet.

Perhaps that's just wishful thinking because I earn in foreign currency.

And Thailand doesn't have an overdraft (unlike 90% of other countries)! (I'm reliably informed from another similar thread) I also earn in foreign currency, but it still goes alot further over here than it did 'at home'!

[JimsKnight]

What makes the baht strong?

Well they've probably got their fiat currency backed by more gold thank most western nations is one reason...

[JimsKnight]

It could do with a slight devaluation to allow exports to recover from the floods, once the real level of the damage has been revealed. This has been under-estimated by the present government for sure, both for the short-term and the long-term.

Some foreign companies might use this as an excuse to go elsewhere and Cambodia, for one, beckons increasingly, with more enticing labour rates and less internal problems.

Good news for English is that the Eurozone crisis at the moment , the level of the U.S. debt and the UK's austerity measures are combining to make the UK (along with Germany) the two "safest havens" for investors in the Western World. Safer even than the Scandinavian block. This may or may not be temporary, but will inevitably raise Sterling's value, so that the combination of this this with the possiblity of the above happening to the Thai currency , might mean a few more Baht to the Pound sooner rather than later.

Should any Eurozone country actually "go-under," then the eventual rebound on the UK and German economies will shift more investment further East, to India and China and the opposite will happen.

Back to the Baht. It's resilience through the various problems has been quite astonishing and suggests that other influences abound (has BoT been buying again?) Influences that would be unpopular with the rice-growers or those in the tourist industry, for example.

Whatever you're smoking is dream-weed if you believe all of that.

The sun is setting on the west, there's no happy-ending.

If governments were to understand that the pain can be lessened by getting the asian debt monkey off it's back thing's would be a whole lot easier for the citizenry...

[bunta71]

All I know is that the dollar each month gains during the middle of the month. Payday for me approaches on the first of the month and EVERY month the dollar sinks against the baht during the week of most falang paydays...Hmmm

[Beechboy]

It could do with a slight devaluation to allow exports to recover from the floods, once the real level of the damage has been revealed. This has been under-estimated by the present government for sure, both for the short-term and the long-term.

Some foreign companies might use this as an excuse to go elsewhere and Cambodia, for one, beckons increasingly, with more enticing labour rates and less internal problems.

Good news for English is that the Eurozone crisis at the moment , the level of the U.S. debt and the UK's austerity measures are combining to make the UK (along with Germany) the two "safest havens" for investors in the Western World. Safer even than the Scandinavian block. This may or may not be temporary, but will inevitably raise Sterling's value, so that the combination of this this with the possiblity of the above happening to the Thai currency , might mean a few more Baht to the Pound sooner rather than later.

Should any Eurozone country actually "go-under," then the eventual rebound on the UK and German economies will shift more investment further East, to India and China and the opposite will happen.

Back to the Baht. It's resilience through the various problems has been quite astonishing and suggests that other influences abound (has BoT been buying again?) Influences that would be unpopular with the rice-growers or those in the tourist industry, for example.

Whatever you're smoking is dream-weed if you believe all of that.

The sun is setting on the west, there's no happy-ending.

If governments were to understand that the pain can be lessened by getting the asian debt monkey off it's back thing's would be a whole lot easier for the citizenry...

Funnily enough, as I was writing that, I was listening to a discussion (on BBC News24) between four leading economists, including Robert Peston of the BBC , a Times Newspaper's leading economic correspondent, Kathry Hopkins and two leading bankers (one German and one British.) The points I made, with the exclusion of any reference to the Baht, were from that discussion.

I suppose they were having a smoke-in.

"Sun is setting on the West?" Why is it necessary for some people to make such sweeping and inaccurate statements in such arguments. It betrays a complete naivity of the subject under discussion. The complex web of international finance**** is worthy of more intellectual debate.

**** Take the UK, for example. Whatever the value of it's IOU notes to China, it is most certain that Britain has proportionally greater Chinese assets whose value would be amplified by Sterling's plunge.

