Thailand To Avoid Currency Fight As Shadow Of 1997 Crisis Looms

[Melyn]

Anyone remember these?

increased inflow of foreign money into Asia due to poor returns from major currencies.

Increased asset prices in those territories - property, equities

Increased consumer credit - car loans, home loans, credit cards etc.

Increase in wages not matched by a corresponding increase in productivity

Syphoning off of funds into "crony capitalism"

Excessive government borrowing - flood schemes, rice schemes, high speed rail

Balance of payment deficit - 2012 $20B

Loans from foreign governments - China, Japan

Devaluation of major regional currencies such as the Yen

Subsequent recovery of the USD followed by higher interest rates

Cost of imports rise

Outflow of foreign money back into major currencies

Dollar rises further

Currency outflow accelerates

Government attempts to "peg" the currency

Lenders put a squeeze on further borrowing

Foreign borrowers attempt to exit

Currency crashes

[slim]

So the Thai Baht will now be allowed to float ?

Or there will still be 'smoothing' by the BoT, and the currency will remain suspiciously-fixed, for much of the time ?

Its been floated since 1997

[Spellforce]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

[Mudcrab]

I must be the only selfish farang in Thailand I would to see the baht where it was 72 to £ when i came to Thailand and transfered all my cash here.

Could you please write that again in good English so that we may understand your sentiments

It will simply be when the pound regains strength or the baht collapses. So which is it...has the baht strengthened or the pound collapsed. I would suggest it is the poor economies in Europe and the US that will keep the relativaties low (or high depending on your perspective) and can't neccessarily blame the baht for getting stonger, maybe the real reason is because the pound tanked.

The Aussie dollar is at an all time high against the US dollar...mostly due to a very weak US dollar, not neccessarily due to sound economic

(mis)management by the incumbent government.

The news now shows companies laying off aussie workers in their thousands, while other people are buying cheap flat screen TV's.

Swings and roundabouts. This is the way of the world.

[Spellforce]

I see many comments of american/european retired people with US/€/£ pensions, they have some difficulties to admit that years after years, they are getting poorer and poorer !

[Ricardo]

So the Thai Baht will now be allowed to float ?

Or there will still be 'smoothing' by the BoT, and the currency will remain suspiciously-fixed, for much of the time ?

Its been floated since 1997

That's a point-of-view, but I'm very struck by just how very stable it seems to be, even in extreme political-turmoil it seems to just plod along, rarely-changing much.

And if it's totally-freely floating, why are there still controls, on taking one's money back out of the country ?

And why do the BOT talk about reintroducing measures to manage/deter inflows ?

[khunken]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Thailand is a developing country - a euphamism for 3rd world. Don't understand your maths ('double profit'). Your condo is in the middle to upper range.

There are huge developments of condos in my area (On Nut) almost all in the low range - under B2m. They are selling them and unoccupied doesn't mean not owned. Only when the developers can't sell the properties they are building will a bubble start to emerge. It hasn't happened yet

[TommoPhysicist]

Banks will lend 2M on the flimsiest of incomes.

A loan of this size is no problem using forged wage slips and a forged letter of employment.

The banks only check money is being paid into a bank account, and the employer exists.

I'm guessing many of the condos are being bought this way.

It will all end badly.

[jpinx]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

That is some wierd way to calculate

[Thai at Heart]

So the Thai Baht will now be allowed to float ?

Or there will still be 'smoothing' by the BoT, and the currency will remain suspiciously-fixed, for much of the time ?

Its been floated since 1997

That's a point-of-view, but I'm very struck by just how very stable it seems to be, even in extreme political-turmoil it seems to just plod along, rarely-changing much.

And if it's totally-freely floating, why are there still controls, on taking one's money back out of the country ?

And why do the BOT talk about reintroducing measures to manage/deter inflows ?

