What's Up With The Thai Baht?

[lovelomsak]

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.

[RogueLeader]

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.

A liberal isn't a socialist and a socialist isn't a liberal. Gambling and reckless short-termism by institutions which failed, then threatened to bring the economy down unless given enormous sums of taxpayers' money caused lethal structural weaknesses in European and American economies. This is neither socialism nor liberalism, but can best be described as neoconservatism.

Glad I could help.

Edited January 31, 2013 by RogueLeader

[chiang mai]

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.

Is the correct answer.

[ccarbaugh]

OP - "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."

Ever heard the song, "Don't Worry, Be Happy?"

[chiang mai]

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

Phew, thank god you're here, we were all just making up silly stories and killing time, waiting for you to get here so that you could explain it all to us, over to you Mr Soros.

[easyozzi]

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.

Hit - Nail - Head

[Acharn]

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.

[mikecwm]

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.

[davidrkw]

The Japanese may find that manufacturing in Thailand is becoming too expensive if the Baht continues to rise and the yen keeps falling. Toyota and others could start reducing output in Thailand in favour of Japanese factories. The inflows to Thailand are short term and could reverse if there is bad news from the Eurozone or the US.

[Estrada]

Thailand pegged its currency at 25 to the dollar from 1984 until July 2, 1997, and 35 to pound sterling when the country was hit by the Asian Financial Crisis. The baht was floated and halved in value, reaching its lowest rate of 56 to the dollar and 88 to the pound in January 1998. Up until 1997 Thailand had been booming at these exchange rates, they can hardly complain now when the exchange rate is only B30/$ and B47/£! You should expect the exchange rates to recover to pre-1997 levels within 2 years as the world economies recover.

[MrVain]

You're absolutely right to be worried at least a little bit. Yes ups and downs but with the near future of this new year it looks dramatic. New war in Iran is comming, France is about to be bankrupt after a few other countries. With France the case is probably that it will end the Euro because its much bigger then Greece if you look how the pie is cut.

The USA looks at a major crash.. $£€, I'm afraid it won't matter much, the governments are run by banks and we let it all explode in our face.

[chiang mai]

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..

[robokop]

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.

Somehow or another I do not see a business closing down a factory in Thailand because the Thai Baht getting a little stronger against foreign monies. I also find this idea that a business will close shop because of a slight increase in the cost of the Thai slave labor costs. 300 Baht a day equals $10 USD a day labor cost or about $280 USD a month., that is slave labor. I wonder how many writers here would work for about $300 USD a day, or to a Thai person, about 9000 Baht a month. It is a bit difficult to support one person on 9000 Baht. No 1 month vacation, no worker protection, few jobs with medical benefits if any. Moving a business into or out of Thailand is very costly, so decisions over a slightly stronger Baht over a small period of time is not going to cause a business to make a major move such a opening or closing shop.

[farmerkevin]

Buy a little gold every month

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

[MrVain]

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.

So good to know the problem is Global and sooner or later we have to pay the price for ignorance and greedy people taking all. QE3 speaking of printing money, we all do it in the west. It get's invested well to the banks and war, why would 49.000.000 people on food stamps need money anyway?

[cdmtdm]

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 ..

[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.

A liberal isn't a socialist and a socialist isn't a liberal. Gambling and reckless short-termism by institutions which failed, then threatened to bring the economy down unless given enormous sums of taxpayers' money caused lethal structural weaknesses in European and American economies. This is neither socialism nor liberalism, but can best be described as neoconservatism.

Glad I could help.

And the socialists aren't socialists, they are just a couple of corrupt opportunists. Who hand out some money for the lazy to get their votes and else do what their lobbyists pay them to do.

That is these days valid for almost all countries, both for Obama and even more for Thailand. Worst example are the communist red shirts who team up with with the worst capitalist Thaksin....

[cdmtdm]

You're absolutely right to be worried at least a little bit. Yes ups and downs but with the near future of this new year it looks dramatic. New war in Iran is comming, France is about to be bankrupt after a few other countries. With France the case is probably that it will end the Euro because its much bigger then Greece if you look how the pie is cut.

The USA looks at a major crash.. $£€, I'm afraid it won't matter much, the governments are run by banks and we let it all explode in our face.

yes sorry i forgot about France ... Italy is following France very quickly into the shit

[cdmtdm]

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 ...

[h90]

Buy a little gold every month

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

If I would have money I would prefer farm land. I recall the stories of my grandparents, how the rich people went to the countryside and bought a chicken with a golden ring. Everyone was hungry beside the farmer. You can't eat gold, but having 10 natural chicken that produces maybe 3-5 eggs per day is easy.

