Thai Baht Takes A Dip On Dollar Buying

[webfact]

BAHT
Baht takes a dip on dollar buying
The Nation

BANGKOK: -- The baht retreated yesterday on impulse buying of US dollars, while concern over speculation in the stock market lingered despite days of profit taking.

Despite yesterday's step back, the baht has advanced the most among its regional peers, gaining 5.04 per cent this year to date.

The baht weakened to 29.22-29.24 per US dollar in morning trade from 29.08-29.11, the highest level since the 2007 Asian financial crisis, at the prior day's closing.

A currency trader sees the resistance level for the baht at 29.10 and the support level at 29.25.

Bank of Thailand Governor Prasarn Trairatvorakul remained silent on any additional measures for the baht. He acknowledged that the unit had appreciated rapidly in the past one to two days but said more foreign capital flowed into the bond market than the equity market.

Charamporn Jotikasthira, president of the Stock Exchange of Thailand (SET), said the stock market still showed signs of speculation despite the index dropping for several days.

"The market was volatile for the past two days with high turnover. That means high speculation. High turnover means making too-short investment," he said.

Besides raising the guarantee for cash balance accounts from 15 per cent to 20 per cent, the SET has not initiated any steps to curb stock speculation. The Association of Securities Companies will ask for comments from its members next week.

The SET Index receded against other regional markets in the morning, giving foreign investors pause to see the interest rate direction and measures for money markets, said Padon Vannarat, vice president of Maybank Kim Eng Securities (Thailand).

After rising in the morning session, the SET Index closed at down 14.15 points to 1529.52 points on trade worth Bt61.85 billion.

Full margin loans for securities, which partly prompted lack of buying support, were also cited for the market drops.

In the past two months, margin loans have reached Bt50 billion.

The SET plans to provide sufficient knowledge to investors, particularly newcomers, on investing.

In the first two months of this year, about 40,000 accounts were opened for stock trading. This year's target for new accounts is 100,000, according to the SET.

"It's good to have new investors if they understand stocks and the overall investment," he said.

Deputy Democrat Party leader Korn Chatikavanij said the baht was on an uptrend due to external factors. The US and Japan have a policy to print their own money, which are the currencies used by many countries around the world as their international reserves.

Those powerful economies were serious about reducing the value of their currencies so that they could export more products to the world’s market.

Korn, who was once a finance minister, said the Yingluck government has no policy to curb the capital inflows, as they want to support investors and the surge of the stock market.


-- The Nation 2013-03-22

[kennedy]

Crickets

[NeverSure]

I don't have this figured out yet. The US dollar has risen about 4% in less than two months, yet it's apparent that baht has risen more.

I'm still bearish on Thailand. Reading the recent collapse of Cyprus reads like Thailand to me.

"MK: No. The situation (in Cyprus) is absurd. After years and years of
a policy which is a part of regulation arbitrage, and offshore
paradise offers made to non-residents, which has created a bubble
economy and a bubble banking community, which is truly
disproportional to the gross national product of the island." Link

Historically, when investors got nervous, they fled to dollars. Right or wrong, they still do which I think has been the cause of the rise in the dollar internationally.

I'm still waiting, and may have to wait a while, for international investors to see how bad bank loans are, and ballooning consumer debt is, in Thailand. When that happens, investors will flee the baht, causing a precipitous drop in value.

Right now, what is driving up the baht is the inflow of foreign investment capital and Thailand is encouraging it, so far. But all is not rosy.

BoT chief rejects rumours of insufficient funds.

Rise in mortgages poses threat, says KResearch

And, of course mortgages don't include burgeoning consumer debt for the car scheme, credit cards and other new Thai household debt.

"When employment in the US resumes, the Fed will end the QE
[quantitative easing] and capital fund flows will return to the US
again, meaning the cycle of interest rate will rise again and influence
the higher financial burden of consumers, especially mortgagess," he
said.

