Pound Hits 50, How Long Will The Trend Last?

chiang mai · May 16, 2012

The only place there's a consensus that the Baht will depreciate is amongst those residents who are wishing it do so, anyone else who bothers to set aside their fantasies in favour of economic fact arrives at a different conclusion. For example, Thai GDP is currently estimated at around 3.6% whereas the UK is forecast to be circa 0.1%. Thai foriegn currency reserves are upwards of USD 170 billion versus the UK which are negligible. Impact on UK banking by a disruption in Europe, potentially lethal, impact on Thail banks is negligible (per Fitch this date)

I don't think we really need to compare relative debt levels or it makes the Baht depreciation theory seem too ridiculous, ditto the looming threat that suggests a break up in Europe would cost the UK 40% of its export market!

As for the comparison with 1997, there isn't one. 1997 was the result of Thai banks over extending themselves and racking up massive bad debt, not the withdrawl of speculative funds from overseas investors, the creation of an independant central bank has gone a long way subsequently. If anything, I can imgaine at some point that Thailand could reintroduce currency controls to slow down the amount of inbound hot cash from overseas.

w11guy · May 16, 2012

I have seen this trend for the last 2 years don't know why but last may it hit 50 to which was a yearly high then come this may it did the same hit a yearly high always seems to happen just when going into low season don't worry the trend will continue and by the time we hit high season again it will be 47-48

Sorry but no way did it hit 50 last may at any time ,i brought over 5k and got 48.10 to the pound

Take a look at a currency chart. It was 50 or very, very close (49.9something) in May last year. If you got 48.1 maybe you used a bank who used a dodgy conversion rate.

chiang mai · May 16, 2012

... In most countries, a combination of coups, airport seizures, street occupations, political musical chairs, dubious government policies, etc would have impacted on the currency. But foreign inflows have helped to keep the THB strong - I'd suggest overly so. Question is, how much of those inflows are speculative? And what happens if - or when - the speculators decide - as in 1997 - it's time to pull the plug?

Not to be dour, but isn't Thailand heading for yet more political uncertainty?

We have Big Brother busy rehearsing his triumphal return to power and greatness speech (thanks little sister, I'll take it from here!) and a King who appears to be holding on through sheer guts and willpower... and that's a man who will be truly and sadly missed. I don't see much improvement in political stability anytime soon.

Thailand has been plagued by political uncertainty throughout the past 100 years, everyone thought that the fairly recent riots would decimate the currency but instead it strengthened.

metisdead · May 16, 2012

An inflammatory insult post has been removed.

chiang mai · May 16, 2012

Any number of opinions, but no one has any real idea as to the direction of either currency. One post suggests a USD rate of 1.50, ignoring the fact that the USD/GBP rate has fluctuated for many years, moving over time between 1.38 and 2.10. Thailand government policies threaten massive debt obligations vs a low tax inflow, and a strong likelihood of quantitative easing - printing money.

In most countries, a combination of coups, airport seizures, street occupations, political musical chairs, dubious government policies, etc would have impacted on the currency. But foreign inflows have helped to keep the THB strong - I'd suggest overly so. Question is, how much of those inflows are speculative? And what happens if - or when - the speculators decide - as in 1997 - it's time to pull the plug?

I can remember GBP/USD at 1.o and also at 2.60, all that really confirms is that the rate moves with the economic climate in both countries and that range has little to do with today.

But I'm curious, why do you think that Thailand is ready to begin QE, is there a supportable reason for this or merely an odd wish?

chiang mai · May 16, 2012

And whilst I'm at it:

I'm no expert in these matters although there are posters in the forum who are. And whilst I am not an expert in FOREX let me also add that I'm not a dreamer either who wishes for things to happen that are almost impossible, it's not that difficult to spend fifteen minutes at the UK's ONS site and the Thai BOT site to look at the numbers and the present position and a better answer is not that difficult to conclude.

yoshiwara · May 16, 2012

The only place there's a consensus that the Baht will depreciate is amongst those residents who are wishing it do so, anyone else who bothers to set aside their fantasies in favour of economic fact arrives at a different conclusion. For example, Thai GDP is currently estimated at around 3.6% whereas the UK is forecast to be circa 0.1%. Thai foriegn currency reserves are upwards of USD 170 billion versus the UK which are negligible. Impact on UK banking by a disruption in Europe, potentially lethal, impact on Thail banks is negligible (per Fitch this date)

I don't think we really need to compare relative debt levels or it makes the Baht depreciation theory seem too ridiculous, ditto the looming threat that suggests a break up in Europe would cost the UK 40% of its export market!

