Thai Baht

[Jaffy]

Can't beleive the strength of the thai baht recently.

The current spot rate is approx. 69.3b / £ or 39.0 / $

Now I assumed that the thai baht was linked to the $. Therefore, when the dollar is weak, the baht weakens & when the $ is strong the baht behaves accordingly.

However, currently the $ - £ rate is 1.7750.

When i last visited LOS the $ - £ rate was 1.74 but I was still getting 73 baht / £.

So what's going on?

Why is the baht so strong?

Isn't thailands foreign exchange reserves dependent on tourism levels? By all accounts it seems that tourism levels have not yet recovered fully after the tsunami so I'm a little confused as to the comparative strength of the baht. It must be terrible for not only the tourist industry but for thai exports too!

[Ricardo]

Also bad for farang residents in LOS, whenever we bring in money, to live upon.

[marquess]

Also bad for farang residents in LOS, whenever we bring in money, to live upon.

Not for those of us who work here and travel abroad! Besides, salaries have not really gone up here in five years, but the Baht has gone down against most major foreign countries, so 35 to the dollar you won't get me complaining.

[OldAsiaHand]

Now I assumed that the thai baht was linked to the $. Therefore, when the dollar is weak, the baht weakens & when the $ is strong the baht behaves accordingly.

The baht is no more linked to the dollar than is sterling. It floats freely (more or less), and trades like any other currency.

The reason for the near term strength of the baht has been the significant buying activity out of Singaporean banks (which are significant marketmakers in the baht), and the reason for that buying activity was the worst kept secret in the history of corporate finance -- the deal formally announced today in which the PM's family sold its interest in Shin Corp.

Remember the law of supply and demand? Big demand for the baht = rising prices for the baht. Just like oil. Will it weaken somewhat this week when demand driven by the Shin deal slackens? That would be the way to bet.

[nokia]

America's Debt Time Bomb

In the last 25 years America has gone from the world's largest creditor nation to the world's largest debtor nation. Today the national debt is approximately $7.9 trillion, and growing by over a billion a day. America depends on foreign investors to buy the govt bonds & treasury Bills. What happens if they(French,Japs & Chinese) trade dollars for euros?

Will the dollar ever drop to pre-speculation 1996 baht level of 25 ?

[chownah]

America's Debt Time Bomb

In the last 25 years America has gone from the world's largest creditor nation to the world's largest debtor nation. Today the national debt is approximately $7.9 trillion, and growing by over a billion a day. America depends on foreign investors to buy the govt bonds & treasury Bills. What happens if they(French,Japs & Chinese) trade dollars for euros?

Will the dollar ever drop to pre-speculation 1996 baht level of 25 ?

The US was a creditor nation 25 years ago? I doubt it. What do you mean by this?

[ThaiPauly]

Its gone up half a baht to the GBP overnight

HSBC is now showing a rate of 70.063 on their website today

The following rates were for the previous five days. I have kept a note of them as I need to transfer some money from overseas, but I am gonna wait a while longer. I think we will see it back to around 72 within the next two weeks

23rd 69.535

22nd 69.198

21st 69.183

20th 69.131

19th 69.479

TP

[skylar]

When I lived in Thailand it was outrageous when the baht to the pound jumped from 34 to mid-60s during the Asian Economic Crisis.

[Carmine6]

America's Debt Time Bomb

In the last 25 years America has gone from the world's largest creditor nation to the world's largest debtor nation. Today the national debt is approximately $7.9 trillion, and growing by over a billion a day. America depends on foreign investors to buy the govt bonds & treasury Bills. What happens if they(French,Japs & Chinese) trade dollars for euros?

Will the dollar ever drop to pre-speculation 1996 baht level of 25 ?

Being a creditor isn't all that great. No one remembers all that debt that's been forgiven over the years. Who cares if other countries owe money if they don't pay. Bono is trying to have some African debt wiped out now, so this continues.

China is owed a lot of dollars, so they've got a vested interest in the dollar staying reasonably strong. If the dollar drops, not only are the bonds worth much less, but their exports will drop substantially and really smack that economy. Same for Japan. My guess is, if push came to shove, they'd negotiate on that debt. But I don't think it'll get that bad. Somehing will kind of snap before then and it'll finally freak out the politicians. In the meantime, the debt is more than offset by US assets.

One bit of resistance to the dollar dropping drastically is that oil is still priced in dollars. So a weak dollar means that oil costs even more.

[barryofthailand]

All curencies are linked to the dollar. When the dollar is week the thai baht is stronger. When the dollar gets stronger the Thai baht weakens.

Same with the British pound, Australian dollar etc.

Barry

[Carmine6]

All curencies are linked to the dollar. When the dollar is week the thai baht is stronger. When the dollar gets stronger the Thai baht weakens.

