What's Up With The Thai Baht?

[connda]

The Thai baht seems to be strengthening against many currencies, especially the US Dollar and British Pound. This should be getting the expat community feeling a little anxious. Over the last 5 years I've lost over 20% of the value of any savings residing in my home country. And I get the feeling we might be headed for another 20+ percent drop in the next few years if not sooner. Don't know about anyone else, but it's got me worried. I'd think that anyone on a non-o visa should be worried.

[Boater]

i believe it is only short term, i have seen it strengthen in the last few days .........

[dean999]

My wife said the government are talking about doing something about it. With the Baht getting stronger and the 300 Baht minimum wage, how long do you think the foreign business owners will stay here.

England done the same with the pound at one stage, because the pound was getting strong against the Euro and that is bad as most of are exports/imports are from Europe. It won't last.

[Nana Cowboy]

If the government tries to do something about it then it will have the opposite effect. Markets cannot be fixed, they need to work themselves thru. The baht strength is a direct correlation to the US stock market rise. check out your S&P 500 charts vs the baht and you will see this. When the stock market corrects later this year the baht will go back over 30/USD. Take a look at the 2008 financial crisis and you saw 36/USD

[up-country_sinclair]

What's Up With The Thai Baht?

It's exchange rate, for one thing.

[kennedy]

Every dog has it's day.

[NeverSure]

Relative to its size, Thailand has big deficits, and it also prints money to pay bills. I know some think that Thailand's economy is booming and that it has "no" unemployment and no debt and... Link

I personally know three Thais who were laid off work last week in Udonthani because of the increase in the minimum wage. I don't think we've begun to see the fallout from that. I think it will also affect decisions of multi-nationals to expand into Thailand because wages and other costs are now cheaper elsewhere.

Let's see how this all washes out. Thailand has a habit of borrowing money, or setting aside budget money for something and then spending it on something else. Look at the money earmarked for flood damage that got siphoned off.

I believe, and don't ask anyone to agree with me, that Thailand is way overbuilt in housing, that real estate has skyrocketed into a bubble, and that the new minimum wage will actually be the straw the breaks the camel's back.

Housing, land, medical care, food - it's all rising which means the Baht buys less.

Inflation is just another term for deflation of the value of money. If it takes more baht to buy something then the baht is worth less.

If the West wasn't being so imprudent with currencies, I'd hold a belief about the future of the baht. As it is, I'm just sitting back and watching. Something out there is unsustainable. Maybe many things.

[meatballs]

I'm afraid to look. Is it bad?

Looks like I'm in the market for a 2,000/month room again.

[roamer]

Relative to its size, Thailand has big deficits, and it also prints money to pay bills. I know some think that Thailand's economy is booming and that it has "no" unemployment and no debt and... Link

I personally know three Thais who were laid off work last week in Udonthani because of the increase in the minimum wage. I don't think we've begun to see the fallout from that. I think it will also affect decisions of multi-nationals to expand into Thailand because wages and other costs are now cheaper elsewhere.

Let's see how this all washes out. Thailand has a habit of borrowing money, or setting aside budget money for something and then spending it on something else. Look at the money earmarked for flood damage that got siphoned off.

I believe, and don't ask anyone to agree with me, that Thailand is way overbuilt in housing, that real estate has skyrocketed into a bubble, and that the new minimum wage will actually be the straw the breaks the camel's back.

Housing, land, medical care, food - it's all rising which means the Baht buys less.

Inflation is just another term for deflation of the value of money. If it takes more baht to buy something then the baht is worth less.

If the West wasn't being so imprudent with currencies, I'd hold a belief about the future of the baht. As it is, I'm just sitting back and watching. Something out there is unsustainable. Maybe many things.

Many will disagree with you, I'm not one of them. At the end of the day Thailand is not much more than a giant factory for multi-nationals and the bottom line is it's all about the money. They moved the sewing machines years ago and the heavy manufacturing and tech stuff will eventually follow. Successive governments of any colour have failed to invest in education and innovation and break away from the rigid thinking that will eventually return them back to the start. One of the worlds most overheated property markets ain't going to help things in the long run either.

