Where Is The Thai Baht Going In Next Few Years ?

[scorpio]

reason for asking is that we have a lot of money tied up in thailand in the one bank allready and we are due to send more over though i want to wait to see if the baht drops, for 3 years now we have put around 4 million to our kasikorn account and im not sure if i want to keep building it up or just save in uk untill we are at least ready to make a move to thailand and enjoy our savings. does anyone reckon its better off to hold back for a year or two to see how things fair out ?

was reading on another thread that thailand will go into recession and that is another reason why i am thinking twice. CHEERS

[jcgodber]

In 1997 I was saving money here in Thailand for building my retirement home. I had my money in Bank of Bangkok. One day the exchange was 25 baht to one dollar Then after the collapse my U.S. dollar was about 50 to one . In just a few day I had LOST half of my money on deposit here.

I also have one other thought about strength of the baht, What happens if there is a major change here ???

[djayz]

I am by no account an economist, financial consultant, banker, etc. but the way I see it Thailand and the Baht are going to remain pretty stable for the foreseeable future. The economy seems to be pretty robust and exports stable. Unlike most (if not all) western economies, Thailand doesn't appear to have a groaning debt problem yet.

You could simply try to halve your risk by transferring 50% of the money now and leaving the remaining 50% in Bath.

The only real concern I have here is what will happen when the "unspeakable happens"...??? From the few Thais I have met who would speak to me about the topic, they all predicted the worst of the worst.... but they're not economist, consultants or bankers either... just normal folk speaking their mind.

I would take the 50/50 option if I were you.

[pigeonjake]

im in the same boat as you, ive got money in thailand,

but im still working on veriouse jobs, so what to do, its a big question

im going to agree with the other poster and start to leave my money in the uk, and hopefully move when its a better rate,

[chainarong]

Same as its been the last 10 years. Nowhere.

Edited October 25, 2012 by chainarong

[khunron13]

In 1997 I was saving money here in Thailand for building my retirement home. I had my money in Bank of Bangkok. One day the exchange was 25 baht to one dollar Then after the collapse my U.S. dollar was about 50 to one . In just a few day I had LOST half of my money on deposit here.

I also have one other thought about strength of the baht, What happens if there is a major change here ???

Unless you changed your money back to US Dollars, you didn't lose anything. If you did change it back, then you deserve it!

I remember my father moaning about how much money he lost during the Black Monday Wall Street collapse in 1987, so I asked him how much of his stock did he sell after the crash. He looked at me like I was crazy and told me he would never sell stock after such a huge drop in price. I looked at him and said "then you didn't lose any money, did you?"

[PattayaPhom]

In 1997 I was saving money here in Thailand for building my retirement home. I had my money in Bank of Bangkok. One day the exchange was 25 baht to one dollar Then after the collapse my U.S. dollar was about 50 to one . In just a few day I had LOST half of my money on deposit here.

I also have one other thought about strength of the baht, What happens if there is a major change here ???

If you were saving for a retirement home here, you cant say you lost half in a day...1 Baht=1Baht regardless of XE rates

[Gary A]

My retirement fund remains in the US. I do have more assets in Thailand than I have in the US, but most of my cash is in the US. If either economy would go down the tubes, I think I would survive.

[cloudhopper]

Impossible to predict. It depends almost entirely on the politics rather than economics. For example if the BOT is persuaded to print zillions of baht to pay for all the rice losses then we could see devaluation vs other currencies. I wasn't here for the '97 crash but I suspect there must have been some price inflation after that. And likewise it depends on what happens to your home currency as well. If you live in Thailand it makes sense to me to have a substantial amount of THB.

[yoshiwara]

Assuming that you have decided to hold your cash for the time being in either sterling or baht, then you might want to take a position of being prepared to convert in either direction.

eg convert sterling to baht at over 50 and convert baht to sterling at less than 45. In the meantime while the rate is range bound, do nothing ie for you increase your sterling savings.

Your review of the rate might take place just once per year in order to take interest on your deposits, otherwise if you want to be always ready and active to take advantage of trading opportunities, then forego the higher interest rates.

[Naam]

Impossible to predict. It depends almost entirely on the politics rather than economics. For example if the BOT is persuaded to print zillions of baht to pay for all the rice losses then we could see devaluation vs other currencies. I wasn't here for the '97 crash but I suspect there must have been some price inflation after that. And likewise it depends on what happens to your home currency as well. If you live in Thailand it makes sense to me to have a substantial amount of THB.

there was a price inflation but initially very limited and specific. however values of durable goods such as immobile property, fancy imported cars, brandname watches and jewelry, works of art, etc. could be picked up at auctions at rockbottom prices. in 1998 we attended a few auctions in Bangkok and couldn't believe what we saw.

