MrWorldwide Posted January 24, 2014 Share Posted January 24, 2014 Why is the baht so stable last few days should be the question. Baht should be dropping like a stone with USD appreciating across the board. If what you are saying is correct, that would apply to a host of other currencies - no-one here knows exactly how and when a given central bank or another large institution will step in and start buying back currency. The Canadian Loonie has lost over 4 cents against the USD over the last month, but the Bank of Canada is steadfastly refusing to raise interest rates and I'm sure Canadian exporters are jumping for joy. Here in Oz, our pollies are publicly backing the Aussie to fall back to ~85 US cents, but the market will be the final judge of that. Getting a demo FX account was the best thing I've done in terms of understanding just how volatile the currency markets can be - never underestimate the mechanical traders who will buy back into a given currency when it drops to a pre-determined point, or the sellers who will take profits simply because they can : this has little to do with the economic fundamentals of a given country and everything to do with fear vs greed. 1 Link to comment Share on other sites More sharing options...
Naam Posted January 25, 2014 Share Posted January 25, 2014 Europe trading Thai time 20.27 (three minutes ago): THB Europe.jpg GBP always drops on a Friday afternoon. Next week GBP will continue it's rise. Link to comment Share on other sites More sharing options...
chiang mai Posted January 25, 2014 Share Posted January 25, 2014 (edited) Just to be clear as to what happened Friday afternoon and why GBP/THB moved downwards: "The GBP/USD took a major tumble today to trade at 1.6524 giving up 114 points after BBA mortgage approvals missed expectations on a quiet day. The Bank of England Governor refused to consider an early rate hike given that the unemployment rate is nearing the 7% threshold it had previously provided. At a CBI lunch in Davos, Carney has indicated the recovery needed to strengthen and there was “some way to run” before he would sanction higher rates. This dovish push back against market expectations has sent sterling broadly lower and has inflicted much damage to the near-term outlook for sterling. Sterling initially rose to new two-year highs against the dollar in Asia and now has sold off through yesterday’s lows". http://www.fxempire.com/fundamental/fundamental-analysis-reports/gbpusd-fundamental-analysis-january-27-2014-forecast/ Edited January 25, 2014 by chiang mai Link to comment Share on other sites More sharing options...
i claudius Posted January 25, 2014 Share Posted January 25, 2014 (edited) The pound against the dollar is back up to 1.6483, still highest for ages. Edited January 25, 2014 by i claudius Link to comment Share on other sites More sharing options...
Naam Posted January 25, 2014 Share Posted January 25, 2014 The pound against the dollar is back up to 1.6483, still highest for ages. last time august 17, 2011 Link to comment Share on other sites More sharing options...
i claudius Posted January 25, 2014 Share Posted January 25, 2014 The pound against the dollar is back up to 1.6483, still highest for ages. last time august 17, 2011 over 2 years ,thats ages at my age. 1 Link to comment Share on other sites More sharing options...
SheungWan Posted January 25, 2014 Share Posted January 25, 2014 The pound against the dollar is back up to 1.6483, still highest for ages. last time august 17, 2011 over 2 years ,thats ages at my age. You are 10? Link to comment Share on other sites More sharing options...
OnMyWay2 Posted January 25, 2014 Share Posted January 25, 2014 Why is the baht so stable last few days should be the question. Baht should be dropping like a stone with USD appreciating across the board. They can artificially prop up the bhat for some amount of time to avoid any kind of panic but gradual decline is almost inevitable. Link to comment Share on other sites More sharing options...
chiang mai Posted January 25, 2014 Share Posted January 25, 2014 Why is the baht so stable last few days should be the question. Baht should be dropping like a stone with USD appreciating across the board. They can artificially prop up the bhat for some amount of time to avoid any kind of panic but gradual decline is almost inevitable. Foriegn currency reserves have fallen by USD 1.5 bill. over the past five weeks, it's not proving to be very expensive at all. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG Link to comment Share on other sites More sharing options...
OnMyWay2 Posted January 26, 2014 Share Posted January 26, 2014 (edited) Why is the baht so stable last few days should be the question. Baht should be dropping like a stone with USD appreciating across the board. They can artificially prop up the bhat for some amount of time to avoid any kind of panic but gradual decline is almost inevitable. Foriegn currency reserves have fallen by USD 1.5 bill. over the past five weeks, it's not proving to be very expensive at all. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG That's why they can afford to let it fall over time instead of a quick correction like in the nineties. I dont think that a lower bhat isn't necessarily a bad thing for Thailand. it's just bad if it happens too quickly. Edited January 26, 2014 by OnMyWay2 Link to comment Share on other sites More sharing options...
