Are You Worried By This Exchange Trend?

[English Noodles]

If you are living in Thailand but recieve an income from overseas or have cash reserves overseas waiting for transfer to Thailand does this graph give you cause for concern? and do you think the line is going to start heading north soon or keep creaping southwards?

Cheers Noodles.

British pound Sterling

[britmaveric]

No worries - it will go back up. Normally down in high season and comes back up during low season.

[ThaiPauly]

It is worrying.. all my dosh is offshore...

Just hope that Brit is right... but there is FA I can do about it anyway!

TP

[GuestHouse]

No worries - it will go back up. Normally down in high season and comes back up during low season.

The point is - This is the low season and the Bht is rising - So yes, people on a fixed income from overseas (Pensions/Rental Income from overseas) are seeing a reducition in their Thai incomes.

Add to that Thailand's inflation rate (circa 8%) and if you are living in Thailand on a low imported income or are planning to move to Thailand on a low imported income, the prospects are a rapidly declining standard of living.

[Mister Doom]

Without bothering to check the records, the pound was down to around 65 agionst the pound about 3 years ago. In recent years it has very rarely gone below 65 and for the last year or so has been in the 70s. It was as high as 85 in the crash of the late eighties. I think it is reasonable to assume that in the long run it will drift between the 60's and 70's.

The influx of FC from Singapore to pay for the Sin shares pushed an already strengthening Baht even higher. The market is still adjusting to that.

The Baht is far more influenced by the USD than any other currency. As the dollar strengthens, the Baht weakens and vice versa. In the recent past the pound was very strong against the dollar - like in the 1.80's which gave us a good rate agiant the Baht, even though the dollar was relatively weak against the Baht. Now the dollar is edging up against the Baht, but the pound is still hovering around 1.74 to the dollar, so the rate to the Baht is bad for us Brits.

Medium term (3-6 months) I reckon things won't change too much, but long term especially if the political troubles don't get sorted, I see the Baht weakening. The UK economy is still pretty strong so I wouldn't panic.

Its swings and roundabouts, so transfer what you have to.

This is all my totally uneducated and unresearched opinion. I could be wrong.

Edited March 27, 2006 by Mister Doom

[britmaveric]

I guess you need to sort out what is an unacceptable line you can't cross or you are buggered. Long term concerns are what you should be considering not short term gains or losses.

[wolf5370]

It went as high as 96 to the £ during the crash - I was there with my traveller's cheques worth almost double what I paid for them - oh, happy days (OK, so I'm selfish).

I also remember it being as low as 45 when it was linked to the Dollar which was high and the quid low a little while before the crash.

I think it always safer - given the money - to spread the cash between offshore and onshore accounts to mitigate the exchange hit in the short term. A little luck with transfers can make so dough too (forex trading by the backdoor) - City Bank for example is international so exchanges between City Bank Accounts costs little.

[bangkokblue]

I guess you need to sort out what is an unacceptable line you can't cross or you are buggered. Long term concerns are what you should be considering not short term gains or losses.

70 and above you've been spoilt, 60-70 you should be happy. I set my line at 55 some years ago and nothing over the past 20 yrs has convinced to change it.

[Prakanong2005]

I guess you need to sort out what is an unacceptable line you can't cross or you are buggered. Long term concerns are what you should be considering not short term gains or losses.

70 and above you've been spoilt, 60-70 you should be happy. I set my line at 55 some years ago and nothing over the past 20 yrs has convinced to change it.

How or why did you set your line at 55 when it was circa 40 or less until 97 - more than half the 20 years?

[GuestHouse]

Inflation is the enemy.

At current rates of inflation an expat on a fixed income from overseas will see their Bht value halve over the next 9 years.

If you are bringing in currency to buy 100,000 a month, that 100K is going to be worth 50K in under ten years time.

If you are at the 100K level you might get by, but a pensioner brining in 50K or less is going to find themselves struggling.

[ThaiPauly]

Inflation is the enemy.

At current rates of inflation an expat on a fixed income from overseas will see their Bht value halve over the next 9 years.

