The Baht Appreciates To Strongest Level In 7 Years

[ando]

I guess a lot of people have got the shits with the Baht gaining on the international market.

Some even proclaim their interest is of some paternalist nature so as to protect Thai exports. I think the majority of people here are simply pissed off their western currency wont take them as far in Thailand at the moment. I remember back in '94 when the Baht was worth somewhere around 19 to the $AUD, and Thailand was still a cheap place to visit (28 to the $AUD now). I dont see what all the bitching and moaning is about. The Baht seems to have settled in at around + or - 5% on the $US at around 39.5/$US since it was floated. Pretty stable really for such a small country.

[usatrader]

This is were I got those numbers

I track, the USD, Euro, Sterling, Yen, Mexican Pesco and the Yuan at

http://www.x-rates.com

[Jai Dee]

Exchange rate of 37 baht to the dollar is affecting Thai exports

The Federation of Thai Industries state that the exchange rate of 37 baht to the US dollar is affecting the nation's export, and advises the government to lend a hand.

Mr. Santi Wirassakdanon (สันติ วิลาสศักดานนท์), deputy chairman of the Federation of Thai Industries, stated that the strengthening of the Thai baht to 37 baht to the dollar will affect the ability of Thai operators to export goods due to a higher competitive value in the market, especially in the agricultural sector involving products such as rice. Mr. Santi reports that the Minister of Commerce will enter discussions with the Bank of Thailand on Monday or Tuesday and a solution will hopefully be worked out.

The deputy chairman of the Federation of Thai Industries added that a good value for the Thai baht which is conducive to export is around 39-40 baht to the US dollar.

Source: Thai National News Bureau Public Relations Department - 14 April 2006

[Pattaya_Fox]

Exchange rate of 37 baht to the dollar is affecting Thai exports

The Federation of Thai Industries state that the exchange rate of 37 baht to the US dollar is affecting the nation's export, and advises the government to lend a hand.

Mr. Santi Wirassakdanon (สันติ วิลาสศักดานนท์), deputy chairman of the Federation of Thai Industries, stated that the strengthening of the Thai baht to 37 baht to the dollar will affect the ability of Thai operators to export goods due to a higher competitive value in the market, especially in the agricultural sector involving products such as rice. Mr. Santi reports that the Minister of Commerce will enter discussions with the Bank of Thailand on Monday or Tuesday and a solution will hopefully be worked out.

The deputy chairman of the Federation of Thai Industries added that a good value for the Thai baht which is conducive to export is around 39-40 baht to the US dollar.

Source: Thai National News Bureau Public Relations Department - 14 April 2006

So what will the clever man at the Bank do now? Reverse the recent rise in interest rates and risk higher inflation and less liquidity in the markets.....or ride out the storm and hope that good American Data will be forthcoming to boost the US dollar.....Unfortunately if the US Dollar gains in strength and the Euro and GB Pound and other currencies do not also gain against the Baht then poor Thai Data figures or other detrimental Thai news may be needed to reduce the strength of the baht.....we await with baited breath.

[Ricardo]

Also debate with bated breath too

I suspect that one consequence of the strong Baht will be an increase in Thai-tourists heading overseas, and good luck to them, make hay while the sun shines !

[Maestro]

When talking about changes in exchange rates over time a lot depends on the length of the time period we look at, as the two graphs below illustrate.

However, all that is history. You are more interested in knowing how much you will get for your euro, US dollar, British Pound, etc. tomorrow, in a month, in a year. I have a strong feeling that the present strengthening of the Baht is the calm before the storm, that some time within the next 12 months Thailand will be experiencing an economic crash similar to the 1997 crash, perhaps not necessarily on the same magnitude.

In the graph below, notice how in 1997 the Baht got stronger just before the crash.

I dare to predict that on 12 April 2007 you will get at least 20% more for the British Pound than you were getting on 12 April 2006.

I am not so sure about the US dollar, because that currency may lose in value against the Pound. Therefore, for this currency I predict that you will get at least 10% more in Baht.

--------------

Maestro

FX_rates_20060412.pdf

Edited April 16, 2006 by maestro

[ColPyat]

I have a strong feeling that the present strengthening of the Baht is the calm before the storm, that some time within the next 12 months Thailand will be experiencing an economic crash similar to the 1997 crash, perhaps not necessarily on the same magnitude.

I have that feeling as well.