As for the comparison with 1997, there isn't one. 1997 was the result of Thai banks over extending themselves and racking up massive bad debt, not the withdrawl of speculative funds from overseas investors, the creation of an independant central bank has gone a long way subsequently. If anything, I can imgaine at some point that Thailand could reintroduce currency controls to slow down the amount of inbound hot cash from overseas.

The independence of the central bank is being undermined and there is the little problem of inflation rising with government initiatives to shore up Thaksin's support base to encourage his return. Thailand has benefitted from being seen as within the Chinese geographical sphere, but the halo is slipping and I wouldn't be betting on the baht substantially strengthening any time soon. As for the pound, should be OK for the next two years, ut uncertainty about the next election will weigh.

Jim walker · May 16, 2012

I transferred my money GBP the other day and got 50.17 TT to my Bangkok Bank account I have just had a quick check and it is down to 49.97 I think that this must be the first time I managed to do a transfer at the right time to benefit me, if I transfer GBP generally just drops like a stone

http://www.bangkokbank.com/Bangkok%20Bank/Web%20Services/Rates/Pages/FX_Rates.aspx

yoshiwara · May 16, 2012

Any number of opinions, but no one has any real idea as to the direction of either currency. One post suggests a USD rate of 1.50, ignoring the fact that the USD/GBP rate has fluctuated for many years, moving over time between 1.38 and 2.10. Thailand government policies threaten massive debt obligations vs a low tax inflow, and a strong likelihood of quantitative easing - printing money.

In most countries, a combination of coups, airport seizures, street occupations, political musical chairs, dubious government policies, etc would have impacted on the currency. But foreign inflows have helped to keep the THB strong - I'd suggest overly so. Question is, how much of those inflows are speculative? And what happens if - or when - the speculators decide - as in 1997 - it's time to pull the plug?

Any number of opinions, but no one has any real idea as to the direction of either currency. One post suggests a USD rate of 1.50, ignoring the fact that the USD/GBP rate has fluctuated for many years, moving over time between 1.38 and 2.10. Thailand government policies threaten massive debt obligations vs a low tax inflow, and a strong likelihood of quantitative easing - printing money.

In most countries, a combination of coups, airport seizures, street occupations, political musical chairs, dubious government policies, etc would have impacted on the currency. But foreign inflows have helped to keep the THB strong - I'd suggest overly so. Question is, how much of those inflows are speculative? And what happens if - or when - the speculators decide - as in 1997 - it's time to pull the plug?

I can remember GBP/USD at 1.o and also at 2.60, all that really confirms is that the rate moves with the economic climate in both countries and that range has little to do with today.

But I'm curious, why do you think that Thailand is ready to begin QE, is there a supportable reason for this or merely an odd wish?

I don't think so. I believe the lowest point was $1.07. The good old days.

BWPattaya · May 16, 2012

I have just waded through all the posts in the hope that a real expert predicted going back to the 75 Bt to the Pound that I get for my first couple of years here.

So, with bated breath I will wait a couple more years.

w11guy · May 16, 2012

Here's a way to sort out which of you are currency experts. Which one of you is living off the proceeds of all the cash you made in forex trade?. There are so many 'experts' on here that there must be numerous millionaires here. So own up and let us know how much you made?

My guess is none of you made money and maybe many of you lost money.

No-one knows what GBP vs. THB will be in the future. If you think the current rate is good then take it. Don't waste your life listening to 'experts' on here and trying to wait for a perfect rate.

Reading these posts just shows how little people know, but how much they think they know. If people were as clever as they thought they were they could make a few GBP million overnight.