If you are bringing in currency to buy 100,000 a month, that 100K is going to be worth 50K in under ten years time.

If you are at the 100K level you might get by, but a pensioner brining in 50K or less is going to find themselves struggling.

Sheesh thats worrying GH!

Maybee we should all get some dosh transfrered and into these 4.5% savings accounts that are now available at the big banks. I read yesterday that the money has to be deposited by the end of April though amd the article in the BK Post was unclear as to what interest the money would attract after 8 months as they are all fixed term rates.

[Mister Doom]

Inflation is the enemy.

At current rates of inflation an expat on a fixed income from overseas will see their Bht value halve over the next 9 years.

If you are bringing in currency to buy 100,000 a month, that 100K is going to be worth 50K in under ten years time.

If you are at the 100K level you might get by, but a pensioner brining in 50K or less is going to find themselves struggling.

Sheesh thats worrying GH!

Maybee we should all get some dosh transfrered and into these 4.5% savings accounts that are now available at the big banks. I read yesterday that the money has to be deposited by the end of April though amd the article in the BK Post was unclear as to what interest the money would attract after 8 months as they are all fixed term rates.

I agree about inflation. However, in theory if inflation here is much higher than the UK - and that is a likely scenario, the Baht will depreciate against the pound to compensate. But don't count on it.

I went to get a new ATM card on Saturday at K Bank and the guy saw I had a bit of cash in my savings account and asked me in Thai if I wanted to get 4.5% interest on it for 8 months. I said yes, signed my name in a big book and thought I was very clever. After reading that B Post article yesterday, I'm not too sure what I've done. I hope they haven't restricted my right to draw out on my savings acccount! Hopefully I will just receive the ineterest on the balance remaining after 8 months, but who knows? I will return to the Bank this morning with wife in tow and get it sorted. Will advise later.

Edited March 28, 2006 by Mister Doom

[barryofthailand]

Everybody worring about the pound. This is all controlled by the dollar, so if all you Brits want the pound to go back up you better start rooting for the dollar to strengthen.

Barry

[Meerkat]

Don't know where 8% inflation has suddenly come from. The last number was 5.6%, down from the previous month's 5.9%. Indeed, strip out energy, and your core rate is only 2.7%. The energy component will gradually come off the headline number as the fuel hikes roll off the Y/Y number.

The last time Thailand saw 8% inflation was 8/98.

Now seeing as you can comfortably get between about 4.5% and 5.25% yield from THB Gov't bonds (depending on tenor), your real inflation rate drops off to between 0% and 1%, so all this talk about savings being eroded to nothing seems a bit overdone to me. Further interest rate hikes are expected, so that will have the effect of increasing bond yields and helping to contain inflation so expect that spread to improve.

If you prefer to keep your money offshore, the USD 2yr treasury note will currently give you 4.75% as well; it's interesting to note that the 2yr THB/USD FX forward rate (ie the rate the market expects THB/USD to be in 2 years time) is trading at 39.35/39.38 so you could always ask your bank for a price (you won't get one that tight though), and hedge your future FX exposure.

[astral]

It went as high as 96 to the £ during the crash - I was there with my traveller's cheques worth almost double what I paid for them - oh, happy days (OK, so I'm selfish).

Why do you consider yourself selfish?

That what currency markets are about.

I bought a new car on that boom (bust?), missing the peak by one day on the exchange,

but it was still a very good rate.

Back in the 80's it was 25baht/ $1 and about 35 to the pound, and we all survived.

To the OP, you just have to live with it, or move elsewhere.

If you do move you are unlikely to find life any better!!

[Thaible]

Buy gold if you're worried about inflation (through securities, not the actual material).

[English Noodles]

[To the OP, you just have to live with it, or move elsewhere.

If you do move you are unlikely to find life any better!!

I agree but the situation i am in is not as simple as that. At the moment i want to transfer around 100,000 British pounds as part payment on a condominium. So a change in the rate by B1 is either a gain or loss of B100,000 so i am actualy wondering what would be the best price to settle for. B68 - B69 now or wait and get B72 - B73 in a few months time or maybe i wait and it drops further to below B65.