Can anyone with some economical knowledge please explain to me in laymen's terms if my gut feeling is somewhat true, and in case of that being so, how that might happen, please.

[LaoPo]

I have a strong feeling that the present strengthening of the Baht is the calm before the storm, that some time within the next 12 months Thailand will be experiencing an economic crash similar to the 1997 crash, perhaps not necessarily on the same magnitude.

I have that feeling as well.

Can anyone with some economical knowledge please explain to me in laymen's terms if my gut feeling is somewhat true, and in case of that being so, how that might happen, please.

Sit back, relax, and read this a few times...

http://www.atimes.com/atimes/Southeast_Asia/HC30Ae04.html

There are some more significant signs outthere; the Chinese economy is rapidly overheating.

The 1st quarter of 2006 showed a growth of 10.2% and that's unheard of and a great concern to 'Beijing' (read: and the rest of the World!).

It just can't continue like that and will have an effect on the whole economy in SE Asia and further.

How big? I fear nobody knows at this stage but there has to be a slowdown, worldwide, in consuming....but, tell that to the manufacturers, buyers, importers, promoters and the like

LaoPo

[ColPyat]

Sit back, relax, and read this a few times...

http://www.atimes.com/atimes/Southeast_Asia/HC30Ae04.html

There are some more significant signs outthere; the Chinese economy is rapidly overheating.

The 1st quarter of 2006 showed a growth of 10.2% and that's unheard of and a great concern to 'Beijing' (read: and the rest of the World!).

It just can't continue like that and will have an effect on the whole economy in SE Asia and further.

How big? I fear nobody knows at this stage but there has to be a slowdown, worldwide, in consuming....but, tell that to the manufacturers, buyers, importers, promoters and the like

LaoPo

Thanks a lot. That confirms my fears.

Very good article. Seems to me that there are a few major underlying problems:

-After the '97 crises the necessary social and economical reforms have not been pushed through. -The rising gap between rich and poor have only been exploited by all sides leading now to an almost open class conflict.

-And yes, the situation with China is very worrying, not just the overheating of China's bubble, but also the mainly unreported social tensions make this a time bomb. And Thailand has, i believe oriented their economy far too much into China. I think i have read somewhere that CP group has invested so heavily into China that if China's bubble bursts, CP will go bancrupt.

It all looks that we might be slipping into a crises possibly far worse than '97. Don't think i want to have any long term investments here in the region presently. I do know several wealthy Thai businessmen who have shifted the last two years a lot of their investments into stable western economies.

[LaoPo]

Sit back, relax, and read this a few times...

http://www.atimes.com/atimes/Southeast_Asia/HC30Ae04.html

There are some more significant signs outthere; the Chinese economy is rapidly overheating.

The 1st quarter of 2006 showed a growth of 10.2% and that's unheard of and a great concern to 'Beijing' (read: and the rest of the World!).

It just can't continue like that and will have an effect on the whole economy in SE Asia and further.

How big? I fear nobody knows at this stage but there has to be a slowdown, worldwide, in consuming....but, tell that to the manufacturers, buyers, importers, promoters and the like

LaoPo

Thanks a lot. That confirms my fears.

Very good article. Seems to me that there are a few major underlying problems:

-After the '97 crises the necessary social and economical reforms have not been pushed through. -The rising gap between rich and poor have only been exploited by all sides leading now to an almost open class conflict.

-And yes, the situation with China is very worrying, not just the overheating of China's bubble, but also the mainly unreported social tensions make this a time bomb. And Thailand has, i believe oriented their economy far too much into China. I think i have read somewhere that CP group has invested so heavily into China that if China's bubble bursts, CP will go bancrupt.

It all looks that we might be slipping into a crises possibly far worse than '97. Don't think i want to have any long term investments here in the region presently. I do know several wealthy Thai businessmen who have shifted the last two years a lot of their investments into stable western economies.

Well, I don't know.

If the bubble bursts the whole world will suffer, including (and especially) 'stable western economies'...if there are any left at that point.

It's an old saying: never put all of your eggs (it's Easter ) in one basket and that's exactly what they're probably doing.

Spreading the risks.

LaoPo

[srisatch]

I am glad everyone keeps going back to the Asia Times article!!

I cannot really judge its potential accuracy.

Asia Times proposes quite radical interpretations of lots of things-especially on the US as well as Thaksin etc-

I wou;ld jst keep your treasures spread about!!