Apparently they have been trying to manage it so that it doesn't get too strong, as have all Asian economies for a long time, the biggest offender being China. But, that can only go on so long. The original statement is that there will be no official policy to fight an overwhelming trend. Inflows since the start of the year have been very strong, so up it goes. To declare a fixed rate would only encourage more speculation, and there isn't much any Central Bank can do when the US and EU is printing so much money and it is sloshing around the world looking for a home that pays some interest.

In 1997, Thailand devalued the baht to shore up a faltering economy, abandoning its policy of pegging the currency to the U.S. dollar, a move that left a legacy debt of $35 billion from bailing out financial companies. International reserves fell by 31 percent to $27 billion in 1997, according to data compiled by Bloomberg. Reserves have increased more than sixfold since then to $182 billion last month.

Lower interest rates would discourage inflows into the country, Kittiratt said, adding that the measure could be a “double-edged sword.” He said the central bank should employ measures to prevent the baht from rising or falling sharply while avoiding any moves that are unsustainable.

“The impact on this would be only a very small basis point of the exchange rate,” Kittiratt said, referring to central bank intervention to keep the baht stable. “There won’t be any effort against trading against this rate to any significant level.”

So what he says is, there isn't going to be any last ditch stance like the BOT tried in 1997, which only served to empty the country of forex. Seems, everyone has to accept that the Baht is probably going to get a bit stronger unless, the BOT drops interest rates.

[Osiris]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Thailand is a developing country - a euphamism for 3rd world. Don't understand your maths ('double profit'). Your condo is in the middle to upper range.

There are huge developments of condos in my area (On Nut) almost all in the low range - under B2m. They are selling them and unoccupied doesn't mean not owned. Only when the developers can't sell the properties they are building will a bubble start to emerge. It hasn't happened yet

The developers are giving away many perks to move the condos. I think we are at the top of the market cycle with many factors to consider. You can do what you want. I'm waiting on the sidelines for the break.

[TommoPhysicist]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Not after you pay the 15% Thai tax on the condo rental.

[jpinx]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Not after you pay the 15% Thai tax on the condo rental.

plus maintenance, management, etc. And if he says "I do it myself" then he is not valuing his own working time....

[Soi Sauce]

Crash the baht, make a fortune. Many did in 1997 and the way PTP spends, it seeme they want to do it again.

After that, having moved their cash into forex b4 they made it happen, they can buy up the country on the cheap.

Easy to work out really, and many have been saying this was the plan since they came to power.

[khunken]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Thailand is a developing country - a euphamism for 3rd world. Don't understand your maths ('double profit'). Your condo is in the middle to upper range.

There are huge developments of condos in my area (On Nut) almost all in the low range - under B2m. They are selling them and unoccupied doesn't mean not owned. Only when the developers can't sell the properties they are building will a bubble start to emerge. It hasn't happened yet

The developers are giving away many perks to move the condos. I think we are at the top of the market cycle with many factors to consider. You can do what you want. I'm waiting on the sidelines for the break.

I'm not doing anything other than renting my condo - just observing. I would hate to forecast any market top unless I had the evidence to back it up. Currently, bank profits are increasing, bad loans are low, developers are profitable. (& have almost always offered perks). Certainly no evidence of a bubble - yet.

[Spellforce]

The developers are giving away many perks to move the condos. I think we are at the top of the market cycle with many factors to consider. You can do what you want. I'm waiting on the sidelines for the break.

Rule N°1 is the location, and I admit that On Nut is overbuilt. I choosed Tonglor.

Anyway, the prices in real estate are still far from America & Europe. For 5 years the prices of "East Sukhumvit" are rising 7-10% EVERY years !

In Pattaya, the land department had doubled the value of lands in jully 2012.

You have choosed to wait and see, meanwhile your $/€/£ are still getting weaker and weaker... up to you !