[rgs2001uk]

Of more concern to me would be why keep 4 million in a Thai bank account, I wouldnt even keep that amount in a UK bank account.

If I were the OP on my next trip to Thailand I would visit both Aberdeen and Ing, I would split the money into 4 accounts of 1 million baht, 2 with Aberdeen and two with ING.

[uptheos]

Impossible to predict. It depends almost entirely on the politics rather than economics. For example if the BOT is persuaded to print zillions of baht to pay for all the rice losses then we could see devaluation vs other currencies.

Being relegated to the 3rd largest rice exporters, behind Vietnam and India has hurt Thailand.

A strong baht will do nothing to remedy the situation.

[Naam]

Impossible to predict. It depends almost entirely on the politics rather than economics. For example if the BOT is persuaded to print zillions of baht to pay for all the rice losses then we could see devaluation vs other currencies.

Being relegated to the 3rd largest rice exporters, behind Vietnam and India has hurt Thailand.

A strong baht will do nothing to remedy the situation.

rice is a commodity traded and invoiced globally in US-Dollars. the exchange rate Baht vs. any other currency is therefore totally irrelevant, except for the last step when the earned forex is exchanged into Baht.

but the latter does not affect competitiveness with other suppliers.

[rfukata]

I think it'll (baht) stay relative to the exchange rate of 30: 1USD; for some time or the equivalent in sterling. As you mentioned about the

possible recession here, yes, also the EU may also face turbulent times ahead with the austerity initiatives sinking the Euro lower.

Its a difficult situation for myself as well, and I am sure many of us share similar thoughts about the baht exchange rate, good luck.

[dragons70]

Its an interesting question, one Im sure we'd all like to know a definitive answer to.

From what I know of Thai spending habits, I can only think that there will be a credit bust based recession in next 2-3 years. My wife works for Citibank credit and she says the way money is handed out to low-middle income earners with no means to repay it is criminal. A situation very similar to what happened to the States etc in 2008 is brewing in my opinion. The Thai government did identify the credit problem and tried to address it by offering low interest loans to pay off the credit card companies, but this wont be enough. Most Thais are living well beyond there means and it will catch up to them soon. I have worked for 30 years and never owned a brand new car,yet see rice farmers driving new Fortuners and Thai school teachers BMWs.

Because of the continuing political instability, uncertainty over the monarchy and predicted credit bust, I would not invest large sums in Thai banks. If not already living here in Thailand,I would leave your money in home country bank and transfer amounts as required once the permanent move is made.Its quite easy to transfer money into Thailand these days with internet banking etc..

On the other hand, if already residing in Thailand and money is in Thai bank, its baht for baht unless inflation really kicks in.Good luck.

[Rancid]

I've frequently had that amount floating around in Thai bank accounts, but it is always moving in and out for various projects. However I am heading home for a few years so don't think I will just leave that much in a Thai account. Thinking I will keep1m that already have in term deposits rolling over and convert the rest to bullion. OK, gold gets no interest, but after tax bank accounts aren't that geat here either, expect gold will go north before I return, plus short of a massive price drop there is no danger as I'll take it with me then probably bring it back.

[scorpio]

if and its only a question , we invested say 4 million into gold what kind of return could we get in say 4 years ? also where to buy gold ? its something i know nothing whatsoever about and i am not a gambling man, i have a daughter so anything i leave behind is all for her.

[cheeryble]

if and its only a question , we invested say 4 million into gold what kind of return could we get in say 4 years ? also where to buy gold ? its something i know nothing whatsoever about and i am not a gambling man, i have a daughter so anything i leave behind is all for her.

If you invest 4million in gold you're a gambling man.

Edited October 26, 2012 by cheeryble

[davejones]

In 1997 I was saving money here in Thailand for building my retirement home. I had my money in Bank of Bangkok. One day the exchange was 25 baht to one dollar Then after the collapse my U.S. dollar was about 50 to one . In just a few day I had LOST half of my money on deposit here.

I also have one other thought about strength of the baht, What happens if there is a major change here ???

You didn't lose any of your money. You still had exactly the same amount of baht.

[laowai1960]

Same as its been the last 10 years. Nowhere.

