What's Up With The Thai Baht?

[thailand49]

When I first came to Thailand 20 years ago the Can $ was worth 20 Baht.

5 years ago it was worth 34.

Now it is worth 30.

Notice any predictable pattern?

No, nor do I.

No one can tell you which way a currency will go against any other currency (except maybe Zimbabwe).

35 years ago gold went to $900 an ounce.

Then it dropped to $200 an ounce.

Today? $1700.

Notice a pattern?

No nor do I.

Is there any point to this post?

Yes - life is unpredictable. Don't expect otherwise.

Easily explainable, USD/THB was pegged at 25 to USD until 1997, after the crash is soared and now it';s getting back to where it should be, a fairly predictable cycle I think, reverting to the norm..

You are right and wrong.. the big difference today 2013 from 1997, is you don't have China, you don't have Vietnam, You don't have Malay, you don't have Indonesia. you don't have Burma, there is just too much completition for Thailand to deal with. Just hope you are wrong and I'm right? We alll have been spoil, I just wish they would spoil me again?

[oldsailor35]

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

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

Expensive living in Thailand compared to where ? you have to have some comparison.

[oldsailor35]

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

Yep! just allow us to own land, and then sit back and watch the money flow in !

[Danbit]

Compare with the € not the £ and the Baht is weak. I expect it will be very bad, many new cars with a 100,000 support, they can´t pay the Bank. To much activity with building houses and condoes, who is to stay there, where I stay +30% is for sale, same price as 20 years ago. We are building a bubble.

[oldsailor35]

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

I guess everybody can have their own ideas, so if you do not agree with anything. Dont read it !

[chiangmaikelly]

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.

Past behavior predicts future performance. In 2004 when the baht was at 45 to the US dollar I seem to remember two types of posts on Thai Visa. One kind said it was going to 62 and to hang on. Another said it was going to 25 and sell while the the baht was at it's high. So the baht has gone from 45 to 29 in 8 years. I guess if one wants a good opinion one would ask those folks who sold when it was at 45 to the US dollar..

Edited January 31, 2013 by chiangmaikelly

[yourauntbob]

The Fed and ECB are both in massive quantitative easing mode. This means that the supply of Euros and Dollars is being increased to "stimulate" the economy. The larger the supply of something (including money) the lower the price (or exchange rate). The BOT will need to either print more money, which could lead to inflation, or allow the Baht to strengthen.

Plain English translation: Western countries are trying to improve their economies by printing more money, the more money they print the less their money is worth.

[oldsailor35]

A strong baht is the only tool left to stop Thailand from doing well. The strong baht can cripple the economy. What this means is other countries can then reclaim some of the trade Thailand was taking away from them. This is an Asian power play. Korea and Thailand are the targetted countries. China needs to protect their position of trade.. Korea and Thailand are becoming too strong and a correction is needed so a correction is being done.

That said. China still needs Thailand in the future for distribution of their products. So the pressure shall be kept on by use of the strong baht till there is an election and the Dems get back into power (yes they will get in}. The good old boys are keeping their golden goose. Then the baht will weaken and trade will come back to a certain extent. Thailand will then become the broker for China and neighbouring countries to the rest of the world. Thailand will assemble and ship China and neighbouring countries will manufacture. Japan already is capable of doing this,in Thailand, but other asian countries donot wish to be left out.

This should all play out in a rather short time. I forcast less than a year and a half.

Maybe, but what damage will another military coup cause ?

[yourauntbob]

Buy a little gold every month

So where and how do you suggest we buy it ? I really am interested in this suggestion.

There are brokerage firms in Thailand that allow you to buy gold at spot prices in the commodities exchanges. They will even house the gold for you so you dont have the risk of it being stolen, lost etc....

[Berkshire]

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.

Very good summary which covers most of the key points. I wish these other guys posting would just read this and quit making up silly suggestions as to why they think the baht is as strong as it is. They're embarrassing themselves! As for the Cheap Charlies threatening to leave if the baht gets even stronger? Don't let the door hit you on the ass on your way out.

[chiangmaikelly]

A strong baht is the only tool left to stop Thailand from doing well. The strong baht can cripple the economy. What this means is other countries can then reclaim some of the trade Thailand was taking away from them. This is an Asian power play. Korea and Thailand are the targetted countries. China needs to protect their position of trade.. Korea and Thailand are becoming too strong and a correction is needed so a correction is being done.