[rattler]

I was in Thailand for and before the 1997 crash. To quote yogi Berra it's déjà voo all over again. I've felt another crash was going to come because they are doing the same thing that happened back in 97. The trigger for 1997 was Japan which trickled to Thailand. What has staved a crash in Thailand is that the economies of the us and Europe where tanking which made Thailand look relatively good for a while. How here's the thing: there's a lot if condos that are sitting empty that are on finance with people who really can't afford it. Like my early 20's cousin bought a condo on finance. He just got out if school. Was looking for a job. For a small down payment he bought a condo. He then found a job and needs to sell said condo cuz it's not near where he works. There is actually a lot of property that people are just sitting on and not using. Before it used to be the thing that the owners of condos that were empty paid cash and were sitting on them. But now it's on finance. People buying houses on credit when they couldn't afford it and increasing the prices for those who could actually afford it is what caused the real estate melt down in the USA. It's only a matter of time that the real estate building boom, easy credit, the car tax rebate, and the 300 baht minimum wage results Ina crash. This is of course IMHO.

For once I agree, I see a country borrowing like crazy, cars everywhere yet little signs of the income to support it.

[Thai at Heart]

I was in Thailand for and before the 1997 crash. To quote yogi Berra it's déjà voo all over again. I've felt another crash was going to come because they are doing the same thing that happened back in 97. The trigger for 1997 was Japan which trickled to Thailand. What has staved a crash in Thailand is that the economies of the us and Europe where tanking which made Thailand look relatively good for a while. How here's the thing: there's a lot if condos that are sitting empty that are on finance with people who really can't afford it. Like my early 20's cousin bought a condo on finance. He just got out if school. Was looking for a job. For a small down payment he bought a condo. He then found a job and needs to sell said condo cuz it's not near where he works. There is actually a lot of property that people are just sitting on and not using. Before it used to be the thing that the owners of condos that were empty paid cash and were sitting on them. But now it's on finance. People buying houses on credit when they couldn't afford it and increasing the prices for those who could actually afford it is what caused the real estate melt down in the USA. It's only a matter of time that the real estate building boom, easy credit, the car tax rebate, and the 300 baht minimum wage results Ina crash. This is of course IMHO.

For once I agree, I see a country borrowing like crazy, cars everywhere yet little signs of the income to support it.

People borrowing money is very different from governments.......

[rattler]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

Is that because its a new condo?? prices fall as they age and as many remain empty.

I got +11% and sold them after 7 years, I got back in rent what I paid for them and made a modest profit as in 100k baht when I sold, still much better than it sitting in a bank for 7 years though.

From new I used to get 15k a month now the going rate is 10K or less. I had 5 units.

[marchawkes]

... and that Bangkok is overbuilt with a low occupancy ratio in many condo's

Are you joking ??? Last month I bought one condo in Bangkok 6.6M bahts and I rent it allready 50.000 bahts/month. ROI = 9%

Thinking that Thailand is a 3rd world is a big mistake, I'm sure that in middle/long terme the £ will be around 40 bahts (and I will rent my last condo more that 60,000 bahts/month => double profit ! ).

You may wish to convince the World Bank, IMF, ADB. Transparency International, Medecins sans Frontier, ASEAN........ that Thailand is not a Third World Country.

[Naam]

The Baht is on its´s way down. They build new Houses/Condoes all over Thailand. It´s called a bubble probably close to 1997 crisis.

Trafic is terrible, how to solve the problem: Give new car owner 100.000 baht to a new.

no doubt that the Baht is on its way down... when you turn the charts upside down.

this is what happened during the last 6 years:

EUR THB from 52.50 to 40.00

USD THB from 42.50 to 30.00

GBP THB from 72.00 to 47.00

[marcusd]

Well people... Everyone is thinking about the currency. .big payers control the forex swaps. Eait.until approx April this year and see the revolutions in the streets. You know what is coming. Some people are not week and others want control.

See the currency devalue in a,zillionth.of a second.

Thailand is living in the oat. Cheaper or compatible in malaysia. Myanmar beckons. Thailand us more executive than our own countries per income dollar in many things like cars..internet..electricity..petrol.