The picture of high liquidity will be changed from the role adjustment
of the Fed, while infrastructure projects worth Bt2.2 trillion, which
require huge lending, will curb liquidity. The factors will impact
increase in interest rate, he said.

Non-performing mortgage loans were unlikely until the interest rate is
increased, which would make some borrowers unable to bear the burden of
the debt, he said.

The monetary policy currently reflects the worry of the Bank of
Thailand, said the economist, adding that the central bank does not want
to cut the rate despite the strong baht because if the rate is lowered,
it will accelerate mortgage lending. Link

Link

[asiamaster]

Impulse buying ???? I would say deliberate buying. Let the SET and the THB rise - sell off and convert to US dollars - SET drops -THB drops and let the game begin again....

[Joe Mamma]

It seems a currency war is brewing worldwide. The gold standard was the stabilizer of the past, but now the first world countries are printing the money and using it to buy gold reserves. Think the US dollar as a world standard reserve is going to change. Must bone up on my Chinese now.

[morrobay]

Thanks for the good news NeverSure / post #3. For some reason Thailand gets by in many areas on perception instead of reality. But like you say - the day is coming

Edited March 22, 2013 by morrobay

[wpcoe]

OTOH, the dollar has *soared* against the Japanese Yen, rising from about Y80 to Y96 to the US$ in just three months -- a jump of 20%. Is there no foreign investment capital remaining in Japan?

[NeverSure]

It seems a currency war is brewing worldwide. The gold standard was the stabilizer of the past, but now the first world countries are printing the money and using it to buy gold reserves. Think the US dollar as a world standard reserve is going to change. Must bone up on my Chinese now.

China is in a world of hurts. They are broke. They too have borrowed and spent for "stimulus" but their exports are way down. They are holding the value of their currency down too, trying to maintain exports but that has a bigger problem. Their exports have dropped a lot, and the cheap value of their currency means they aren't getting a lot of profit. In fact, they lost money last quarter.

Also, unlike any other country on the list, China is communist and the government owns the means of production, and has the responsibility to support 1.3 billion people. Unlike other countries, if industry loses money, the government is the industry losing the money.

Consider the US as just one example. The government is spending much more than it takes in. But, the private sector, the corporations, are rolling in profits. They are hoarding cash. China doesn't have that model.

I don't know of an example of a communist country that ever stayed profitable for the long haul. To the contrary, look at how the USSR went belly up and had to break up because they couldn't support their people. You had poverty in communist E. Berlin, and prosperity in capitalist W. Berlin, and eventually that wall came down.

Russia has actually chastised the West for going socialist, while Russia is going capitalist. Russia has been there, trying to support all of its people, and knows it can't be done.

The people have to support the government, not the other way around. The West is finding that out the hard way with printing a deficits, and just hasn't admitted it yet.

China is in for a bad and long recession.

[NeverSure]

OTOH, the dollar has *soared* against the Japanese Yen, rising from about Y80 to Y96 to the US$ in just three months -- a jump of 20%. Is there no foreign investment capital remaining in Japan?

Japan is also badly hurting. Their debt to GDP ratio is the highest in the world. They had that tsunami and nuclear meltdown that set them back too. but they too are over spending and borrowing and going into a big hole.

This is Asia. Japan, S. Korea, China - all are in a world of hurts.

Thailand, with its own borrow and spend, but lack of transparency coupled with corruption, can't escape it. Thailand is riding a wave of borrow and stimulate, borrow and buy rotting rice (which alone could break Thailand) and raising the minimum wage an absurd percentage, and wave upon wave of empty condos and houses, and consumer debt skyrocketing with ez money for home loans and car stimulus program and credit card junkies and...

The baht is high because investors are bringing in foreign capital and converting to baht just like we do. When the investors figure out what is really happening and want their money out of Thailand meaning out of the baht and back into something else like GBP or USD, the baht will drop like a rock.