It is quite a big difference when you change a large sum of cash.

Cheers noodles.

[monochaser]

No worries - it will go back up. Normally down in high season and comes back up during low season.

Not always, I've seen the opposite happen in recent memory. Worrisome? absolutely. What can you do about it if you have cash reserves? Convert 1/2 into Thai baht. What can you do if your monthly wages are paid in another currency? nothing

[monochaser]

It went as high as 96 to the £ during the crash - I was there with my traveller's cheques worth almost double what I paid for them - oh, happy days (OK, so I'm selfish).

Why do you consider yourself selfish?

That what currency markets are about.

I bought a new car on that boom (bust?), missing the peak by one day on the exchange,

but it was still a very good rate.

Back in the 80's it was 25baht/ $1 and about 35 to the pound, and we all survived.

To the OP, you just have to live with it, or move elsewhere.

If you do move you are unlikely to find life any better!!

This is typical attitude of many arrogant farang and is simply not true. Thailand is not the ultimate paradise. There are plenty of alternatives. People who hold this view need to get out more

Edited March 28, 2006 by monochaser

[moonoi]

For me its a good trend as I'm paid locally and transfer my savings back to europe

I'm sure theres many others like me who are also quite happy with the situation as is

[English Noodles]

For me its a good trend as I'm paid locally and transfer my savings back to europe

I'm sure theres many others like me who are also quite happy with the situation as is

I agree once i have made this transfer i would preffer it to drop as far as possible as i also make my money here and like to travel overseas sometimes.

[GuestHouse]

Don't know where 8% inflation has suddenly come from. The last number was 5.6%, down from the previous month's 5.9%. Indeed, strip out energy, and your core rate is only 2.7%. The energy component will gradually come off the headline number as the fuel hikes roll off the Y/Y number.

The last time Thailand saw 8% inflation was 8/98.

The figure comes from an article in the Financial Times about a month and a half back (they were examining the financial trends in Asia and in particular inflation - The crux of the article was that inflation is bein under reported).

As for the contribution of engery costs - My guess is foreigner expast in Thailand spend a great deal more on energy than Thais do - if so, the contribution of energy costs to inflation (for foreigners) would be higher.

Foreigner spending patterns are different from those of Thais, so again, reporting Thai inflation rates (based on Thai staples) is not necessaraly a useful figure.

The point I am making is that if an expat is living in Thailand on fixed income from abroad and has a low budget, then his/her standard of living is at considerable risk due to Thai inflation.

[Mister Doom]

If you do move you are unlikely to find life any better!!

This is typical attitude of many arrogant farang and is simply not true. Thailand is not the ultimate paradise. There are plenty of alternatives. People who hold this view need to get out more

Your opinion!

There are thousands of farangs who have a different opinion.

Why are they arrogant? Because they don't agree with you.

If anyone is arrogant, I would suggest you look nearer home.

[English Noodles]

I had wondered when i started the thread how many posts it would take to get completely off topic.

[Mister Doom]

Everybody worring about the pound. This is all controlled by the dollar, so if all you Brits want the pound to go back up you better start rooting for the dollar to strengthen.

Barry

I think I sort of said that in my post #5. In fact, correct me if I'm wrong, but apart from brief periods, the dollar hasn't being doing that well against t\he Baht for the past year or so, but because the pound was strong against the dollar we were getting lots of Bahts for our pound. Now the pound is around 1.74 - and the dollar/Baht is 38-39, not so good. (1.74 x 38 = 66.12)

Hope for strong dollar, or a strong pound /dollar, or best case scenario: both.

By the way, I won't be getting my 4.5% from K Bank because I drew out some money out of the account. Now I get nil interest. However there are some pretty good deals going at the moment if you've got some spare Thai cash you can sort away for a while. My wife did the 4.5% , 8 month deal and also signed up for an incredible life linked product that is paying extremely good interest rates and guaranteed maturity lump sums. Minimum period: 7 years. Nice little inflation hedge.