The twighlight years are upon Thailand as a cheap destination now. Watch the next few years.

Those of you from the EU will see you cannot buy as much her or get as good a return and you may leave and seek fredh new patures.

I am here on business so.it duress not really affect me but i see so many retired paying too much.now compared to give years ago. Home could beckon you to return if this pace continues along this path

[geriatrickid]

Well people... Everyone is thinking about the currency. .big payers control the forex swaps. Eait.until approx April this year and see the revolutions in the streets. You know what is coming. Some people are not week and others want control.

See the currency devalue in a,zillionth.of a second.

Thailand is living in the oat. Cheaper or compatible in malaysia. Myanmar beckons. Thailand us more executive than our own countries per income dollar in many things like cars..internet..electricity..petrol.

The twighlight years are upon Thailand as a cheap destination now. Watch the next few years.

Those of you from the EU will see you cannot buy as much her or get as good a return and you may leave and seek fredh new patures.

I am here on business so.it duress not really affect me but i see so many retired paying too much.now compared to give years ago. Home could beckon you to return if this pace continues along this path

Yes, Myanmar beckons, but that does not mean it is a viable substitute. There are those pesky issues of no infrastructure, a despotic military dictatorship and an unskilled labour market. Get back to me once Myanmar has a power grid that doesn't suffer chronic outages.

Thailand's tourist economy is still robust. Tens of thousands of foreigners have investments that are difficult to liquidate. They can't just dump their condos. They don't know it, but they are in effect trapped. Hundreds of thousands of asian visitors are surging into Thailand. A chinese may not spend as much as an elderly Swede, but they are contributing all the same. Thailand's manufacturing sector still is strong and its domestic demand still steady. The world needs food and Thailand whatever its weaknesses is still a major supplier.

I note the predictionof revolution as unemployed rise up etc. Well, the s problem with that prediction is that there is a skilled labour shortage. The pressure on wages isn't coming from the paltry minimum wage hikes, but from the scarcity of workers. When a resource is in short supply, the cost of that resource will increase.

Oh yes, we've been told by omniscient foreigners for successive decades that the end is nigh. Thailand will collapse. Well it hasn't and it will not unless there is another military coup and resultant civil war. Thailand has the advantage of being able to feed its people and to have the ability to sustain itself. This isn't a landlocked EU with minimal natural resources. Millions of Thais have been living without potable water, and crapping into a hole in the ground for generations. They might want to improve their lives but they are at least able to live it "rough". Quite a contrast from impoverished EU citizens freezing treezing to death this winter or the EU countries teetering on the brink of financial collapse. On the contrary, I'd suggest that the EU is more likely to dissolve before Thailand.

[Thai at Heart]

Well people... Everyone is thinking about the currency. .big payers control the forex swaps. Eait.until approx April this year and see the revolutions in the streets. You know what is coming. Some people are not week and others want control.

See the currency devalue in a,zillionth.of a second.

Thailand is living in the oat. Cheaper or compatible in malaysia. Myanmar beckons. Thailand us more executive than our own countries per income dollar in many things like cars..internet..electricity..petrol.

The twighlight years are upon Thailand as a cheap destination now. Watch the next few years.

Those of you from the EU will see you cannot buy as much her or get as good a return and you may leave and seek fredh new patures.

I am here on business so.it duress not really affect me but i see so many retired paying too much.now compared to give years ago. Home could beckon you to return if this pace continues along this path

<< Spelling police comments removed >>

Yes, Thailand is getting more expensive, as gdp grows. I hear that south Korea was very cheap 40 years ago too.

Edited January 25, 2013 by metisdead

[rubl]

Well people... Everyone is thinking about the currency. .big payers control the forex swaps. Eait.until approx April this year and see the revolutions in the streets. You know what is coming. Some people are not week and others want control.

See the currency devalue in a,zillionth.of a second.

Thailand is living in the oat. Cheaper or compatible in malaysia. Myanmar beckons. Thailand us more executive than our own countries per income dollar in many things like cars..internet..electricity..petrol.