Edited May 16, 2012 by w11guy

Lite Beer · May 16, 2012

A post bringing HM The King into the discussion has been removed.

chiang mai · May 16, 2012

The only place there's a consensus that the Baht will depreciate is amongst those residents who are wishing it do so, anyone else who bothers to set aside their fantasies in favour of economic fact arrives at a different conclusion. For example, Thai GDP is currently estimated at around 3.6% whereas the UK is forecast to be circa 0.1%. Thai foriegn currency reserves are upwards of USD 170 billion versus the UK which are negligible. Impact on UK banking by a disruption in Europe, potentially lethal, impact on Thail banks is negligible (per Fitch this date)

I don't think we really need to compare relative debt levels or it makes the Baht depreciation theory seem too ridiculous, ditto the looming threat that suggests a break up in Europe would cost the UK 40% of its export market!

As for the comparison with 1997, there isn't one. 1997 was the result of Thai banks over extending themselves and racking up massive bad debt, not the withdrawl of speculative funds from overseas investors, the creation of an independant central bank has gone a long way subsequently. If anything, I can imgaine at some point that Thailand could reintroduce currency controls to slow down the amount of inbound hot cash from overseas.

The independence of the central bank is being undermined and there is the little problem of inflation rising with government initiatives to shore up Thaksin's support base to encourage his return. Thailand has benefitted from being seen as within the Chinese geographical sphere, but the halo is slipping and I wouldn't be betting on the baht substantially strengthening any time soon. As for the pound, should be OK for the next two years, ut uncertainty about the next election will weigh.

I agree that the independece of the central bank is a concern and can only hope that there is intervention on that point.

As far as a strengthening baht is concerned: much of the work of the BOT in recent months has been in trying to keep the Baht weaker through intervention not the other way around.

Agree also there are problems with the Chinese halo and that's a bit of a wild card for me. Disagree though relative to Pounds strength vis a vis politics, the elections are not a factor, unlike the US.

phantomfiddler · May 16, 2012

In my humble opinion, any country that engulfs a system where it becomes more profitable NOT to work is inexorably going down the tubes, and since UK and America are prime examples, if I had any UK pounds I would dump them immediately on this temporary high. Tis but a glitch on an inevitable slide.

yoshiwara · May 16, 2012

The only place there's a consensus that the Baht will depreciate is amongst those residents who are wishing it do so, anyone else who bothers to set aside their fantasies in favour of economic fact arrives at a different conclusion. For example, Thai GDP is currently estimated at around 3.6% whereas the UK is forecast to be circa 0.1%. Thai foriegn currency reserves are upwards of USD 170 billion versus the UK which are negligible. Impact on UK banking by a disruption in Europe, potentially lethal, impact on Thail banks is negligible (per Fitch this date)

I don't think we really need to compare relative debt levels or it makes the Baht depreciation theory seem too ridiculous, ditto the looming threat that suggests a break up in Europe would cost the UK 40% of its export market!

As for the comparison with 1997, there isn't one. 1997 was the result of Thai banks over extending themselves and racking up massive bad debt, not the withdrawl of speculative funds from overseas investors, the creation of an independant central bank has gone a long way subsequently. If anything, I can imgaine at some point that Thailand could reintroduce currency controls to slow down the amount of inbound hot cash from overseas.

The independence of the central bank is being undermined and there is the little problem of inflation rising with government initiatives to shore up Thaksin's support base to encourage his return. Thailand has benefitted from being seen as within the Chinese geographical sphere, but the halo is slipping and I wouldn't be betting on the baht substantially strengthening any time soon. As for the pound, should be OK for the next two years, ut uncertainty about the next election will weigh.

I agree that the independece of the central bank is a concern and can only hope that there is intervention on that point.

As far as a strengthening baht is concerned: much of the work of the BOT in recent months has been in trying to keep the Baht weaker through intervention not the other way around.

Agree also there are problems with the Chinese halo and that's a bit of a wild card for me. Disagree though relative to Pounds strength vis a vis politics, the elections are not a factor, unlike the US.