[Anon999]

I am glad everyone keeps going back to the Asia Times article!!

I cannot really judge its potential accuracy.

Asia Times proposes quite radical interpretations of lots of things-especially on the US as well as Thaksin etc-

I wou;ld jst keep your treasures spread about!!

There is a lot of good comment here but what bothers me is the focus on the Asia Times article. It is the view of ONE person and like everything else in life there is always a contra view if you look for it. Economists and market watchers can never agree.

As far as investment in China is concerned then General Motors for one and many other US and european companies are investing there very heavily. If the whole lot comes crashing down in an unseemly heap then major problems will happen world-wide. However, I'm not convinced that will happen. The Chinese are definitely trying to rein in the growth rate but that's going to take some doing as it has been not so far short of 10% for some time.

There is certainly going to be some form of correction in the future but who knows when and how big. It may well be a 'soft landing' followed by a gently and more sustainable recovery.

Interest rates are a concern as the USA, UK and Thailand, for instance all have similar bank rates now but differing inflation levels and GDP. Not to mention balance of payments.

Has there ever been a time when things have looked so uncertain in the past 60 years?

[Anon999]

Maybe both or all three of you real experts in forex here can enlighten me more than the last three guys who admitted they didn't study forex much in their MS-economics courses. The last guy, however, did say that most currency valuations, in the short term, are controlled 99% by speculators. I think he meant, with some exaggeration, that the factors you'd expect to drive a currency, such as

1. Relative rates of inflation between countries

2. Stability of the government and the economy

3. Export and import ratios, current account deficits, govt. deficits, trade deficits, etc.

4. Productivity and quality of goods produced for internal and external consumption

5. Relative supply and demand for a given currency

don't drive forex rates. Speculation drives the rates in the short term.

On Caretaker Finance Minister Thanong Bidaya’s remarks that the appropriate level the baht should stay is 39 to the dollar, Mr. Chatchaval said it is an average level in the medium term rather than the short term.

He said currency exchange rates could not be determined because they are sensitive to economic conditions. It depended on the economic fundamental as well.

He added it is uncertain whether the capital that flew into the country was for short-term speculation or not.

Which is more likely to drive baht/dollar/sterling rates for the rest of 2006: economic conditions, fundamentals, or speculation?

I'm pleased your list finally hit the nail on the head. Supply and demand is what ALL business is about and it therefore controls the price, nothing else. That includes private sales/purchases too.

[LaoPo]

There is a lot of good comment here but what bothers me is the focus on the Asia Times article. It is the view of ONE person and like everything else in life there is always a contra view if you look for it. Economists and market watchers can never agree.

You're right here, but.........................it's the view of a person who forecasted the '97 downfall.

He wrote to the end of the article some facts:

""In July 1997, the baht was devalued by 20% and by the end of that fateful year the depreciation of the baht against the US dollar exceeded 80%. As Thailand's political and social crisis deepens in the months ahead, and with it confidence in the economy, a new financial and balance of payments crisis cannot be ruled out.""

AND:

""Jephraim P Gundzik is president of Condor Advisers, Inc. Condor Advisers correctly forecast Thailand's exchange rate devaluation in 1997.""

I'm not saying he will be right this time (again) but it's certainly something to keep in mind.

LaoPo

Edited April 17, 2006 by LaoPo

[usatrader]

Has there ever been a time when things have looked so uncertain in the past 60 years?

If I may offer an opine of hopefully simplicity.

I am sure the query was made in thoughtful consideration of the present, was genuine and posed in a wonderment of how different uncertainty in this era is as compared with those of the last 60 years.

Truth is, supported by history, the real and factual answer to this ever present, often asked, generational quandary is YES, there have been many points along this continuum of human endeavors that have been as equal or greater in uncertainty as today. Uncertainty to varying degrees, at any basic level of humanity and or nationality existing these 60 years hence has been impacting on varying generations of grandparents, parents and now children and grandchild alike in similar fashions.

As much as one generation assumes it is the first to experience something, the fact is, on a human level, their experiences, considering changes in the tools, methods and procedures that change from generation to generation, are little different for today’s generations as they were in contextual human terms of those of the past.

Uncertainty and its antecedent chaos have proven themselves the nectar and energy of human inventiveness and evolution as those tides ebb and flow.

P.S

I might add in the positive of the human condition, an old proverb of ancient origins, When one door closes, another opens widely.

Edited April 17, 2006 by usatrader