The twighlight years are upon Thailand as a cheap destination now. Watch the next few years.

Those of you from the EU will see you cannot buy as much her or get as good a return and you may leave and seek fredh new patures.

I am here on business so.it duress not really affect me but i see so many retired paying too much.now compared to give years ago. Home could beckon you to return if this pace continues along this path

Yes, Myanmar beckons, but that does not mean it is a viable substitute. There are those pesky issues of no infrastructure, a despotic military dictatorship and an unskilled labour market. Get back to me once Myanmar has a power grid that doesn't suffer chronic outages.

Thailand's tourist economy is still robust. Tens of thousands of foreigners have investments that are difficult to liquidate. They can't just dump their condos. They don't know it, but they are in effect trapped. Hundreds of thousands of asian visitors are surging into Thailand. A chinese may not spend as much as an elderly Swede, but they are contributing all the same. Thailand's manufacturing sector still is strong and its domestic demand still steady. The world needs food and Thailand whatever its weaknesses is still a major supplier.

I note the predictionof revolution as unemployed rise up etc. Well, the s problem with that prediction is that there is a skilled labour shortage. The pressure on wages isn't coming from the paltry minimum wage hikes, but from the scarcity of workers. When a resource is in short supply, the cost of that resource will increase.

Oh yes, we've been told by omniscient foreigners for successive decades that the end is nigh. Thailand will collapse. Well it hasn't and it will not unless there is another military coup and resultant civil war. Thailand has the advantage of being able to feed its people and to have the ability to sustain itself. This isn't a landlocked EU with minimal natural resources. Millions of Thais have been living without potable water, and crapping into a hole in the ground for generations. They might want to improve their lives but they are at least able to live it "rough". Quite a contrast from impoverished EU citizens freezing treezing to death this winter or the EU countries teetering on the brink of financial collapse. On the contrary, I'd suggest that the EU is more likely to dissolve before Thailand.

You're rambling a bit, dear Gkid (IMHO that is).

Decades of 'the end is near'? Well, in 1997/1998 that was true, now wasn't it? Able to 'live it rough', wonderful, voluntarily as well? Freezing? Below 12C up-North is declared a disaster zone.

BTW EU dissolve? You mean we Europeans will finally get rid of the enthousiastic British?

[dighambara]

that was a totally different situation than today

YEP - Obama's good friend George Soros was then manipulating Asian currency - today, it is European and American currency...

[Osiris]

The developers are giving away many perks to move the condos. I think we are at the top of the market cycle with many factors to consider. You can do what you want. I'm waiting on the sidelines for the break.

Rule N°1 is the location, and I admit that On Nut is overbuilt. I choosed Tonglor.

Anyway, the prices in real estate are still far from America & Europe. For 5 years the prices of "East Sukhumvit" are rising 7-10% EVERY years !

In Pattaya, the land department had doubled the value of lands in jully 2012.

You have choosed to wait and see, meanwhile your $/€/£ are still getting weaker and weaker... up to you !

The "time" value of money never goes away, and the are other places to invest.

[Thai at Heart]

that was a totally different situation than today

YEP - Obama's good friend George Soros was then manipulating Asian currency - today, it is European and American currency...

welcome to the fox news viewer for the day.

And what would have been the US federal deficit if George junior bush hadn't written everyone a cheque on being elected and gone to war in iraq?

I'll give you a clue. Its between minus one usd and plus one usd.

Soros ruined the world. My god. As though the politicians didn't do anything.

Its good to know there are economically illiterate people all over the world, not just confined to Thailand.

Edited January 25, 2013 by Thai at Heart

[Soi Sauce]

All these experts.

Cumulatively, you must be worth billions.

What's the secret?

I know; post on Thai Visa.

Edited January 25, 2013 by Soi Sauce

[Thai at Heart]

All these experts.

Cumulatively, you must be worth billions.

understanding and execution are two completely different skills.