I agree that the baht has until recently been seen as over-strong and maybe the government thinks there is sufficient slack for them to push out the boat, but they are not the brightest bulbs around and I would be betting that they are going to overshoot with escalating inflation. With Europe doing a wobble and the US going loopy the next few months I think the pound looks like the cleanest shirt in the dirty laundry basket. Long term though I really like the Singapore Dollar. Sorry I didn't do something about it when it was 3 to the pound.

Edited May 16, 2012 by yoshiwara

pmacaodh · May 16, 2012

Hard to say. There are two sides to every currency and fundamentals don't always determine direction,more often technical aspects like capital flows and expectations of future policy can have the greater influence. Just look at PPP currency models.

GBP: While Britain is in charge of it's own monetary policy and went the way of monetising it's mountain of debt right from the start (something Greece et al can't do themselves, but Europe will have to do to save the Euro), it indirectly weakens the currency. On the other hand, since it has tackled its problems first, it can be first to start growing again... maybe then interest rates will start to rise if it appears inflation is taking off.

THB: A growing economy is usually positive for a currency and Thailand doesn't have the problems of Europe but it seems inflation is on the rise and there is some capital flight in the short term, all of which can weaken the THB.

Many aspects to factor in and nothing is unquestionable. Turns out it's quite hard to make money trading currencies.

yoshiwara · May 16, 2012

Here's a way to sort out which of you are currency experts. Which one of you is living off the proceeds of all the cash you made in forex trade?. There are so many 'experts' on here that there must be numerous millionaires here. So own up and let us know how much you made?

My guess is none of you made money and maybe many of you lost money.

No-one knows what GBP vs. THB will be in the future. If you think the current rate is good then take it. Don't waste your life listening to 'experts' on here and trying to wait for a perfect rate.

Reading these posts just shows how little people know, but how much they think they know. If people were as clever as they thought they were they could make a few GBP million overnight.

Actually the answer to a part of that question is that it doesn't have to have been done through straight forex trades. One example is those individuals who bought property in Thailand when the rate was 1:70 for the pound. They are now sitting on a sizeable appreciation if they just sell the property at the same baht value they bought it at.

chiang mai · May 16, 2012

Yoshiwara:

"I agree that the baht has until recently been seen as over-strong and maybe the government thinks there is sufficient slack for them to push out the boat, but they are not the brightest bulbs around and I would be betting that they are going to overshoot with escalating inflation. With Europe doing a wobble and the US going loopy the next few months I think the pound looks like the cleanest shirt in the dirty laundry basket. Long term though I really like the Singapore Dollar. Sorry I didn't do something about it when it was 3 to the pound."

The Baht has been seen to be overly strong recently, it has been overly strong, hence if there are capital outflows at present that will be of benefit to the BOT.

Agreed on SGD although it moves with USD so any strength is dependant upon a US recovery.

W11Guy:

I don't think this is about FOREX trading and how much money anyone has made or lost, I think it's about having some sort of grasp of economics and an understanding of some of the factors involved. Perhaps you remember a similar topic a few years ago when posters were suggesting it was only a matter of months before GBP/THB would be back at 70+, the lunatics and dreamers were in a feeding frenzy on the idea of it, there's still a few around, even today!

robertson468 · May 16, 2012

The only place there's a consensus that the Baht will depreciate is amongst those residents who are wishing it do so, anyone else who bothers to set aside their fantasies in favour of economic fact arrives at a different conclusion. For example, Thai GDP is currently estimated at around 3.6% whereas the UK is forecast to be circa 0.1%. Thai foriegn currency reserves are upwards of USD 170 billion versus the UK which are negligible. Impact on UK banking by a disruption in Europe, potentially lethal, impact on Thail banks is negligible (per Fitch this date)

I don't think we really need to compare relative debt levels or it makes the Baht depreciation theory seem too ridiculous, ditto the looming threat that suggests a break up in Europe would cost the UK 40% of its export market!

As for the comparison with 1997, there isn't one. 1997 was the result of Thai banks over extending themselves and racking up massive bad debt, not the withdrawl of speculative funds from overseas investors, the creation of an independant central bank has gone a long way subsequently. If anything, I can imgaine at some point that Thailand could reintroduce currency controls to slow down the amount of inbound hot cash from overseas.