That said. China still needs Thailand in the future for distribution of their products. So the pressure shall be kept on by use of the strong baht till there is an election and the Dems get back into power (yes they will get in}. The good old boys are keeping their golden goose. Then the baht will weaken and trade will come back to a certain extent. Thailand will then become the broker for China and neighbouring countries to the rest of the world. Thailand will assemble and ship China and neighbouring countries will manufacture. Japan already is capable of doing this,in Thailand, but other asian countries donot wish to be left out.

This should all play out in a rather short time. I forcast less than a year and a half.

Maybe, but what damage will another military coup cause ?

It is not like there is a shortage of examples to check. How many has there been in the pasy 100 years in Thailand 20?

[oldsailor35]

Thailand has been running a trade surplus for many years. After the meltdown in 1997, both the government and the people decided they would take steps so they would never, ever have to go to the IMF again. For good reason. The IMF are basically pirates who impose policies on weak governments to encourage looting by the "advanced" economies. Also known as "the Washington Consensus," or "neoliberalism" which has no connection to "liberalism." Anyway, the U.S. dollar has been overvalued since Robert Rubin was Clinton's Secretary of the Treasury. Several countries were propping it up, especially China, but also Japan and Germany, to preserve their trade surpluses. Although it will devastate my income, the U.S. needs to weaken the dollar even more to overcome the disastrous trade deficit they have been running for twenty years. The U.S. has been following very conservative monetary policies since Greenspan left the Fed, and the general population has been forced to cut back on their borrowing since the financial crisis in 2007, so they are not able to continue importing underpriced goods. I've been expecting this for a long time, and have been hoping it would be held off for a while longer.

And learn not to waste so much money by keeping out of other peoples wars a 'tad' less.

[ayayay]

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.

Why would it be bad for import if the Pound was strong against the Euro?

[chiangmaikelly]

Thailand has been running a trade surplus for many years. After the meltdown in 1997, both the government and the people decided they would take steps so they would never, ever have to go to the IMF again. For good reason. The IMF are basically pirates who impose policies on weak governments to encourage looting by the "advanced" economies. Also known as "the Washington Consensus," or "neoliberalism" which has no connection to "liberalism." Anyway, the U.S. dollar has been overvalued since Robert Rubin was Clinton's Secretary of the Treasury. Several countries were propping it up, especially China, but also Japan and Germany, to preserve their trade surpluses. Although it will devastate my income, the U.S. needs to weaken the dollar even more to overcome the disastrous trade deficit they have been running for twenty years. The U.S. has been following very conservative monetary policies since Greenspan left the Fed, and the general population has been forced to cut back on their borrowing since the financial crisis in 2007, so they are not able to continue importing underpriced goods. I've been expecting this for a long time, and have been hoping it would be held off for a while longer.

And learn not to waste so much money by keeping out of other peoples wars a 'tad' less.

What wars?

[oldsailor35]

When I first came to Thailand 20 years ago the Can $ was worth 20 Baht.

5 years ago it was worth 34.

Now it is worth 30.

Notice any predictable pattern?

No, nor do I.

No one can tell you which way a currency will go against any other currency (except maybe Zimbabwe).

35 years ago gold went to $900 an ounce.

Then it dropped to $200 an ounce.

Today? $1700.

Notice a pattern?

No nor do I.

Is there any point to this post?

Yes - life is unpredictable. Don't expect otherwise.

I can remember when it was $A130 an ounce, but my mate just kept on prospecting and making an idiot of himself by telling everybody that it would reach $A 1000 one day. What a fool he turned out to be. The poor bugger just kept toiling away in the hot Aussie sun, now hes a millionaire but still keeps swinging his metal detector. And another fact, any gold found in Australia is TAX FREE !

[phuturatica]

I'm not going to get involved in the silly debate and theories about whats happening with the Thai Baht however I will express my frustration with how rubbish it is withdrawing money from my English accounts and getting less for the exchange rate every time.

[oldsailor35]

i think its time a few expats pulled their heads out of the dark hole and looked around ... trying to predict what the baht is going to do is a waste of time ..perhaps spend the time analyzing what is happening in the country you came from ..

1/ America ? its bankrupt and may recover in 25 years

2/ Japan ..basket case beyond help

3/ Europe ..( greece , portugal ,italy , spain , ireland, and soon the UK one step behind the states ..not pretty reading) and the germans are getting ready to jump ship

4/ Aussie ... over cooked economy, but strong commodity base may save it the same fate as others .. interest rates continue to drop

so the Thai economy to me does not fall into the same boat as many of the above ..keep on hoping for a correction in value but it wont happen in the short term ..