26 - 10 - 2002 = 42.4

26 - 10 - 2003 = 39.8

26 - 10 - 2004 = 41.0

26 - 10 - 2005 = 40.8

26 - 10 - 2006 = 37.0

26 - 10 - 2007 = 31.7

26 - 10 - 2008 = 34.8

26 - 10 - 2009 = 33.4

26 - 10 - 2010 = 29.9

26 - 10 - 2011 = 30.7

26 - 10 - 2012 = 30.7

[Naam]

if and its only a question , we invested say 4 million into gold what kind of return could we get in say 4 years ? also where to buy gold ? its something i know nothing whatsoever about and i am not a gambling man, i have a daughter so anything i leave behind is all for her.

If you invest 4million in gold you're a gambling man.

if his net worth is 40 million i'd consider him a prudent investor

[Naam]

Same as its been the last 10 years. Nowhere.

26 - 10 - 2002 = 42.4

26 - 10 - 2003 = 39.8

26 - 10 - 2004 = 41.0

26 - 10 - 2005 = 40.8

26 - 10 - 2006 = 37.0

26 - 10 - 2007 = 31.7

26 - 10 - 2008 = 34.8

26 - 10 - 2009 = 33.4

26 - 10 - 2010 = 29.9

26 - 10 - 2011 = 30.7

26 - 10 - 2012 = 30.7

make that 15½ years and "Baht went nowhere" respectively "Baht weakened" applies.

[SantiSuk]

A balanced portfolio approach is needed for almost any investment situation where the total money involved is not trivial. Simple answers like "put it all into x" do not represent good advice.

Questions to ask yourself are

How soon do I need the money? which will determine how much equity risk you should take on. I why a poster would say you should not be keeping 4m in any bank account, but this is still an appropriate home if you want to use the money within the next say 2-3 years. You would be very unhappy if you made decent equity returns in year 1 and 2 but found that the market had retraced 30% in year 3 at the point when you needed to use the money. Equities are really for a 5 year plus time horizon IMO (that said there is nothing wrong with taking a punt with money you can afford to lose or making limited investments over a shorter period). I would guess that the prospects of a 30% retracement within 3 years are low but not trivial (25% risk?). The prospects of an at least 30% fall within 7 years are 75%+ (thank goodness - how would old hands make good money if markets rose steadily 6% pa?)

How committed am I to the prospect of living in Thailand. What would I/my partner do if regime change resulted in a period of turbulence? What would I do if my wife ran out on me? Would I try somewhere else in Asia? For those with deep commitments to Thailand their approach would be the converse of how they would have invested before in their home countries - i.e. heavily balanced towards Thai (include SE Asia for country risk spreading) banks and investments, but with a strong 'overseas' element to their portfolio (counting the home country as an overseas element that one is likely to have a better handle on than most overseas elements, therefore still attracting a fair slug of money). You should always try to have a fair amount of asset cover in the same currency as your commitments - as you already have done (and I congratulate you on avoiding the trite "Thialand is cr@p/risky so keep all your assets back home" conclusion).

If I look at my own portfolio over the last years prior to settling in Thailand it was roughly 15% UK cash, 40% UK equities, 10% Europe equities, 10% US equities, 10% Asia-Pac equities, 5% emerging Market equities and 10% fixed interest (bonds etc). I typically hold more cash (term deposits) than most advisers recommend and I would classify my approach as medium risk/medium return strategy. 10 years ago a UK adviser would have classified it as medium/higher risk because of its overseas content (how times have changed!). Actually over 30 years of investing I have to say looking back that it was a low-risk/medium return strategy. It included some horrendous mistakes when I breached my own principles (Japan is bound to bounce back one day, not: 150,000 in Lloyds bank at the wrong time <deleted>!) but overall it set me up well for retirement.

Now, having a wife and kids here, and the shit hit the fan big-time I would hunker down and if it lasted it would more likely be another Asian country than the UK (too cold, wife doesn't like it). I am now aiming to switch gradually (pension content makes de-Anglification a slow process) towards 25% Thailand, 30% other Asia-Pacific, 20% UK, 10% EU, 10% US and 5% Emerging markets. Within that 15% cash will remain my base case (one-third in Thailand) but as always my cash element goes up and down in a range of 7% to 25% depending on my global view of medium term prospects for equities. So as you can see I would be more cautious about my new home country than when I was committed to my old country.

Keeping significant sums of cash (stratified maturity deposits, but a high proportion withdrawable despite penalties) is sensible if there is good reason to do so. Good reasons include needing to build/buy a house within the next three or so years and needing to have money ready for those golden market downturn oppotunities that come by 10 times in a lifetime.

