Baht Moving Beyond Fundamentals: Bank Of Thailand

[firestar]

If i am correct, in November 2009, it was the exact same situation (Eur/Thb at 37.5).

I can't recall, was it a big issue then?

Euro is comparatively the one that performed best, USD has been going down and GBP completely tanked.

[CNXBKKMAN]

Getting good intelligent information on thaivisa is like looking for prawn in a phat Thai bought from a roadside stall. Push it round and round, notice the mass of second hand oil its fried in then there it is. Bright orange little dried prawn, barely a shrimp even.

[whitfield]

The Bank of Thailand has more than one weapon to combat the strength of the baht which must have them worried with all the rice bought at intervention prices being stored because it is impossible to sell abroad.

An interest rate cut would help but they can also use the baht strength to increase their foreign reserves - either T Bills, Gold, Euros or whatever. A strong signal from the BoT that they are going to take decisive action would have all those speculators running for the hills. But in the end the reason the THB is rising is because they have a strong economy and Yingluck is proving to be a steady hand on the tiller. Steady as she goes. Choc dee Khon Thai.

[Joyeuss]

It is both good and bad at the same time. Bad for people that want to come here on a cheep holiday, but good for Thailand, it means that they are starting to build an economy that does not fully rely on tourism for income. Thailand is victim to tourism in so many ways, which is evident when you see the lack of Thai culture in touristy areas. I would be nice for Thailand to have tourism based on its culture and a nice place to stay (and affordable) rather than tourists just coming here and doing what they like because they can pay for it.

[Billmont]

'Stock Market Correction Delights Poorest, Stupidest Expats'

I have often wondered what Thai citizens must think when they read some of comments on TV. Perhaps those stupid enough to continually debase Thailand, its traditions, the Immigration and its rules and regulations etc are also stupid enough to think that their comments are only being read by Farangs. Or perhaps they think their posts, apart from boosting their own ego, will actually be a tool to implement the change that they require and know what is best for Thailand! Now I do not need to wonder any more, the above link shows that TV posts are being read by many Thais and the verdict is that they are not impressed. Further comments on TV state that we are not really wanted here, really, now is that a surprise after reading posts that continually slag off our host country. If I were a Thai I would also think why should we welcome these Dickheads who just because they spend a few Bucks, Pounds, Euros or whatever continually criticise us as a race, our way of life, our traditions and our country in general. Unfortunately we all get tarred with the same brush, so those of us who are happy to live here, happy to accept that this is their country and are also happy to accept that things are done differently are being grouped with the few who give the Thai's good reason to dislike us. While I fully appreciate that a Forum is for discussion but why use it to insult our hosts and host country.Why criticise for criticisms sake? Constructive criticism, providing it is polite, is acceptable I am not hoping for miracles but hopefully some of the posts will be toned down for the benefit of all.

[lifeincnx]

Step 1: Thai banks just announced a few days ago they are pulling back on condo loans avoid a potential condo bubble. In other words there already is a condo bubble. Step 2: short-term investors buying government bonds paying a higher rate than US or EU bonds will start to pull out seeking a more secure offshore investment strategy. Step 3: we've already seen that in 1992, 1996, 2000 and 2008.

It's deja vu all over again.

[Chicken George]

It would seem that the baht is strong because of money invested in bonds ie straight forward money from abroad put into interest paying accounts here. So no real help to the domestic economy in fact a burden to it. Exports will go down as already seen in the rice market and so less money for the labour market to earn. It will not be noticed yet but over time manufacturers will move production elsewhere.. It could also happen as a crash with confidence lost in returns here as worties about a downturn fester. So then all monies withdrawn or even lost.. Simple economics yes. But people well banks are looking for gain here and joe blogs has no control as usual. The losers will be at the bottom of the food chain as usual and yes that includes us Expats.. Stickly rice and nam prik macam will taste very nice you will see.

[eeeya]

Its a forum and that is all..

I wouldnt read too much into it

[Stjohnm]

They should have done something about this a long time ago, but I suppose they're waiting for exports to fall through the floor & tourist numbers to dwindle to non-exsistant levels. On the first count that's not far off, & on the 2nd they are almost completely reliant on their Asian neighbours. I can foresee a time when the only Farangs left here are the long term expats not reliant on Money from abroad to sustain them.