[Huayrat]

The SET is shaking ohhh ohhhh

[Stjohnm]

US$ is still well down on its year on year

Sent from my iPhone using ThaiVisa app

Edited March 22, 2013 by Stjohnm

[kennedy]

OTOH, the dollar has *soared* against the Japanese Yen, rising from about Y80 to Y96 to the US$ in just three months -- a jump of 20%. Is there no foreign investment capital remaining in Japan?

Japan is also badly hurting. Their debt to GDP ratio is the highest in the world. They had that tsunami and nuclear meltdown that set them back too. but they too are over spending and borrowing and going into a big hole.

This is Asia. Japan, S. Korea, China - all are in a world of hurts.

Thailand, with its own borrow and spend, but lack of transparency coupled with corruption, can't escape it. Thailand is riding a wave of borrow and stimulate, borrow and buy rotting rice (which alone could break Thailand) and raising the minimum wage an absurd percentage, and wave upon wave of empty condos and houses, and consumer debt skyrocketing with ez money for home loans and car stimulus program and credit card junkies and...

The baht is high because investors are bringing in foreign capital and converting to baht just like we do. When the investors figure out what is really happening and want their money out of Thailand meaning out of the baht and back into something else like GBP or USD, the baht will drop like a rock.

Being someone that doesn't give a dam if the baht goes up, down, or sideways, it's time for my afternoon nap.

[belg]

ladies and gentlemen ... euro at 37 baht ... how low will it go ?

[khunken]

There's a lot of fake economic opinion on this thread.

The Japanese Yen has dropped significantly because the new government has made it clear that it wants a weaker Yen and is replacing the BOJ management with government supporters (a bad move for independence) who will start printing more money.

Asian currencies with some major exceptions have risen relative to the US$ & this includes the Baht. The US$ has risen against the other major world currencies - Yen, Euro, Stg - because of serious weaknesses in Japan, EU & UK.

China is NOT in any big trouble. It's currency is relatively stable and it's exports have dropped due to recessions in its major markets. It has successfully boosted internal consumption which allows decent growth, slightly less than the 9-10% before. It is amazing that some people can't see beyond the old 'reds under the bed' syndrome & open the other eye to see that China has adopted a mixed system of communism & capitalism quite successfully. it is constantly improving and just like turning around a 200,000 tonne tanker, is taking time in improving the lot of 1.3Bn people.

Currency inflows into Thailand take advantage of arbitrage. Investors get a higher interest rate in government bonds than they would in the US, UK & EU. This is not permanent money and will be withdrawn when investors find another currency with a better yield, whereupon the Baht will drop. It seems that the BOT recognises this and is taking no action.

[MobileContent]

There's a lot of fake economic opinion on this thread.

The Japanese Yen has dropped significantly because the new government has made it clear that it wants a weaker Yen and is replacing the BOJ management with government supporters (a bad move for independence) who will start printing more money.

Asian currencies with some major exceptions have risen relative to the US$ & this includes the Baht. The US$ has risen against the other major world currencies - Yen, Euro, Stg - because of serious weaknesses in Japan, EU & UK.

China is NOT in any big trouble. It's currency is relatively stable and it's exports have dropped due to recessions in its major markets. It has successfully boosted internal consumption which allows decent growth, slightly less than the 9-10% before. It is amazing that some people can't see beyond the old 'reds under the bed' syndrome & open the other eye to see that China has adopted a mixed system of communism & capitalism quite successfully. it is constantly improving and just like turning around a 200,000 tonne tanker, is taking time in improving the lot of 1.3Bn people.

Currency inflows into Thailand take advantage of arbitrage. Investors get a higher interest rate in government bonds than they would in the US, UK & EU. This is not permanent money and will be withdrawn when investors find another currency with a better yield, whereupon the Baht will drop. It seems that the BOT recognises this and is taking no action.

Excellent response +1 for pointing out on the fake economic opinion on this thread.

[Naam]

There's a lot of fake economic opinion on this thread.