All Australia needs is a new government which understands money and trading. They have an abundance of natural resources including new found oil deposits.

[stoli]

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.

I can understand why you think the housing market here is now in a bubble, and getting ready to burst. I sometimes think that myself. What gets me to think about it even more is when the housing bubble burst in the US, which has been, and still is, very damaging, it was the US citizens buying these homes and then getting screwed. Here in Thailand, I am trying to figure out the outcome as so many of the condos sold here are owned by foreigners. It is not the working class Thai citizens that are buying them, whereas in the US it was the US working class. I know they can only be 49% owned by foreigners, and the rest to Thai's, but that includes Thai companies setup by foreigners. Any thoughts anyone?

[HardenedSoul]

Buy a little gold every month

Keeping your savings in gold is, without a doubt, the most effective solution.

wait for the gold bubble to pop ... thats also looming ...

A bubble is just a bull market in which the person calling it a bubble doesn't have a position.

Still, if gold is in a "bubble", what are bonds in? The bond market dwarfs gold's by miles and is manipulated by central bank "buyer-of-last-resort" tinkering.

I'm more inclined to trust gold because it doesn't depend on the ability of another to cough up the readies unlike bonds.

I'm not saying that its bull market can't or won't come off the rails one day but I'm confident the bond market will pop first.

[Osiris]

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.

Tech stuff is beginning move already. A programmer I know in India will be mi Laos in April to set up shop, because they speak English there.

[Denizen]

This discussion is very low in intellect.

Before the Asian economic meltdown of 1997 the Thai Baht was trading at THB 25 to USD 1.00. I believe the Thai Baht is slowly heading for that rate again or possibly even lower rate.

Anybody living in Thailand who did not convert their wealth to Thai Baht has made a costly mistake. You only have to consider the phenomenal growth rate of Thai exports over the past 5 years to understand why the Thai Baht has upward pressure. The Thai government does not have the reserves to fend off speculation on the currency and there may well be upward spikes over the years from speculators. It is historically proven that only the largest countries have the resources to defeat currency speculation bubbles by massive speculator attacks.

The British pound is suffering from the end of the North Sea oil boom era where oil and gas production in UK is declining. Prior to this period in the UK oil boom times of 1980s and 1990s, and even before that, British industry was declining due to the effect of oil production and export on the British Pound. This is typical of resource booms where the resource rich country's currency appreciates during the boom and busts after the boom. UK industries other than oil and gas were shrunk by the high value of the British Pound in those periods.

Just consider that in 1948 the exchange rate was GBP 0.25 to USD 1.00 (USD 4.00 = GBP 1.00).

The prognosis for UK is poor with much further decline in oil and gas production expected over the long term and industry already decimated by long period of high value UK pound before that. It will take some time for British industry to recover if it ever does. High oil prices will aggravate the situation because UK is now a net energy importer compared to energy exporter in 1980s-1990s. The UK is already running trade deficits which will get worse if oil price rises.

The prognosis for the British Pound is bad. Declining oil and gas production will further weaken the British Pound. The renaissance of British industry is likely to take a very long time. Talent will stream out from UK because of low remuneration relative to USA and other countries.

[oldsailor35]

Buy a little gold every month

So where and how do you suggest we buy it ? I really am interested in this suggestion.

There are brokerage firms in Thailand that allow you to buy gold at spot prices in the commodities exchanges. They will even house the gold for you so you dont have the risk of it being stolen, lost etc....

Risk of being stolen ! I would prefer to see it in my hand, already been burned once by a company "safely" looking after my money ! You never know when they will go bankrupt and loose the lot.

[rekkie]

I think the property bubble didn't burst as the market got a second wind from the Russian influx of monies.

Hence the continuing strength of the baht. Just under half of all condos sold in Pattaya were to Russians this year...

The other issue is the dire mess that US and European countries are in, totally beholden to the institutions lending them the money they need. It is very scary that the UK despite 2 years of austerity cannot stop their national debt rising....and is rising faster than when they started the austerity measures.

Thailand is in debt but not in as big a mess as some of the west and likely to grow at 5% a year for several years to come....European average growth consensus for next 12 months about 1/10 of this.