[MrWorldwide]

They should have done something about this a long time ago, but I suppose they're waiting for exports to fall through the floor & tourist numbers to dwindle to non-exsistant levels. On the first count that's not far off, & on the 2nd they are almost completely reliant on their Asian neighbours. I can foresee a time when the only Farangs left here are the long term expats not reliant on Money from abroad to sustain them.

Right, so these remaining Farang would be reliant on the very same economy you have just consigned to financial oblivion ?

[BahBahBoBo]

Thailand should not do anything that would encourage the bubbles,

move forward on their concerns about encouraging property speculations and bubbles and act accordingly,

they are focused in the right direction there.

Also, DO NOT lower interest rates as this again fuels bubbles and also penalises thier savings interest rates.

Not fair to those struggling and saving.

My own thoughts is that the absolute best way for Thailand to deal with this would be for they themselves to also target quantitive easing.

While this may seem an odd choice,

as they are not overwhelmed with debt, and not in any particular financial or trade troubles...

they could use the created currencey (which will lower the baht value/ease the exchange rate/ encourage tourism and trade ) to fund infrastructure developement which while benefiting the economy and dealing with the raised baht value issue,

would at the same time be a future investment of value in the country,

and would at the same time create many new jobs.

This I think is the best way forward as:

They do have very legitimate concerns about bubble creation,

They do want to ease or slightly reverse the strengthining of the baht,

They do not want to lower interest rates (see above two)

They do want to protect trade and tourism.

[chiang mai]

They should have done something about this a long time ago, but I suppose they're waiting for exports to fall through the floor & tourist numbers to dwindle to non-exsistant levels. On the first count that's not far off, & on the 2nd they are almost completely reliant on their Asian neighbours. I can foresee a time when the only Farangs left here are the long term expats not reliant on Money from abroad to sustain them.

Oh dear, how sad this is! So exports are at risk of falling through the floor, but in the meantime they continue to rise! And tourist numbers are at risk of dwindling to nothing but in the meantime they continue to rise also!! Tell me, are you a natural pessimist!

[TheGhostWithin]

The strengthening of the baht is not primarily of Thailand's making. The US, Japan and other countries printing lots of money to stimulate their economies - call it quantitative easing or whatever - is a major factor behind this. Falling exchange rates also increase the export competitiveness of the big boys in what is effectively an exchange rate war.

Due to lack of financial scale Thailand and many other smaller economies - can do little to protect themselves and their own export industries in the face of this onslaught - until/if/when other countries' policies begin to change - the baht will remain strong.

I would believe this if it were not for other currencies which have been appreciating naturally due to market forces with confirmed trade data to back it up (growing trade surpluses in my country New Zealand for example) losing ground against a baht which is "magically" appreciating as well. The only reason the baht is appreciating is the same reason that the baht has always appreciated: intervention and manipulation of inbound and outbound money flows to and from Thailand. It is very easy to get money in, it is hard to get decent money out. It is designed to ensure everyone has a Benz to drive and Gucci to wear in the short term, but will ensure a relapse of the last crash in the long term. The results of the underlying economic activity which is currently taking place (Tourism being starved due to higher costs to visit the country, the government borrowing funds it cannot afford to repay, artificial manipulation of the cost of produce in the form of a price minimum) are very difficult to reverse quickly, let alone over the long term.

Thailand always brags about its' considerable foreign reserves, and about its' low debt to GDP ratio in comparison to "Farang" countries.. well, now it is time that you get to sit on your cushion until it is worn out.. then the pain starts.

[thaikahuna]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

I've been here 8 years which by most standards makes me a newbie. In my brief time here I have seen my purchasing power decrease by at least 35%. This is due to increase costs from price increases based on the new minimum wage law, the strong baht and any number of other factors. If they (the Finance Ministry) doesn't wake up and act soon we could see a repeat of the mid 90s here. If that happens it may not be so fast to recover as it did last time.

[Fullstop]

As someone who lives, works and gets paid in Baht here and makes online purchases from overseas ... I'm not worried.