The Japanese Yen has dropped significantly because the new government has made it clear that it wants a weaker Yen and is replacing the BOJ management with government supporters (a bad move for independence) who will start printing more money.

Asian currencies with some major exceptions have risen relative to the US$ & this includes the Baht. The US$ has risen against the other major world currencies - Yen, Euro, Stg - because of serious weaknesses in Japan, EU & UK.

China is NOT in any big trouble. It's currency is relatively stable and it's exports have dropped due to recessions in its major markets. It has successfully boosted internal consumption which allows decent growth, slightly less than the 9-10% before. It is amazing that some people can't see beyond the old 'reds under the bed' syndrome & open the other eye to see that China has adopted a mixed system of communism & capitalism quite successfully. it is constantly improving and just like turning around a 200,000 tonne tanker, is taking time in improving the lot of 1.3Bn people.

Currency inflows into Thailand take advantage of arbitrage. Investors get a higher interest rate in government bonds than they would in the US, UK & EU. This is not permanent money and will be withdrawn when investors find another currency with a better yield, whereupon the Baht will drop. It seems that the BOT recognises this and is taking no action.

Excellent response +1 for pointing out on the fake economic opinion on this thread.

[thairay]

bring a bit more cash with you than you used to..,pay a bit more for the stuff you remember from your last visit...sit around this lovely country doing whatever it is you do..baht up,,baht down...price of beer shocking......still looks better than the deal you get in most places,,sun up, sun down..warm waters,great food....sorry i drifted off a bit,now what were you all moaning about...if it is too pricey now stick around and it may get worse....

[bkk_mike]

There's a lot of fake economic opinion on this thread.

The Japanese Yen has dropped significantly because the new government has made it clear that it wants a weaker Yen and is replacing the BOJ management with government supporters (a bad move for independence) who will start printing more money.

Asian currencies with some major exceptions have risen relative to the US$ & this includes the Baht. The US$ has risen against the other major world currencies - Yen, Euro, Stg - because of serious weaknesses in Japan, EU & UK.

China is NOT in any big trouble. It's currency is relatively stable and it's exports have dropped due to recessions in its major markets. It has successfully boosted internal consumption which allows decent growth, slightly less than the 9-10% before. It is amazing that some people can't see beyond the old 'reds under the bed' syndrome & open the other eye to see that China has adopted a mixed system of communism & capitalism quite successfully. it is constantly improving and just like turning around a 200,000 tonne tanker, is taking time in improving the lot of 1.3Bn people.

Currency inflows into Thailand take advantage of arbitrage. Investors get a higher interest rate in government bonds than they would in the US, UK & EU. This is not permanent money and will be withdrawn when investors find another currency with a better yield, whereupon the Baht will drop. It seems that the BOT recognises this and is taking no action.

Excellent response +1 for pointing out on the fake economic opinion on this thread.

China has coped reasonably well with the slowdown in the US/EU, and as the recession in the west is coming to an end, they will probably do quite well out of any recovery.

But I don't believe it's a 100% rosy picture. They're not likely to stop growing in the immediate future. 10 years from now - might be a different matter.

1. Their workforce has, recently, stopped growing. (the one-child policy has now been in effect long enough that the number of new people entering the workforce is more than offset by retirees). This will continue and you'll see China become the fastest ageing country on the planet.

2. Bad loans. The private sector in China is making money. But the state-owned sector gets cheap loans from banks that are essentially never repaid (until the government steps in to pay them by bailing out the banks), especially for loss making industries. i.e. The State has far higher liabilites than they say they have.... (Think Fannie Mae / Freddie Mac in the US where they weren't treated by the government as part of the state, so they could borrow without it raising government borrowing figures - but the banks lending them money knew that the government would step in if it ever looked like they would go bust - which is exactly what happened in 2007/2008).