[taninthai]

Well the pound was at it's lowest in over a year Yesterday,hate to think what exchange rate they are offering in the uk 43,44?

[Briggsy]

If you hold most of your savings in pounds but spend in another currency, there are ways of protecting yourself from devaluation of the pound by holding GBP-denominated funds that in turn hold assets in other currencies like government bonds. Very easy to manage from a computer terminal anywhere in the world just using any of the UK asset management/ discount broker/ stockbroker firms.

[Briggsy]

Looking at these current account figures, Thailand is still running a current account surplus.

http://www.tradingeconomics.com/thailand/current-account

And with a benchmark interest rate well above that of UK, USA, Eurozone etc.

http://www.tradingeconomics.com/thailand/interest-rate

it would point to the baht retaining its current strength against Western currencies.

[submaniac]

Honestly, one of the reasons the baht did so well was because the Western economies weren't doing well. USA had mortgage crisis and economy has been faltering for the last few years. The government bail out from the mortgage fiasco really devalued the dollar. Europe has...well Greece and bailing out the Euro. UK's economy isn't exactly doing on fire right now either. As a result, the Thai economy looked relatively good and the baht was relatively strong. I think it will catch up with the baht and it will have to crash. With the 300 baht a day minimum wage, manufacturing moving because of the floods, people taking out mortgages on inflated property values in Thailand, the country's debt, the baht really cannot be sustained at this level. My money is on another crash like 1997. If I were you connda I wouldn't be moving my assets to Thailand from the USA in the near future. I would wait for the baht to crash, and then move the money over when the baht is low.

Edited January 31, 2013 by submaniac

[Gary A]

A simple answer. The very liberal socialists have broken the Western economies. They simply can no longer afford to provide for people who have no desire to work. Thailand hasn't gotten to that point, YET.

[David48]

Suppose it's all a relative perspective with the perceived appreciation of the Thai Baht.

When compared to the Australian Dollar the AUD is within 7% of 10 year highs against the THB

[Sandman77]

One time I read on the net the bath Is coupled to the us dollar, and the pound to€ go up and down the same way but not € wins against pound 3 procent and against dollar 6 procent!

I recogneized that ausyrialian Taiwanese dollar go same way down then the us!

One year ago I also got between 40,3 and 40,5 bath for one euro, and this in a time where the flood was coming and economy shout down!

If the thai bath so strong and euro so weak, then in should be everything hold in balance bath to €

Maybe in future pounds euro have around the same level!

In Cambodia I go next week it's good when dollar go down, for 1000€ I win 150€ around 20 procent comparing to last year!

Sent from my iPhone using ThaiVisa app

[David48]

One time I read on the net the bath Is coupled to the us dollar...

Be careful what you read ... not everything on the internet is factual

.

[h90]

If the government tries to do something about it then it will have the opposite effect. Markets cannot be fixed, they need to work themselves thru. The baht strength is a direct correlation to the US stock market rise. check out your S&P 500 charts vs the baht and you will see this. When the stock market corrects later this year the baht will go back over 30/USD. Take a look at the 2008 financial crisis and you saw 36/USD

No but you can change the market.....simple example, if you just print money, it looses value....But of course it is extreme dangerous if an incompetent government plays with the exchange rate.

[chiang mai]

Relative to its size, Thailand has big deficits,

Yup, that 1.5% budget overun against GDP was a real show stopper last year!

http://www.tradingec...vernment-budget

And what about those foriegn reserves, all the hundred billion plus of funny money, what are they dollars or something or worthless!!

Big sigh.

And for the OP: indeed THB has strengthened, mostly as a function of quantattive easing in Japan and also the US to some degree, it's foriegn funds looking for a decent yield that they can't find at home, unfortunately for the BOT it costs too much to try and throw large ammounts of baht at the problem to try and keep the baht artificially weak.