Your smugness may turn to anguish if rampant inflation occurs or if/when the currency speculators decide its time to cash in and sell their Bt.

"Smug" is a bit dramatic. I'm simply not in "The sky is falling" mode. Like I said, I get paid in Baht. What the 'speculators' end up selling it for has no effect on me. Apart from occasional overseas purchases.

[Oww]

I don't see a writer's credit for that Nation article. What's the point of it? So what if there are a percentage of lower economic class, opinionated foreigners here. Do people on TV really think those type of people represent even 30% to 40% of foreigners here? Probably more like 15%-20%. So what? What percentage of Thais here are clueless about the stock market, have conspiratorial ideas and are unhappy with their financial predicament? (oh and um..drink alcohol and frequent prostitutes).Think its only 15%-20%???

In what way does that article even qualify as journalism?
Even those 'poorest and stupidest' foreigners are spreading more money around
their immediate communities than 50%-75% of the Thais. Constantly parading the worst foreigners
here in the media only develops a stereotype which we all have to eventually contend with.
Crap journalism, spewing nonsense to meet a deadline.

Edited April 19, 2013 by Oww

[PattayaPhom]

Pesos pesos pesos

[John71]

Thailand has had it's day. Move to Cambodia

[Fullstop]

Do people on TV really think those type of people represent even 30% to 40% of foreigners here? Probably more like 15%-20%. So what? What percentage of Thais here are clueless about the stock market, have conspiratorial ideas and are unhappy with their financial predicament? (oh and um..drink alcohol and frequent prostitutes).Think its only 15%-20%??

I don't see a writer's credit for that Nation article.

I don't see any links for those stats either. Where did they come from?

[jelida]

If i am correct, in November 2009, it was the exact same situation (Eur/Thb at 37.5).

I can't recall, was it a big issue then?

Not correct.

November 2009 it was a high of 50 and a low of 49 baht

[RogueLeader]

Please note: Before making any comments on a thread involving monetary policy, posters are advised to read Not The Nation's excellent 'Stock Market Correction Delights Poorest, Stupidest Expats'

Satire consisting of wealthy expats sneering at people who work for a living. Nice.

Once again, I'm so glad that I don't have to live in Thailand.

[dave111223]

Surely they have to do something soon.

It is not just the expats, just about all nationalities, which are being hit hard but the businesses that trade with overseas companies could find it getting rough with their customers seeking cheaper suppliers.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

What would you suggest they do? Get out the printing press and try and keep up with Japan and US in devaluing the currency? This would send inflation even higher as the Chinese will not be waiting to eatup all the newly printed bahts as they are with the newly minted debased dollars.

Thai government is really damned if they do, damned if they don't...they are basically just a long for the ride

[yoshiwara]

Please note: Before making any comments on a thread involving monetary policy, posters are advised to read Not The Nation's excellent 'Stock Market Correction Delights Poorest, Stupidest Expats'

priceless! delicious! on the dot!

The author appears to have also written at least half of the contributions on this thread as well. Well done!

[metisdead]

A derogatory post containing inappropriate language has been removed.

[khaowong1]

Surely they have to do something soon.

Inevitably it will hit the tourist areas with people who come here for a holiday and the ex-pat living off his pensions, finding their currency is no longer enough due to a 10 -25% loss in value in the last 6 months. Yes most expatswill stay and touristswill still come to Thailand but less Baht means less goods being bought.

This is made worse by inflation here which has been quite noticeable over the past year.

Will not hold my breath though, the powers that be in the Thai government will continue to do the same as always, talk but no action.

I second this. As a regular visitor to the Kingdom (my girlfriend resides permanently with me here but we go home to visit her family from time to time, and it gives me a break from work), we do not travel on a fixed schedule - we are not business travelers but do spend a lot, we stay in good places and spend what we work hard for at home. I would imagine we are not the only ones with this kind of approach to visits to Thailand.

We are currently sitting at home each day, watching the exchange rate waiting for it to straighten up before we return. the NZ Dollar (where we are from) has been one of the top performers in the world the past year) has also been losing ground against the baht, and I have noticed travel agents here have stopped advertising Thailand and started advertising Malaysia (again) and also now Vietnam and South America.