Edited November 17, 2011 by Beechboy

[moe666]

More intellectual debate then should have been posted to the banking forum

[Beechboy]

More intellectual debate then should have been posted to the banking forum

Uh?

Let's talk about the price of Leo then? Would you be a happier bunny?

[lovelomsak]

Thailand doesnot need to devalue it currency for export trade. Other countries are waiting in line for production to get underway so they can access Thai exports for the manufacturers in their own countries. Some countries have reduced car production by 50% since the flood because Thailand couldnot supply them with needed parts. The computer world will see increases in cost because during the flood hard drive product was disrupted. Optical equipment is patiently waiting for lenses , need I say more.

Edited November 17, 2011 by lovelomsak

[meatboy]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

[Beechboy]

<BR>Thailand doesnot need to devalue it currency for export trade. Other countries are waiting in line for production to get underway so they can access Thai exports for the manufacturers in their own countries. Some countries have reduced car production by 50% since the flood because Thailand couldnot supply them with needed parts. The computer world will see increases in cost because during the flood hard drive product was disrupted. Optical equipment is patiently waiting for lenses , need I say more.<BR>[/quote

I actually said, "Could do with," not "Need." There is more to all this than Japanese car parts and computer products or even optical equipment. Lots of industries in other fields, have been affected and I also mentioned farming and tourism as well. Don Muang, the hub for Thai industry requires considerable re-construction also.

Lack of production because of flooding has already caused Thai economists to downgrade the country's growth forecast for next year by over 2% and the US has tonight committed $10m to assist in the countries economic recovery, particularly regarding Don Muang.

Edited November 17, 2011 by Beechboy

[lovelomsak]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

You are absolutely right the Uk and many other nations are sinking. They live in deniel. They donot recognize the power they give away for short term profit in poorly managed capitalism. Labour is the backbone of an economy. Many nations have sold out for high profit margins, by letting most labour go to countries with cheap labour. These high profits donot dewindle down. So the workers are unemployed, cannot purchase items, cannot pay taxes to keep government ran social programs running. In the future countries like Thailand will be dictating what happens. They will economically destroy nations like the Uk because of their pompous attitude that they are the greater power. Their is a finite point when power balance shifts.

The only thing that can save these poorly managed countries is high tax on imports to their countries making it none profitable to seek cheap labour outside their own nation.Thus forcing industry to put labour in their own country back to work. But as we all know goverments are lead around by big business, so whats the chances of this ever happening?

[Beechboy]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

This is to do with the Eurozone crisis. The Bank of England, today, downgraded their growth forecast of the UK economy to 1% and blamed events in Europe.

This factor will, of course, effect inward investment, not so much "haven" investment, but more that from speculators.

There is a "phoney" lull in all European economies at the moment, pending a decision regarding the bail out of those countries in trouble, particularly Italy.

[Gary A]

A country that produces more than it uses will always have a strong currency. Thailand does this along with not being a socialist welfare country. Unfortunately the western countries have forgotten these simple economic facts.

[Beechboy]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

You are absolutely right the Uk and many other nations are sinking. They live in deniel. They donot recognize the power they give away for short term profit in poorly managed capitalism. Labour is the backbone of an economy. Many nations have sold out for high profit margins, by letting most labour go to countries with cheap labour. These high profits donot dewindle down. So the workers are unemployed, cannot purchase items, cannot pay taxes to keep government ran social programs running. In the future countries like Thailand will be dictating what happens. They will economically destroy nations like the Uk because of their pompous attitude that they are the greater power. Their is a finite point when power balance shifts.

The only thing that can save these poorly managed countries is high tax on imports to their countries making it none profitable to seek cheap labour outside their own nation.Thus forcing industry to put labour in their own country back to work. But as we all know goverments are lead around by big business, so whats the chances of this ever happening?

Which, of course explains the following:-

http://www.theriches...gest-economies/

(It takes time to load!)

I see no Thailand.