It's an art not a science, so cue the ctritics

Edited October 27, 2012 by SantiSuk

[fletchsmile]

I would keep some in several currencies. If you plan on spending large amounts of time in Thailand it makes sense to build THB assets. I used to keep about 1/3 in the currency of where I came from, 1/3 where I am/ where is now my home and 1/3 elsewhere - including SGD which I like as an Asian currency.

These days with a stronger comment to Thailand, and with a view on the balance of power shifting more East to West, I keep about 50% in THB, 25% in currency where I came from and 25% in others.

As to the question of which will be stronger in a few years time western currency eg USD/GBP or THB I would (and do) put money onTHB

[Naam]

These days with a stronger comment to Thailand, and with a view on the balance of power shifting more East to West, I keep about 50% in THB, 25% in currency where I came from and 25% in others.

for somebody who neither likes shares nor rental property it is quite difficult, actually impossible, to keep a substantial value in THB except cash.

[rgs2001uk]

A balanced portfolio approach is needed for almost any investment situation where the total money involved is not trivial. Simple answers like "put it all into x" do not represent good advice.

Questions to ask yourself are

How soon do I need the money? which will determine how much equity risk you should take on. I why a poster would say you should not be keeping 4m in any bank account, but this is still an appropriate home if you want to use the money within the next say 2-3 years. You would be very unhappy if you made decent equity returns in year 1 and 2 but found that the market had retraced 30% in year 3 at the point when you needed to use the money. Equities are really for a 5 year plus time horizon IMO (that said there is nothing wrong with taking a punt with money you can afford to lose or making limited investments over a shorter period). I would guess that the prospects of a 30% retracement within 3 years are low but not trivial (25% risk?). The prospects of an at least 30% fall within 7 years are 75%+ (thank goodness - how would old hands make good money if markets rose steadily 6% pa?)

How committed am I to the prospect of living in Thailand. What would I/my partner do if regime change resulted in a period of turbulence? What would I do if my wife ran out on me? Would I try somewhere else in Asia? For those with deep commitments to Thailand their approach would be the converse of how they would have invested before in their home countries - i.e. heavily balanced towards Thai (include SE Asia for country risk spreading) banks and investments, but with a strong 'overseas' element to their portfolio (counting the home country as an overseas element that one is likely to have a better handle on than most overseas elements, therefore still attracting a fair slug of money). You should always try to have a fair amount of asset cover in the same currency as your commitments - as you already have done (and I congratulate you on avoiding the trite "Thialand is cr@p/risky so keep all your assets back home" conclusion).

If I look at my own portfolio over the last years prior to settling in Thailand it was roughly 15% UK cash, 40% UK equities, 10% Europe equities, 10% US equities, 10% Asia-Pac equities, 5% emerging Market equities and 10% fixed interest (bonds etc). I typically hold more cash (term deposits) than most advisers recommend and I would classify my approach as medium risk/medium return strategy. 10 years ago a UK adviser would have classified it as medium/higher risk because of its overseas content (how times have changed!). Actually over 30 years of investing I have to say looking back that it was a low-risk/medium return strategy. It included some horrendous mistakes when I breached my own principles (Japan is bound to bounce back one day, not: 150,000 in Lloyds bank at the wrong time <deleted>!) but overall it set me up well for retirement.

Now, having a wife and kids here, and the shit hit the fan big-time I would hunker down and if it lasted it would more likely be another Asian country than the UK (too cold, wife doesn't like it). I am now aiming to switch gradually (pension content makes de-Anglification a slow process) towards 25% Thailand, 30% other Asia-Pacific, 20% UK, 10% EU, 10% US and 5% Emerging markets. Within that 15% cash will remain my base case (one-third in Thailand) but as always my cash element goes up and down in a range of 7% to 25% depending on my global view of medium term prospects for equities. So as you can see I would be more cautious about my new home country than when I was committed to my old country.

Keeping significant sums of cash (stratified maturity deposits, but a high proportion withdrawable despite penalties) is sensible if there is good reason to do so. Good reasons include needing to build/buy a house within the next three or so years and needing to have money ready for those golden market downturn oppotunities that come by 10 times in a lifetime.

It's an art not a science, so cue the ctritics

"why a poster would say you should not be keeping 4m in any bank account"

SS, on the whole I agree with your post, however to answer your question.

What type of account is this money held in and how much does it generate each year.

4 million held in a time deposit account on a 3 monthly rollover will return 10k each month.

I would hazard a guess and say thats more than the OP is getting at the moment, and each day he leaves it in a bank account is costing him money.

Only the OP can decide what he wants to do with his money, to do so he should IMHO set himself, short term, mid term and long term goals or targets.

Lets say short term 1-3 years, mid term 3-5, and long term 10+ years.