Same with the British pound, Australian dollar etc.

Barry

Um, yeah, kind of the definition there. That doesn't guarantee that they'd all move in the same direction relative to the dollar or as much, and by extension, they'll be different relative to each other.

[IMA_FARANG]

Now I assumed that the thai baht was linked to the $. Therefore, when the dollar is weak, the baht weakens & when the $ is strong the baht behaves accordingly.

The baht is no more linked to the dollar than is sterling. It floats freely (more or less), and trades like any other currency.

The reason for the near term strength of the baht has been the significant buying activity out of Singaporean banks (which are significant marketmakers in the baht), and the reason for that buying activity was the worst kept secret in the history of corporate finance -- the deal formally announced today in which the PM's family sold its interest in Shin Corp.

Remember the law of supply and demand? Big demand for the baht = rising prices for the baht. Just like oil. Will it weaken somewhat this week when demand driven by the Shin deal slackens? That would be the way to bet.

Not to be "picky" but I believe (I could be wrong) the Baht is floated on a basket of currencies that includes Asian currencies and other international currencies, including the Sinapore dollar. Yes, that is a signifigant part of the "basket". I would bet that the Shin Corp deal has made the Asian currencies get stronger and the Baht will follow, at least for a while. I expect it will go back to around 40 to a dollar, because that is the level it has been around for last few years. Answer to the person who asked if the Baht would go back to 25 to a dollar is : No.

Longer answer: Bushy Boy is spending a LOT of money in Iraq. We can't even afford janitorial services here (U.S. military base in Greece) because money goes to Iraq/Afghanistan first. Until that open sore is healed, not likely to be a signifigant improvement in U.S. dollar due to growing deficiet spending.

Edited January 24, 2006 by IMA_FARANG

[nokia]

The US was a creditor nation 25 years ago? I doubt it. What do you mean by this?

The epitaph of the Reagan presidency will be: "When Ronald Reagan became President, the United States was the world's largest creditor nation. When he left the presidency, US was the world's largest net debtor nation." In 1980, US had a trade account surplus of $166 billion; by August 1987, US had an indebtedness to foreigners of $340 billion.

Foreign investors now have claims on the United States amounting to about $8 trillion of its financial assets. That's the result of the ever-larger American balance-of-payments deficits — totaling nearly $3 trillion — since 1982. Last year, the balance-of-payments deficit, the gap between the amount of money that flows into the country and the amount that flows out, was about 5 percent of gross national product. This year it may be larger still.

The Wall Street Journal recently asked: "Is the U.S. Hooked on Foreign Capital?" The answer is yes, and this applies to the government even more than the private sector. Foreign investors now hold about two-fifths of the federal debt in private hands — double the proportion they held 10 years ago, according to the Treasury Department.

Sooner or later, America must begin paying off its debts, and its binge of borrowing must come to an end. Just like everyone who borrows from his credit card.

[youngexpat]

nothing to do with why i am on thai visa today but... The american military views the american debt as sign of tacit support from the governments that are servicing it. They are selling security and the world is buying it by supporting our debt. my two cents.

[Jaffy]

Not to be "picky" but I believe (I could be wrong) the Baht is floated on a basket of currencies that includes Asian currencies and other international currencies, including the Sinapore dollar. Yes, that is a signifigant part of the "basket". I would bet that the Shin Corp deal has made the Asian currencies get stronger and the Baht will follow, at least for a while. I expect it will go back to around 40 to a dollar, because that is the level it has been around for last few years. Answer to the person who asked if the Baht would go back to 25 to a dollar is : No.

Longer answer: Bushy Boy is spending a LOT of money in Iraq. We can't even afford janitorial services here (U.S. military base in Greece) because money goes to Iraq/Afghanistan first. Until that open sore is healed, not likely to be a signifigant improvement in U.S. dollar due to growing deficiet spending.

Thanks for the explanation and

BTW

are you sure you are US Military???

You seem far too intelligent !

[Ricardo]

Also bad for farang residents in LOS, whenever we bring in money, to live upon.

Not for those of us who work here and travel abroad! Besides, salaries have not really gone up here in five years, but the Baht has gone down against most major foreign countries, so 35 to the dollar you won't get me complaining.

My apologies, having retired tends to mean that I've now forgotten, that there are still people out there working away. My respects, to anyone based here, who can earn an internationally-competitive salary. I'm sure you earn it - just as I did, 20 years ago, in the Middle East.

[samran]

Isn't thailands foreign exchange reserves dependent on tourism levels?

Is that the sophisticated way of saying "if it wasn't for us farangs Thailand would be nothing!!"

Anyway, foreign investment is the driver of reserves here. Tourism, though important, isn't the be all and end all. The Asian finacial crisis and the resulting drop in the baht didn't happen because a bunch of people decided to stop holidaying here....