I do note the comments about emerging economies and the reference to 2020 re: China and the U.S. However, much will happen in the next decade, including such as major shifts in power resources for transport and production and medical advancements that will once again leave these emerging economies trailing in the wake.

Minor examples: Will Thailand be amongst the foremost to adopt or produce electric automobiles?

Will Thailand still be producing generic drugs, whilst UK laborities remain amongst the World's leading innovators?

Answers: No and yes. I did say minor examples but who knows what the future may bring in the fields of electronics and computing. Whatever this may be, little will originate in the LOS.

Emerging countries are, by definition, ripe for investment as they offer cheap labour. They prosper because they have limited welfare state facilities or social security commitments to fund, as with Thailand.

They stagnate when other countries become more attractive, eg Cambodia, because their own labour costs rise with the imposition of minimum wage legislation whilst the inevitable development of more sophisticated welfare systems will put a strain upon government spending,( leading to tax increases or borrowing.) Such promises were in the present Thai government's election manifesto, after all.

Innovation and invisibles are now the major source of economic development . Not manufacturing and "dirty" (eg. sweatshops) industries that rely upon cheap labour or the production of fake products.. The latter are ephemeral. A truly emerging country has to eliminate these to become a leading economy Worldwide and not just in it's own immediate neighbourhood. Third World institutionalisation does not a World leading economy make.

Internal problems, such as civil unrest, a divided society and flooding just exacerbate these issues.

Edited November 17, 2011 by Beechboy

[jimbeam1]

Thanks for your insight Beechboy. Some Interesting comments.

jb1

[mataus101]

they prosper because they spend little to nothing on infrastructure, and even less on there people.

let's be realistic, the majority of thai people are not doing very well at all.

[lovelomsak]

they prosper because they spend little to nothing on infrastructure, and even less on there people.

let's be realistic, the majority of thai people are not doing very well at all.

I agree with you 200%. But you forgot one thing the majority of people barely get paid enough to live

[garrfeild]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

You are absolutely right the Uk and many other nations are sinking. They live in deniel. They donot recognize the power they give away for short term profit in poorly managed capitalism. Labour is the backbone of an economy. Many nations have sold out for high profit margins, by letting most labour go to countries with cheap labour. These high profits donot dewindle down. So the workers are unemployed, cannot purchase items, cannot pay taxes to keep government ran social programs running. In the future countries like Thailand will be dictating what happens. They will economically destroy nations like the Uk because of their pompous attitude that they are the greater power. Their is a finite point when power balance shifts.

The only thing that can save these poorly managed countries is high tax on imports to their countries making it none profitable to seek cheap labour outside their own nation.Thus forcing industry to put labour in their own country back to work. But as we all know goverments are lead around by big business, so whats the chances of this ever happening?

That may be so, but the fact is living in the west has become too expensive. the labour force has priced itself out of the manufacturing market compared to Asia. Thats what globalisation is all about being able to go where labour is cheapest, for greater profits. The west may have a higher living standard, but at a cost far exceeding what most can afford and that is the real problem. In real terms the value of the money in peoples pockets doesn't keep up with the cost of the infrastructure and what we pay for public services. These public services are government controled, and governements like to waste money on failed modernisation plans, in the UK look at the fiaso of the child suport agency, recently UK tax office settles tax bill with Vodafone for 1 billion when it should have been 6 billion. Corruption of another kind.

The problem now is the solution, The world normaly sorts these problems out with wars, kill off a few million people destroy infrastructure, creating rebuilding programs starting from scratch. But can we afford to go to war there is no money in the coffers to pay for it, so we get mass civil unrest, not just an arab spring but the occupy wallstreet and other financial centres. This is just the begining. Wonder what next year will bring 2012.

I've got my sign ready "THE END OF THE WORLD IS NIGH"

Edited November 18, 2011 by garrfeild

[meatboy]

i to am baffled by the strenght of the baht,just look at the last 4days mon.14th rates for buying baht,sterling cash 48.69,tues 48.19,wed 48.01,today 47.69 going by these rates its the uk that is sinking

hang on whats happening? 8.30am rate 48.00,12.45pm rate 48.10 dont they know its friday,any guesses at what it will be at 4.30pm.