The independence of the central bank is being undermined and there is the little problem of inflation rising with government initiatives to shore up Thaksin's support base to encourage his return. Thailand has benefitted from being seen as within the Chinese geographical sphere, but the halo is slipping and I wouldn't be betting on the baht substantially strengthening any time soon. As for the pound, should be OK for the next two years, ut uncertainty about the next election will weigh.

I agree that the independece of the central bank is a concern and can only hope that there is intervention on that point.

As far as a strengthening baht is concerned: much of the work of the BOT in recent months has been in trying to keep the Baht weaker through intervention not the other way around.

Agree also there are problems with the Chinese halo and that's a bit of a wild card for me. Disagree though relative to Pounds strength vis a vis politics, the elections are not a factor, unlike the US.

I agree that the baht has until recently been seen as over-strong and maybe the government thinks there is sufficient slack for them to push out the boat, but they are not the brightest bulbs around and I would be betting that they are going to overshoot with escalating inflation. With Europe doing a wobble and the US going loopy the next few months I think the pound looks like the cleanest shirt in the dirty laundry basket. Long term though I really like the Singapore Dollar. Sorry I didn't do something about it when it was 3 to the pound.

Also add the change of the French President, whom I believe is going to tax the backside of the French Rich, who again, speculation has it, are going to throw their Euros into the UK in exchange for sterling. Reports have already appeared in the Press that they are buying up the top range properties in the UK, like there is no tomorrow. It won't have an earth shatterng effect on the £/Baht, but just one of the many factors that could bring some influence in strengthening the £ - I hope!!

Edited May 16, 2012 by robertson468

chiang mai · May 16, 2012

It will be worth looking at the Land Registry report in a couple of months time to see if the French really are buying up central London. Personally, knowing the French just a little bit I think they would rather chew of their arms before moving to the UK and that it's more likely that the report is just another in a long line of reports by vested interests, aka estate agents. But I don't discount that they are converting their Euro's into Pounds and undertaking some form of investments in the UK.

TommoPhysicist · May 16, 2012

I don't think this is about FOREX trading and how much money anyone has made or lost, I think it's about having some sort of grasp of economics and an understanding of some of the factors involved. Perhaps you remember a similar topic a few years ago when posters were suggesting it was only a matter of months before GBP/THB would be back at 70+, the lunatics and dreamers were in a feeding frenzy on the idea of it, there's still a few around, even today!

I'm fairly sure those guys were all predicting 1:35, and they were all wrong.

I can also find many predicting the THB would never hit 50 again ..... also all wrong.

If those who supposedly have 'a grasp of economics' could predict future exchange rates, they would all be rich ..... most of them aren't ...... so alternatively some might conclude exchange rates are basically unpredictable.

Edited May 16, 2012 by TommoPhysicist

tragickingdom · May 16, 2012

The trend will last until the markets realize that they have been fooled by London and Washington. As soon as the markets realize that the debt problem in the US and in England are far far worse than that in France or even the Euro area as a whole they dump it again. In the meantime it could still go up a bit. That is very good news for the Euro area and Thailand whose exports become cheaper. Europe would not mind to se the Euro become 20% cheaper. It is very bad news for the UK and the USA who will see their economic growth go down the drain. Enjoy for at long as it last.

HardenedSoul · May 16, 2012

Also add the change of the French President, whom I believe is going to tax the backside of the French Rich, who again, speculation has it, are going to throw their Euros into the UK in exchange for sterling. Reports have already appeared in the Press that they are buying up the top range properties in the UK, like there is no tomorrow. It won't have an earth shatterng effect on the £/Baht, but just one of the many factors that could bring some influence in strengthening the £ - I hope!!