Inflation will increase even more when the tourists stop - as you know in Thailand when purchase numbers decrease, Thai business ramps up its price to cover the shortfall. More tough times for the Thai economy? Sadly, me thinks so. May be a while before Teerak brings "the Farang" home to say hello to paw me.. We are considering a trip to Nepal this year to do some trekking instead.

Here in the US, they are advertising the Carribean, Mexico, Costa Rico. No mention of Thailand.. Even the Thai's who live here in the US say they can't afford to go home to visit right now and the ones who own small asian food shops can't afford to buy Thai products.

[Ogre2]

The present strength of the Thai Baht is really bad for inward investors as your Pound/Euro/Dollar now gets around 1/3 less Baht than it did at the high point 5 years ago (68 Baht to the pound then 44 Baht now)

I presently only bring in the money I need for living expenses and I am waiting for a change back to better rates so that I can continue to invest in the Kingdom.

I love Thailand and her people with a passion but as I am an elderly man, and not a millionaire, I need to make sure that I get the maximum "bang for the buck" to ensure that my retirement will continue to be comfortable

I hope that this situation is temporary as the hard working people and companies in Thailand will obviously struggle to export at these rates and it will therefore hurt employment.

House prices, and rental charges in Thai Baht will now need to drop to attract customers in the international market with a consequent fall in present income for a lot of people who have already invested in Thailand

Other than cheaper imports I cannot see any positives in the present exchange rates

[VegasVic]

As someone pointed out above, the problem is more that the major currencies such as USD, EUR, JPY, GBP are all weakening, due to the economic issues they are facing, and policies to deal with it. They are deliberately maintaining low interest rates, QE, encouraging weak currencies and so on.

A traditional measure would be for Thailand to cut interest rates to weaken its currency. Unfortunately this risks increasing inflation. Other govt factors have already stoked the inflation fire.

So the government are stuck with the lesser of two evils.

Also to be remembered that when the major countries and currencies are actively manipulating their markets and currencies, Thailand simply doesn't have the firepower to move things in the opposite way. USD, EUR, GBP etc have all been weakening, Thailand can't fight these easily with the resources it has.

Fletch

Fletch and Naam seem to be the only ones who understand the underlying dynamic here. The world is awash with cheap money and that cheap money(Dollars, Euros and Yen) always finds its way to the path with least resistance and greatest reward, and countries like Thailand, Austrailia, NZ and a few others are pawns, having their curencies bid up beyond their control as outside curencies flow in and exchange to local currencies for investment purposes It is a dance for the nimble (kind of like musical chairs), because when the U.S. and the EU begin to raise their interest rates (likely around this time next year) then the outflows will begin and those currencies and markets that have been bid up will fall precipitously as the outflows begin en masse. This time around the rates could move up rapidly in places like the U.S., and smaller countries like Thailand will have very little power to do much to resist the inertia once it begins. David Stockman just wrote an interesting book that lends some insight as to what has happened in the U.S. as well as Europe that has led us to this point in time, it is called "The great deformation(the corruption of capitalisim)" check it out if you get a chance P.S. For those out their who think that I am just a U.S.A. promoter I will let you know that I think the U.S. equity markets are also very overvalued by all this cheap money as well, my instincts tell me that all of this does not end very well, hopefully my instincts are wrong.

[how241]

Its a race to the bottom to see which country can become more 3rd World. In the New World Order, its more important to have

your currency be as sh**ty as possible to maintain your exports. The US is doing a good job of it, but its still early in the game.

+1

[davidstipek]

Talk, talk, talk, talk, talk, talk, talk, talk, talk .......... where is the action ?

Would the last person out of Thailand, please turn the lights off

Anyone remember...? Sounds like an Echo from Seattle 1968 "Would the last person out of Thailand (Seattle), please turn the lights off"...

[Eddy B]

I am just waiting for the market bottom to drop out and 1997 again. Most of the top Thai people will have already transfered their money to USD with inside information from the stock exchange, knowing that the baht is going to crash very soon. Then again if the baht continues its rise against all currency's, it will be treated like a child no one wants to play with come ASEAN!