[Jaffy]

Isn't thailands foreign exchange reserves dependent on tourism levels?

Is that the sophisticated way of saying "if it wasn't for us farangs Thailand would be nothing!!"

Anyway, foreign investment is the driver of reserves here. Tourism, though important, isn't the be all and end all. The Asian finacial crisis and the resulting drop in the baht didn't happen because a bunch of people decided to stop holidaying here....

This isn't what I was getting at!!!!!

I'm not one of these people that thinks that because i choose to spend my "hard earned" in LOS that I have a right to interfere in their politics, way of life or customs!

However, as exports go, Tourism is Thailands greatest export. If tourists stay way, surely this is going to affect the strength of the baht??? And it does seem that people are staying away!

I will, of course, continue to support the country I love!

[britmaveric]

Look at the trends - rates are pretty much constant if you look at a set time period. Flat - would be the word for it!!

[mbkudu]

Isn't thailands foreign exchange reserves dependent on tourism levels?

Is that the sophisticated way of saying "if it wasn't for us farangs Thailand would be nothing!!"

Anyway, foreign investment is the driver of reserves here. Tourism, though important, isn't the be all and end all. The Asian finacial crisis and the resulting drop in the baht didn't happen because a bunch of people decided to stop holidaying here....

This isn't what I was getting at!!!!!

I'm not one of these people that thinks that because i choose to spend my "hard earned" in LOS that I have a right to interfere in their politics, way of life or customs!

However, as exports go, Tourism is Thailands greatest export. If tourists stay way, surely this is going to affect the strength of the baht??? And it does seem that people are staying away!

I will, of course, continue to support the country I love!

Early night life closing time is really affecting tourism. I think it is going to do more harm economically than the government ever expected. I know quite a few people here in the US who went to Thailand as tourists and commented that it was odd that clubs and bars closed so early whereas in the Philipines it rocked on through the night till early moring.

[wincen]

Thanks for the explanation and

BTW

are you sure you are US Military???

You seem far too intelligent !

If you are in the military then thank you for serving your country. I think most of us are lucky to have our freedom and if it wasn't for people like you we woudn't have the feedom we have today. I appriciate what I have and know why I have it and who to thank.

Thanks again IMA.

Edited January 26, 2006 by wincen

[Jai Dee]

FINANCE MINISTER SAYS THE BAHT'S WEAKNESS IS ONLY SHORT-TERM

Finance Minister Tha-nong Phit-tha-ya (ทนง พิทยะ) has indicated that the baht's current strength at 39 baht per dollar was only a short-term adjustment.

Minister Thanong said the short-term adjustment of the baht could have been a result of inflow of foreign capital in the form of share purchases in Shin Corporation, after Temasek Holding purchased as much as 70 billion baht of Shin Corp shares. He said that he will soon confer with Bank of Thailand Governor M.R. Pridiyathorn Devakula (หม่อมราชวงศ์ ปรีดิยาธร เทวกุล) in determining the cause of the baht's strengthening.

Source: Thai National News Bureau Public Relations Department - 27 January 2006

[chuchok]

Isn't thailands foreign exchange reserves dependent on tourism levels?

Is that the sophisticated way of saying "if it wasn't for us farangs Thailand would be nothing!!"

Anyway, foreign investment is the driver of reserves here. Tourism, though important, isn't the be all and end all. The Asian finacial crisis and the resulting drop in the baht didn't happen because a bunch of people decided to stop holidaying here....

This isn't what I was getting at!!!!!

I'm not one of these people that thinks that because i choose to spend my "hard earned" in LOS that I have a right to interfere in their politics, way of life or customs!

However, as exports go, Tourism is Thailands greatest export. If tourists stay way, surely this is going to affect the strength of the baht??? And it does seem that people are staying away!

I will, of course, continue to support the country I love!

I think you will find that coconut,rice and rubber exports far out weigh Tourism on a percentage basis.

[~G~]

However, as exports go, Tourism is Thailands greatest export. If tourists stay way, surely this is going to affect the strength of the baht??? And it does seem that people are staying away!

I think you will find that coconut,rice and rubber exports far out weigh Tourism on a percentage basis.

Correct.

Total Tourists expenditure in 2002: 7,530 Million Dollars

Total value of exports in 2002: 73,089 Million Dollars

Tourism is far from being Thailand's biggest source for foreign currency, in fact it is only about 10% of it.

For example, if tourism expenditure will somehow fall by 30%, which represents a huge blow to the industry and can only happen in very drastic conditions, this will only result in 3% less foreign currency, which is about a single baht to the dollar.

By the way, the biggest exports are manufactured products (Textile,Machinary,Elctrical Aplicances,Plastic products, canned food,vehicles and other) then Agricultural and Fishery products.