[SweRob]

A taxi from the airport to pattya 10 years ago did cost 800 bath, a taxi today 10 years later cost the same amount. The problem with the exchange rate is that your own country is printing and inflating their currency at an faster rate then Thailand is. I bet there are ppl out there bitching about the exchange rate, and still when their own country raises interest rates, they bitch about that too.

[MAJIC]

This question has been asked many times,and never got a satisfactory answer,it almost seems like the stability and resilience of the Baht defies all laws of economics,

even a Military Coup had no effect,Tsunami,Bird flu,last years Red shirts 3 month major problem, you name it? nothing seems to have any effect,on the strength of the Baht.

Most Countries economy would have suffered badly,with half as much as Thailand has coped with.

I guess they must be doing something right! since the Baht crashed in 1997, but what ??? is a mystery.

[StreetCowboy]

A taxi from the airport to pattya 10 years ago did cost 800 bath, a taxi today 10 years later cost the same amount. The problem with the exchange rate is that your own country is printing and inflating their currency at an faster rate then Thailand is. I bet there are ppl out there bitching about the exchange rate, and still when their own country raises interest rates, they bitch about that too.

Que sera, sera.

If you can't laugh in the face of adversity, when can you laugh?

I always used to enjoy watching Adversity Challenge, with Bamber Gascoigne. What greater adversity could a man face, than a name like that?

SC

[trevorg]

A taxi from the airport to pattya 10 years ago did cost 800 bath, a taxi today 10 years later cost the same amount. The problem with the exchange rate is that your own country is printing and inflating their currency at an faster rate then Thailand is. I bet there are ppl out there bitching about the exchange rate, and still when their own country raises interest rates, they bitch about that too.

Que sera, sera.

If you can't laugh in the face of adversity, when can you laugh?

I always used to enjoy watching Adversity Challenge, with Bamber Gascoigne. What greater adversity could a man face, than a name like that?

SC

And the fact that he fathered Paul is equally amazing!

[StreetCowboy]

A taxi from the airport to pattya 10 years ago did cost 800 bath, a taxi today 10 years later cost the same amount. The problem with the exchange rate is that your own country is printing and inflating their currency at an faster rate then Thailand is. I bet there are ppl out there bitching about the exchange rate, and still when their own country raises interest rates, they bitch about that too.

Que sera, sera.

If you can't laugh in the face of adversity, when can you laugh?

I always used to enjoy watching Adversity Challenge, with Bamber Gascoigne. What greater adversity could a man face, than a name like that?

SC

And the fact that he fathered Paul is equally amazing!

Surprising, certainly. And, no doubt, as disappointing for Bamber as Paul. I assume they both claim he was adopted. Ideally, by someone else....

SC

[trevorg]

A taxi from the airport to pattya 10 years ago did cost 800 bath, a taxi today 10 years later cost the same amount. The problem with the exchange rate is that your own country is printing and inflating their currency at an faster rate then Thailand is. I bet there are ppl out there bitching about the exchange rate, and still when their own country raises interest rates, they bitch about that too.

Que sera, sera.

If you can't laugh in the face of adversity, when can you laugh?

I always used to enjoy watching Adversity Challenge, with Bamber Gascoigne. What greater adversity could a man face, than a name like that?

SC

And the fact that he fathered Paul is equally amazing!

Surprising, certainly. And, no doubt, as disappointing for Bamber as Paul. I assume they both claim he was adopted. Ideally, by someone else....

SC

Apologies for wandering off topic, but wasn't he adopted by Bambers mate V bellies?

[janverbeem]

A country that produces more than it uses will always have a strong currency. Thailand does this along with not being a socialist welfare country. Unfortunately the western countries have forgotten these simple economic facts.

So I guess they weren't producing enough in 1997 then since their currency devaluated by 50%.