I use the above as an example of the time limits I yse.

If the OP doesnt need the money in the near future, he should certainly get it parked elsewhere.

In the long term as I already suggested, get it parked into some sort of investment vehicle that will offer better returns.

I appreciate not all will be as financially literate or knowledgeable., and I subscribe to the school of thought that says, if I dont understand it I dont touch it.

[Naam]

keeping THB cash instead of $, £ or € generated a nice yield during the last 5-6 years.

[swlondonmum]

Its an interesting question, one Im sure we'd all like to know a definitive answer to.

From what I know of Thai spending habits, I can only think that there will be a credit bust based recession in next 2-3 years. My wife works for Citibank credit and she says the way money is handed out to low-middle income earners with no means to repay it is criminal. A situation very similar to what happened to the States etc in 2008 is brewing in my opinion. The Thai government did identify the credit problem and tried to address it by offering low interest loans to pay off the credit card companies, but this wont be enough. Most Thais are living well beyond there means and it will catch up to them soon. I have worked for 30 years and never owned a brand new car,yet see rice farmers driving new Fortuners and Thai school teachers BMWs.

Because of the continuing political instability, uncertainty over the monarchy and predicted credit bust, I would not invest large sums in Thai banks. If not already living here in Thailand,I would leave your money in home country bank and transfer amounts as required once the permanent move is made.Its quite easy to transfer money into Thailand these days with internet banking etc..

On the other hand, if already residing in Thailand and money is in Thai bank, its baht for baht unless inflation really kicks in.Good luck.

Yeah I have been thinking this - ok so most Thai people I know's income and standard of living has increased since I first came in 2007 but there is a lot of crazy lending going on and a lot of people borrowing without being certain they can afford the repayments. And a massive desire for expensive consumer goods - unbelievable how many new cars there are here. We moved here 6 months ago and my husband insisted on having a new car (I did say cant we have a second hand car like in the uk - no, we have to have a new car was the reply). We have recently got a 4 million baht mortgage with no deposit despite not having a ' regular' income (self employed and very up and down) - the housing estates are falling over themselves to sell houses and the banks are to give mortgages. I see a lot of people borrowing money from friends and family at rates that would make Wonga seem like the good guys. And there is a lot of naivety about credit here compared the the uk - many people don't seem to understand some of the basics (including my husband) ie you shouldn't borrow money to pay off other debts.

I have ensured our potential losses are limited to any money we brought to Thailand, and my husband will have to let out our Thai house or send money from the uk to pay the mortgage when we move back to the uk (as the letting market is not as strong here) if he wants to keep the house here - seeing as we are unlikely to attain the income we need in Thailand to maintain this lifestyle, we are likely to move back on the next 6 months. Bless him he is lovely and generally hard working plus he wants to provide nice things for me (as well as himself!) but he is not credit aware. I think there are many people like him and far worse.

It is hard to see how there won't be a credit based recession here in the next 5 years!

Edited October 29, 2012 by swlondonmum

[fletchsmile]

These days with a stronger comment to Thailand, and with a view on the balance of power shifting more East to West, I keep about 50% in THB, 25% in currency where I came from and 25% in others.

for somebody who neither likes shares nor rental property it is quite difficult, actually impossible, to keep a substantial value in THB except cash.

Probably true.

As you know, I like Thai equities though, and have enjoyed some nice gains over the last decade or so - Aberdeen Growth Fund being my largest single investment and a key benchmark = up about 1100% since 31 Dec 2000.

We also count our home in that. Compared to paying rent out of foreign income sources, it's been a good way of fixing expenditure and hedging exchange rates. Perhaps you should upgrade your mansion Dr.Naam

After those a few years money in THB cash earning just over 3% to cushion vs near term market risks on other investments.

A vasectomy is also an excellent financial investment/ insurance for anyone with a risk of having (more) children. THBk 15k saves hundreds of thousands per child each year with education factored in

Aside from those, as you say, there's not much of interest:

- Investing in property for rental returns isn't my thing.

- Thai bond and fixed income market is poor pickings although an alternative to cash in terms of spreading credit risk, and eliminating FX risk OP refers to.

- Starting a business and investing time and money into it isn't an option I want to significantly commit to at the moment either - although I know quite a few people who have done well here in their own businesses. Having worked long and hard to acheive financial independence, I'm wary of risking significant amounts of my hard earned money in other areas I've little experience of.

As mentioned above building on what you know is a decent strategy in Thailand, and invest where you can along similar lines you would back where you came from.

Edited October 29, 2012 by fletchsmile