Edited January 27, 2006 by ~G~

[Jai Dee]

By the way, the biggest exports are manufactured products (Textile,Machinary,Elctrical Aplicances,Plastic products, canned food,vehicles and other) then Agricultural and Fishery products.

I thought rice was Thailand's biggest export...

And Thailand is purported to be No 1 in the world for rice exports...

Not supported by any facts or references... just something I've heard.

[~G~]

By the way, the biggest exports are manufactured products (Textile,Machinary,Elctrical Aplicances,Plastic products, canned food,vehicles and other) then Agricultural and Fishery products.

I thought rice was Thailand's biggest export...

And Thailand is purported to be No 1 in the world for rice exports...

Not supported by any facts or references... just something I've heard.

Thailand is number one in the world in Rice export, but -

In 2002, value of rice export was 70,003 Million baht. Of Rubber, 74,603 Million Baht.

In 2003, value of rice export was 76,677 Million baht. Of Rubber, 115,822 Million Baht.

So it's not the biggest one, but certainly in the top. Apart from Rubber, I did not find a single product with higher value. Ok, Textile products are about 180,000 million baht a year, but it is not a single product but rather a huge group of items. Another big group is precious stones and jewllery, about 80,000 Million baht a year. The famous Thai silk is merely 800 Million baht a year.

[Butterfly]

FINANCE MINISTER SAYS THE BAHT'S WEAKNESS IS ONLY SHORT-TERM

Finance Minister Tha-nong Phit-tha-ya (ทนง พิทยะ) has indicated that the baht's current strength at 39 baht per dollar was only a short-term adjustment.

Minister Thanong said the short-term adjustment of the baht could have been a result of inflow of foreign capital in the form of share purchases in Shin Corporation, after Temasek Holding purchased as much as 70 billion baht of Shin Corp shares. He said that he will soon confer with Bank of Thailand Governor M.R. Pridiyathorn Devakula (หม่อมราชวงศ์ ปรีดิยาธร เทวกุล) in determining the cause of the baht's strengthening.

Source: Thai National News Bureau Public Relations Department - 27 January 2006

This is bad news for the stock market. It will hurt Q1 earnings. Expect a drop then for companies having most of their revenues in export.

Thanks Thaksin, you did once with the early repayment of the IMF debt, you are doing it again with your company takeover. What about the rest of us ?

Edited January 27, 2006 by Butterfly

[Jai Dee]

By the way, the biggest exports are manufactured products (Textile,Machinary,Elctrical Aplicances,Plastic products, canned food,vehicles and other) then Agricultural and Fishery products.

I thought rice was Thailand's biggest export...

And Thailand is purported to be No 1 in the world for rice exports...

Not supported by any facts or references... just something I've heard.

Thailand is number one in the world in Rice export, but -

In 2002, value of rice export was 70,003 Million baht. Of Rubber, 74,603 Million Baht.

In 2003, value of rice export was 76,677 Million baht. Of Rubber, 115,822 Million Baht.

So it's not the biggest one, but certainly in the top. Apart from Rubber, I did not find a single product with higher value. Ok, Textile products are about 180,000 million baht a year, but it is not a single product but rather a huge group of items. Another big group is precious stones and jewllery, about 80,000 Million baht a year. The famous Thai silk is merely 800 Million baht a year.

Thanks for that ~G~

They are interesting statistics.

Where do you get your info BTW?

[~G~]

Thanks for that ~G~

They are interesting statistics.

Where do you get your info BTW?

"Thailand Stats", published by "The Brooker Group Plc" (New edition every quarter). They have other useful books as well.

www.brookergroup.com

[OldAsiaHand]

Not to be "picky" but I believe (I could be wrong) the Baht is floated on a basket of currencies that includes Asian currencies and other international currencies, including the Sinapore dollar. Yes, that is a signifigant part of the "basket". I would bet that the Shin Corp deal has made the Asian currencies get stronger and the Baht will follow, at least for a while. I expect it will go back to around 40 to a dollar, because that is the level it has been around for last few years. Answer to the person who asked if the Baht would go back to 25 to a dollar is : No.

Longer answer: Bushy Boy is spending a LOT of money in Iraq. We can't even afford janitorial services here (U.S. military base in Greece) because money goes to Iraq/Afghanistan first. Until that open sore is healed, not likely to be a signifigant improvement in U.S. dollar due to growing deficiet spending.

Thanks for the explanation and

BTW

are you sure you are US Military???

You seem far too intelligent !

Not really. He's completely wrong here.

The Thai baht was once tied to a basket of currencies, that's true; but that was ten years ago. It was cut loose from the basket in 1997 and freely floated. It promptly collapsed. Remember?