Edited March 28, 2006 by Mister Doom

[Firefan]

Guesthouse brings up a very good point - a foreigner/expats inflation rate will be very different from the average number, but as Guesthouse also implies; the official number is surely underreported for ALL.

My inflation number, as well as a friend who keeps track in Microsoft money(nerd for sure! ), has been closer to 10% a year not including actual improvements (I.e. comparing apples to apples) so the Financial Times article number seems resonable to me.

The recent jumps in train fares, bus fares, foods from market(come by truck) Etc. will surely be felt by all.

As to the exchange rate I still believe we will see 35 Baht/USD before we see 45 Baht/USD as the government have surely(IMHO) manipulated the Baht to remain weak in order to maintain export competativeness - especially with China blooming. That is an artificial tool that is hard to maintain in the long run (as the recent jump shows - sale of 1 (big) company only and the Baht strengthens...).

Personally I do the transfer in about twice per year - but close my eyes as to "gains/losses" as currency speculation is even harder than stock speculation. Also; I ensure that my offshore investments are well diversified currency wise also - Incl. Asian currencies wherefore any strengthening of the Baht will hopefully be reflected in gains in my offshore holdings too.

For people "only" having a GBP/USD pension and no savings or Baht buffer holdings, the future can sure be hard should 10% inflation and a 20% strengthening of the Baht be in the cards.

Cheers!

[sonthaya]

You win some and you loose some, I was very lucky back in 93, I bought a Condo in Phuket, price 2,5 Million bath, rate 25 bath to the US $

I had to borrow the money from Siam Commercial Bank at a pretty steep interest rate, but I was lucky when the bath took a nosedive to 56 bath to $.

I don’t have to tell who was very quick to clear the bank loan.

[bangkokblue]

I guess you need to sort out what is an unacceptable line you can't cross or you are buggered. Long term concerns are what you should be considering not short term gains or losses.

70 and above you've been spoilt, 60-70 you should be happy. I set my line at 55 some years ago and nothing over the past 20 yrs has convinced to change it.

How or why did you set your line at 55 when it was circa 40 or less until 97 - more than half the 20 years?

The how and why. In 1987 i met up with a 60's forces pal who on leaving the service went into financial services based in Singapore. Has my planned intention was to retire somewhere in the far east Thailand in particular in the 1990,s i sought his long term monetary advice and from a guy who made 65k US in a day speculating with his own money he obviously had a lot a new a bit. The long and short of it all was set your line at 55 bht . Now i'd say that's not far off the 20 yr average and if it was a mortgage i'd be happy with the outcome, Yes, one could argue simply because of the speculating 97's then again Thailand could and should have revalued the bht year's earlier but that was not the trend of the day. As for my pal's advice and prediction, well, slightly out with the date's but good as you'll get with the average.

[GuestHouse]

The calculation of when the exchange rate becomes a problem is simple and based on the Retirement Income Rules:

For an applicant who is over 50 years old, proof of a sum of 800,000 baht in a Thai bank OR an income of not less than 65,000 baht per month must be presented - OR a combination of balance in the bank and a monthly income. Example: 400,000 Baht in the bank and 32,500 Baht coming in every month.

Just work out when the exchange rate makes meeting the requirement impossible.

So in the example given. If you have 400K in a Thai bank and you are bringing in Bht32,500 a month - At today’s rates that is an offshore income of $835 (₤GBP477)

If your Pension/Fixed offshore income is $1000/month (₤575/month) Then if the Bht strengthens beyond 32.5/$ (56.5/₤) you fall below the minumum income requirements.

This is why I make retirement plans based on living in Farangland at Farangland prices – At least that way I figure a strengthening of the Bht lowers my standard of living, it does not place my retirement and residence at risk.

[Merlin]

I've always been on the wrong side of currency fluctuations: When I first started coming to Thailand many years ago for holidays it was 22BHT/AU$; then in the time I was living there up until late last year it climbed to 32. Now I am back in AU it's been constantly going down down down - - it's at 27.4...