Edited January 31, 2013 by chiang mai

[h90]

A simple answer. The very liberal socialists have broken the Western economies. They simply can no longer afford to provide for people who have no desire to work. Thailand hasn't gotten to that point, YET.

And their "service based society". In simple words we cut each other the hair and from the profit this generates we buy all the things we need from China.

(They of course tell it in so difficult terms that it is hard to find out that it is non sense).

Thailand is also on the way, just a bit behind......

(off topic: In the real socialist countries (GDR, Soviet, North Korea), people who have no desire to work were forced to work)

[me313]

Maybe the Thai government wants to curb the looming housing bubble by increasing inflation, and the ensuing devaluation of the Baht even though it temporarily appears to be increasing in strength. As someone mentioned the over-valued housing market, assume that many of the brand new hotel rooms lining the Andaman Coast are not filled up, or are full only a few weeks out of the year. My hunch is that the movie The Impossible was a kind of propaganda piece to encourage people to come to beautiful Thailand and fill up those hotel rooms that remain empty.

[Jaggg88]

Well the pound was at it's lowest in over a year Yesterday,hate to think what exchange rate they are offering in the uk 43,44?

Yes spot on - Tesco in the UK were offering 43 last Weds

[Bpuumike]

Buy a little gold every month

[tragickingdom]

Nothing is up with the baht. The rise of the Baht is not sharper than that of for instance the Euro. The world has been fooled by the americans and British for too long that the Euro was the problem and that while the Uk and the US has debts far exceeding that of most troubled Euro countries. Would you keep on borrowing money to the US? Embrace yourself for another rise of 10% -15% to those currencies and cross your fingers that the Chinese do not play "repo-man" and recall their money.

[berg1666]

Maybe the Thai government wants to curb the looming housing bubble by increasing inflation, and the ensuing devaluation of the Baht even though it temporarily appears to be increasing in strength. As someone mentioned the over-valued housing market, assume that many of the brand new hotel rooms lining the Andaman Coast are not filled up, or are full only a few weeks out of the year. My hunch is that the movie The Impossible was a kind of propaganda piece to encourage people to come to beautiful Thailand and fill up those hotel rooms that remain empty.

If they want to limit housing price increases, they need to raise interest rates and/or increase minimum deposits. Encouraging inflation only drives people into fixed assets (such as property) as cash (i.e. spending power) loses value that much faster.

[chiang mai]

I love some of the theories put up on this subject, it's the economic equivelent of watching cartoons, the one about curbing property inflation was pure gold.

Edited January 31, 2013 by chiang mai

[easyozzi]

I was travelling through the airport at Suvarnabhumi the other day and it was £1 = 45.09 THB, as usual you can get closer to 46.50THB in the city but either way it's expensive living in Thailand these days.

If the THB continues to strengthen then I'd be looking to move elsewhere - the reason "most" people move to Thailand is for the cheap living outlay and thats no longer the case.

As for land prices, it's just comical now, people are asking 50k THB for 1sq wa on the outskirts of Chiang Mai. Besides which we foreigners cant own the land so why should we care ? It's a case of paradise lost

[watgate]

With quite a few countries recently listed over Thailand as a place to retire, if the baht continues to strengthen against other currencies, then I will look at these other countries to spend my winters and my money in.

[spermwhale]

The baht is strengthening due to capital inflows into Thailand. The country's stock market has been on a tear so more foreign investors are flocking to the Thai stock market to invest. In order to do so, they buy their baht, usually with dollars and it's been happening at such volume that it's affecting the exchange rate and making the Thai baht stronger. Also, interest rates are rock-bottom in the US so investors are also seeking out better returns on bonds in Thailand.

Additionally, the economy is growing at a good clip here, generating more income for the country. Finally, large international companies continue investing in new factories in Thailand. To do that they buy more baht, which, again, strengthens the local currency.

[ronaheck]

Honestly, Lads, please don't pretend to know FX if you don't know FX. It's painful to read.