[NeverSure]

ImageUploadedByThaivisa Connect Thailand1363936448.787449.jpg US$ is still well down on its year on year Sent from my iPhone using ThaiVisa app

No, the USD is up 4% in the past two months. It's just that there is so much demand for baht (so many people bringing foreign money into Thailand) that the baht has risen even more.

The economy and profits in the private sector in the US is improving, but on a sustainable level. (Can't say that for the government budget.) But Thailand's growth in government debt and private debt and wave after wave of new real estate building, and household debt is not sustainable.

[MrWorldwide]

There's a lot of fake economic opinion on this thread.

The Japanese Yen has dropped significantly because the new government has made it clear that it wants a weaker Yen and is replacing the BOJ management with government supporters (a bad move for independence) who will start printing more money.

Asian currencies with some major exceptions have risen relative to the US$ & this includes the Baht. The US$ has risen against the other major world currencies - Yen, Euro, Stg - because of serious weaknesses in Japan, EU & UK.

China is NOT in any big trouble. It's currency is relatively stable and it's exports have dropped due to recessions in its major markets. It has successfully boosted internal consumption which allows decent growth, slightly less than the 9-10% before. It is amazing that some people can't see beyond the old 'reds under the bed' syndrome & open the other eye to see that China has adopted a mixed system of communism & capitalism quite successfully. it is constantly improving and just like turning around a 200,000 tonne tanker, is taking time in improving the lot of 1.3Bn people.

Currency inflows into Thailand take advantage of arbitrage. Investors get a higher interest rate in government bonds than they would in the US, UK & EU. This is not permanent money and will be withdrawn when investors find another currency with a better yield, whereupon the Baht will drop. It seems that the BOT recognises this and is taking no action.

Excellent response +1 for pointing out on the fake economic opinion on this thread.

Sadly, its not just this thread - you will find wild speculative opinion thrown around as 'fact' in every recent thread on the baht, particularly those which revolve around the ability of expat retirees on fixed incomes to continue visiting beer bars till the wee hours. Personally, I like beer bars, but I'm not going to go into a tailspin if I can only go two nights instead of the usual six.

[billd766]

Having carefully read this thread and all the posts my conclusion is that

Oh no it isn't.

OTOH

Oh yes it is.

Is this a pig in a poke or is it a pig with lipstick.

Some posters if they back words with actions will be rich and some won't.

[Baerboxer]

It seems a currency war is brewing worldwide. The gold standard was the stabilizer of the past, but now the first world countries are printing the money and using it to buy gold reserves. Think the US dollar as a world standard reserve is going to change. Must bone up on my Chinese now.

China is in a world of hurts. They are broke. They too have borrowed and spent for "stimulus" but their exports are way down. They are holding the value of their currency down too, trying to maintain exports but that has a bigger problem. Their exports have dropped a lot, and the cheap value of their currency means they aren't getting a lot of profit. In fact, they lost money last quarter.

Also, unlike any other country on the list, China is communist and the government owns the means of production, and has the responsibility to support 1.3 billion people. Unlike other countries, if industry loses money, the government is the industry losing the money.

Consider the US as just one example. The government is spending much more than it takes in. But, the private sector, the corporations, are rolling in profits. They are hoarding cash. China doesn't have that model.

I don't know of an example of a communist country that ever stayed profitable for the long haul. To the contrary, look at how the USSR went belly up and had to break up because they couldn't support their people. You had poverty in communist E. Berlin, and prosperity in capitalist W. Berlin, and eventually that wall came down.

Russia has actually chastised the West for going socialist, while Russia is going capitalist. Russia has been there, trying to support all of its people, and knows it can't be done.

The people have to support the government, not the other way around. The West is finding that out the hard way with printing a deficits, and just hasn't admitted it yet.

China is in for a bad and long recession

Interesting. Isn't that bastion of capitalism and free market enterprise, the USA, absoilutely broke? And, in hock to ................ yep, China. Many academics believe captialism is now as defunct as communism. But, noboday can work out what will replace it.