[oldsailor35]

Thailand has been running a trade surplus for many years. After the meltdown in 1997, both the government and the people decided they would take steps so they would never, ever have to go to the IMF again. For good reason. The IMF are basically pirates who impose policies on weak governments to encourage looting by the "advanced" economies. Also known as "the Washington Consensus," or "neoliberalism" which has no connection to "liberalism." Anyway, the U.S. dollar has been overvalued since Robert Rubin was Clinton's Secretary of the Treasury. Several countries were propping it up, especially China, but also Japan and Germany, to preserve their trade surpluses. Although it will devastate my income, the U.S. needs to weaken the dollar even more to overcome the disastrous trade deficit they have been running for twenty years. The U.S. has been following very conservative monetary policies since Greenspan left the Fed, and the general population has been forced to cut back on their borrowing since the financial crisis in 2007, so they are not able to continue importing underpriced goods. I've been expecting this for a long time, and have been hoping it would be held off for a while longer.

And learn not to waste so much money by keeping out of other peoples wars a 'tad' less.

What wars?

You name it, the Yanks are usually there !

[chiangmaikelly]

I think the property bubble didn't burst as the market got a second wind from the Russian influx of monies.

Hence the continuing strength of the baht. Just under half of all condos sold in Pattaya were to Russians this year...

The other issue is the dire mess that US and European countries are in, totally beholden to the institutions lending them the money they need. It is very scary that the UK despite 2 years of austerity cannot stop their national debt rising....and is rising faster than when they started the austerity measures.

Thailand is in debt but not in as big a mess as some of the west and likely to grow at 5% a year for several years to come....European average growth consensus for next 12 months about 1/10 of this.

What percent of Thai property market do you think is owned by Russians?

[prvtdetdave]

Buy a little gold every month

So where and how do you suggest we buy it ? I really am interested in this suggestion.

There are brokerage firms in Thailand that allow you to buy gold at spot prices in the commodities exchanges. They will even house the gold for you so you dont have the risk of it being stolen, lost etc....

Risk of being stolen ! I would prefer to see it in my hand, already been burned once by a company "safely" looking after my money ! You never know when they will go bankrupt and loose the lot.

Safety Deposit Box, in a bank.

[Fishface]

Those who think the baht will fall further can bring the money here and get 2.9% after tax. A high baht does nothing for the country either exports or tourism. The Government want the banks to step in and control it but the banks prefer a high baht. It makes you wonder who is in charge here.

I bought my house at 38 to the pound. I never thought about it in 1989 it was what it was.

I feel 45 is still good in comparison.,

Good turns bad and bad turns good if you can wait long enough.

[hippie]

The only thing most should have done is what I did in 2000 was buy Gold when it was cheap. Now gold is up over 200% Giving me a nice windfall, Stocks way to Risky Gold on the other gets more expensive at a slower rate Besides alot countries use the gold standard to back there currency.

[chiangmaikelly]

So where and how do you suggest we buy it ? I really am interested in this suggestion.

There are brokerage firms in Thailand that allow you to buy gold at spot prices in the commodities exchanges. They will even house the gold for you so you dont have the risk of it being stolen, lost etc....

Risk of being stolen ! I would prefer to see it in my hand, already been burned once by a company "safely" looking after my money ! You never know when they will go bankrupt and loose the lot.

Safety Deposit Box, in a bank.

Ever tried to get one at a bank in Thailand? 555.

[hopdafru]

Buy a little gold every month

So where and how do you suggest we buy it ? I really am interested in this suggestion.

was curious too from another thread what one would do with gold bars and such - one cannot eat gold can they? - and was wondering about 'cutting bars into pieces', the following concept of breakable gold bars was mentioned:

https://www.valcambigold.com/Charts.aspx

anyways, although no expert (note to hardenedsoul: I'm just a curious layman re. economy etc.) I don't see how carrying a bunch of gold under the mattress will help me if currencies start failing; maybe I'm better off raising chicken, ducks & growing food which I could then exchange for gold ( or whatever new temporary new 'currency') for a fraction of the 'cost' it would be now, no?

As for my relatively short life experience - i'm only about forty - I've noticed that these 'shit hitting the fan' scenarios tend to happen in slow motion (unfortunately so as our life spans are relatively short!)

I don't buy this whole 'buy gold now or you will be doomed' kind of thing, I don't see how it would work in practical terms - how was gold used when USSR collapsed or during Asian and Argentinian currency crisis?

Given a doomsday scenario I feel much more comfortable with stuff people would really need to survive such as food or gas. Just my opinion and open to sound information / advice about why I should buy gold now and how to go about it.

The way I go about the economy these days is I try to inform myself as much as possible, I try not to get carried over by fear and carry 3 currencies in several banks / countries and use them to my advantage. Should anything go very wrong somewhere, some trend should surface and I'll take action from there.

Sokh Dee