Yeah I'd discount anything in the mainstream press on the economy especially when they start predicting nonsense like the French are going to buy up half of Central London and, in doing so, prop up sterling. Remember, these are the same idiots who told the growing ranks of the gullible peasantry in Britain that the Royal Wedding could rescue the UK economy whilst forgetting that the extended holiday would hammer the country's productivity.

chiang mai · May 16, 2012

I don't think this is about FOREX trading and how much money anyone has made or lost, I think it's about having some sort of grasp of economics and an understanding of some of the factors involved. Perhaps you remember a similar topic a few years ago when posters were suggesting it was only a matter of months before GBP/THB would be back at 70+, the lunatics and dreamers were in a feeding frenzy on the idea of it, there's still a few around, even today!

I'm fairly sure those guys were all predicting 1:35, and they were all wrong.

I can also find many predicting the THB would never hit 50 again ..... also all wrong.

If those who supposedly have 'a grasp of economics' could predict future exchange rates, they would all be rich ..... most of them aren't ...... so alternatively some might conclude exchange rates are basically unpredictable.

Yes and I have been "guilty" of ascribing to both those numbers although my 35 or 40 was with the caveat of plus or minus 10% so I got very close on that one, much closer than the 70 crowd.

I also think there are certain events that take place that make trying to hazard even a reasonable guess very difficult, the collapse of a major currency, a significant attack on a middle eastern country and even natural disasters on a large scale, it's nigh on impossible to calculate the imapct on a currency as a result of those things. But in an every day environment, looking at economic indicators goes a long way towards the right answer, my only beef is that many people don't do that or if they do, they ignore the answer in favour of one they prefer - there's an analogy here with technical trading which is a much safer bet altogether.

emibel · May 16, 2012

The chairman of the Thai Central Bank has just been replaced and the new appointed one, Virabongsa, has declared yesterday that he is in favour of easing the interest rates in order to keep pace or further boost the economy.

If that happens, I think we will see a weaker baht in a mid term.

anterian · May 16, 2012

Is it not possible the the increased tourism this year in England with both the Olympics and the Jubilee are having an effect on the Pound?

chiang mai · May 16, 2012

The chairman of the Thai Central Bank has just been replaced and the new appointed one, Virabongsa, has declared yesterday that he is in favour of easing the interest rates in order to keep pace or further boost the economy.

If that happens, I think we will see a weaker baht in a mid term.

Lower interest rates means higher inflation, can't see that being a winner.

chiang mai · May 16, 2012

Is it not possible the the increased tourism this year in England with both the Olympics and the Jubilee are having an effect on the Pound?

I would guess the impact will be negligible, despite them both being very worthwhile events, neither of them has any serious impact on the overall economy outside of hotels and restaurants.

thaibeachlovers · May 16, 2012

Actually the UK is doing very well . Unemployment is on the down , production is on the up. The government Deficit on the way down. its because of whats happening in Europe is masking the UK true economic output. The UK true out put is also masked, for example The wings for the Airbus are made in the UK , but then flown to France for assembly, Then France says we have sold x amount of Air buses, so France gets the Economical benefits.

No the UK is NOT doing very well. It's just not doing as badly as the likes of Greece.

The fact of the matter is that austerity hasn't even really begun to bite down that hard yet and already the pips are squeaking. The country's technically back in recession, inflation remains anchored way above the BoE's target and the banks ain't lending. Make no mistake, things are going to get far, far worse in Britain and it'll take 5 years and a hell of a lot more quantitative easing before any sustainable, meaningful economic recovery takes hold.

If I was the OP, I'd change it up sharpish before the downtrend resumes.

I hope you are right, as I changed it all today.

However, the rates as given in the TV exchange rates are not those in the banks. Best I could get was 49.76, and that was out of 4 banks.

Oh well, now that I don't have any left to change, I fully expect the pound to skyrocket against the baht- Murphy rulez!

anterian · May 16, 2012

Posted 14 minutes ago

anterian, on 20 minutes ago, said:

Is it not possible the the increased tourism this year in England with both the Olympics and the Jubilee are having an effect on the Pound?

I would guess the impact will be negligible, despite them both being very worthwhile events, neither of them has any serious impact on the overall economy outside of hotels and restaurants.

Chiang Mai, I totally disagree, read this http://www.visitbritain.org/insightsandstatistics/visitoreconomyfacts/index.aspx

8.6 of GDP is not negligible.

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