[MrVain]

Buy a little gold every month

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

Be very carefully with gold, only buy if you really get it. If they say we keep it save for you, it's not there! Everybody wants there gold back now before the big clash. For real, whole countries demanding there gold back now... It's not there for a part, I can't tell you how big the fake part in gold is yet. Big fraud all around you, just remember the peoples interest never comes in the first place for most.

[MrVain]

You're absolutely right to be worried at least a little bit. Yes ups and downs but with the near future of this new year it looks dramatic. New war in Iran is comming, France is about to be bankrupt after a few other countries. With France the case is probably that it will end the Euro because its much bigger then Greece if you look how the pie is cut.

The USA looks at a major crash.. $£€, I'm afraid it won't matter much, the governments are run by banks and we let it all explode in our face.

yes sorry i forgot about France ... Italy is following France very quickly into the shit

check this out please:

[oldsailor35]

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

I think that Chamberlain had the same confidence in Hitler !

[thailand49]

I'm no expert on this subject... although I have mutual funds in U.S. and it has risen lately like 15,000 USD in the last month I'm not too concern about the baht.. sure it hits me in the pocket living here less each month that is for sure! totally out of my control. I read the papers as to what the Thai expert are talking and for the last few years I tracked that and what happens right after they speak and try to read between the lines. Each time after they speak I noticed that the baht starts to drop just like it went from 29.44 to other day 29.98, they say they can't do this or that about the market but as far as I'm concern they talk out of both side of their month. This is Asia! Just like China there is some internal malipulation Thailand can't afford to let the baht get too strong the days are different now they have too much competition around them to think they can complete. Just look at what they did with the rice scream?

One thing about this country they never seem to amaze me that they always seem to shoot themselves in the foot! There was a number of years ago when it was 40/1 and some Thai guy said they should set the baht at 37.00 or something like that I was thinking wouldn't that be great?

Well, got to make up the difference tonight and go with Happy Hour drinks instead of after.

[cdmtdm]

Buy a little gold every month

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

Be very carefully with gold, only buy if you really get it. If they say we keep it save for you, it's not there! Everybody wants there gold back now before the big clash. For real, whole countries demanding there gold back now... It's not there for a part, I can't tell you how big the fake part in gold is yet. Big fraud all around you, just remember the peoples interest never comes in the first place for most.

confiscating gold is also not out of the question ,,,,

[oldsailor35]

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.

But i think that 'slowly' very slowly, that western governments are beginning to wake up about those who prefer not to work !

[Sandman77]

Who can explain why the thai bath not go down during the flood crisis?

I still don't know the answer!

So what does it realy mean for export import industries?

Last week I talk with a dutch bisness man he has a company in Amsterdam for export food to Asia! And he told me, you can't be to expensive!

If the price to high for the goods, Thais don't buy, then we buy in china was the answer no matter what the exchange rate will be!

Sent from my iPhone using ThaiVisa app

[thailand49]

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 ..

Don't forget U.S. might be in a mess, people are still pouring money into their market. China, borderline and hiding their economy they have a housing bubble ready to burst. That country is one big Nevada and Arizona?

Japen might be a mess, but we are still complaining about having to complete with the Japanese at the go go's right? Your list 2,3,4, will all go before the U.S, in fact #3, already have the Euro should never be what is its that is why the UK wouldn't have any part of it?

Hey what about the Russians, when is their oil going to run out?

[indyuk]

The USA quietly prints another 85 billion US$ per month while her gross indebtedness approaches 17 trillion US$. As I write the USA Military reduces expenditure by >20% Q4/12. Further swinging cuts have to be implemented across the USA economy starting Q2/13. Each month though 2013 tens of thousands of American jobs per month are likely to be lost forever. The expected rate of growth in the USA economy is unlikely to replace those jobs.

Thailand's sovereign debt overhang from borrowing (US$ 300 million?) during the latter years of the 1990's, sits on the Books of the Bank of Thailand. The government of Thailand seeks to borrow a further 2 trillion baht to support her participation of a range of multiple mega projects. Thailand has always found it difficult to make its interest payments on its's current sovereign debt. Currently the Thai government has refused to top up payments to the provincial managers of the rice pledging project due to a current lack of funds and concern over some of the disbursements already made.

Surely the Baht is appreciating because its bench mark currency is the US$, which on the face of it would seem to be worthless, ensuring that the value of the Baht will continue to increase in spite of Thailand's own onerous obligations.

[oldsailor35]

Buy a little gold every month

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

Edited January 31, 2013 by oldsailor35