chiang mai Posted January 26, 2014 Share Posted January 26, 2014 (edited) Why is the baht so stable last few days should be the question. Baht should be dropping like a stone with USD appreciating across the board. They can artificially prop up the bhat for some amount of time to avoid any kind of panic but gradual decline is almost inevitable. Foriegn currency reserves have fallen by USD 1.5 bill. over the past five weeks, it's not proving to be very expensive at all. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG That's why they can afford to let it fall over time instead of a quick correction like in the nineties. You can't compare the '97 crash with today, they're totally different pictures, if the current rate of "propping up spend" is correct, BOT could do this indefinitely. I'm sure the preference is for a stronger not weaker baht, although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34. On a different note: UK GDP numbers coming out on Tuesday morning, if the numbers are good the Pound will spike. Edited January 26, 2014 by chiang mai Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34... Why 34? Seems like the average of (about) 30... clue me in? Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34... Why 34? Seems like the average of (about) 30... clue me in? Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 Sorry... I don't speak chart :-D Are you saying it is correcting? USD is getting stronger? Guessing? Wishing? Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34... Why 34? Seems like the average of (about) 30... clue me in? the only possible average one can work out is the midpoint between high and low (36.26+28.53)/2=32.40 which might be correct if minor fluctuations occured over a long period. but this is not the case when the difference is 27% and a lot of fluctuation. Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 Sorry... I don't speak chart :-D Are you saying it is correcting? USD is getting stronger? Guessing? Wishing? i'm not saying anything but provided facts for USD THB of the last 5 years. Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 Agreed, though why what factors say to lean toward 34 instead of 30? I guess 30 because that is the average I have been able to budget on the past 3 years being here. Link to comment Share on other sites More sharing options...
chiang mai Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34... Why 34? Seems like the average of (about) 30... clue me in? I think averages are not helpful and tend to be fairly meaningless in forex, my call of 34 is simply a sense of the relative position. When it was at 29 the exporters were screaming THB was too strong and it was hurting trade. So the right number is probably somewhere higher than 29 although it's nowhere near the wishful thinking of those that are calling for 40+, that would imply that the Thai economy has not grown at all in recent years and that's simply not the case. So for those reasons, 33/34 seems about right, intuitively but without any science to back it up. 1 Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34...Why 34? Seems like the average of (about) 30... clue me in? I think averages are not helpful and tend to be fairly meaningless in forex, my call of 34 is simply a sense of the relative position. When it was at 29 the exporters were screaming THB was too strong and it was hurting trade. So the right number is probably somewhere higher than 29 although it's nowhere near the wishful thinking of those that are calling for 40+, that would imply that the Thai economy has not grown at all in recent years and that's simply not the case. So for those reasons, 33/34 seems about right, intuitively but without any science to back it up. OK. Now, that makes sense. You mention Thai economic growth, which there has been, but isn't US growth out-stripping it? What caused THB to get to 28 last year? Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 Agreed, though why what factors say to lean toward 34 instead of 30? I guess 30 because that is the average I have been able to budget on the past 3 years being here. you are changing the goal posts, first you mentioned 5 now it's 3 years. looking at the chart and shooting from the hip i'd say the average was 31. high/low calculation is 30.81 which seems to be a reasonable estimate. Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34...Why 34? Seems like the average of (about) 30... clue me in? I think averages are not helpful and tend to be fairly meaningless in forex, my call of 34 is simply a sense of the relative position. When it was at 29 the exporters were screaming THB was too strong and it was hurting trade. So the right number is probably somewhere higher than 29 although it's nowhere near the wishful thinking of those that are calling for 40+, that would imply that the Thai economy has not grown at all in recent years and that's simply not the case. So for those reasons, 33/34 seems about right, intuitively but without any science to back it up. OK. Now, that makes sense. You mention Thai economic growth, which there has been, but isn't US growth out-stripping it? What caused THB to get to 28 last year? US [actual] growth has not outstripped Thai growth since Pontius was a pilot for "Holy Land Airways" in ancient Jerusalem your question "why 28" should be directed at 12 renowned economists who will give you 24½ half-àssed answers. Link to comment Share on other sites More sharing options...
chiang mai Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34...Why 34? Seems like the average of (about) 30... clue me in? I think averages are not helpful and tend to be fairly meaningless in forex, my call of 34 is simply a sense of the relative position. When it was at 29 the exporters were screaming THB was too strong and it was hurting trade. So the right number is probably somewhere higher than 29 although it's nowhere near the wishful thinking of those that are calling for 40+, that would imply that the Thai economy has not grown at all in recent years and that's simply not the case. So for those reasons, 33/34 seems about right, intuitively but without any science to back it up. OK. Now, that makes sense. You mention Thai economic growth, which there has been, but isn't US growth out-stripping it? What caused THB to get to 28 last year? It was moving towards 28 quite naturally, that was what the market deemed its value to be at the time, albeit BOT had been spending money trying to weaken it and they finally gave up because it was becoming costly - at one point BOT appeared to be spending close to four billion US a month in an attempt to stop THB from becoming too strong, capital outflows then came into play and negated the need for that intervention, much to the relief of BOT I might add. So for BOT to now be spending USD 1.5 bill a month to help strengthen THB is really small change by comparison. Link to comment Share on other sites More sharing options...
OnMyWay2 Posted January 26, 2014 Share Posted January 26, 2014 (edited) Agreed, though why what factors say to lean toward 34 instead of 30? I guess 30 because that is the average I have been able to budget on the past 3 years being here.The past 3 years isn't a good time frame to look at since the US has been easing monetary policy that whole time. That policy just reversed in July so probably for the next two years the dollar will be strengthening.If you're trying to forecast, I would look at where the bhat was under a more normalized Us monetary policy. You would need to before the financial crisis when the bhat was closer to 40. That may be the natural rate the BOT will prop up the bhat to give businesses a chance to adjust , they can't do this indefinitely, I think we'll see 38 within the next 3 years. Edited January 26, 2014 by OnMyWay2 Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 Wow. Well, I think I will buy some $NZ and hold them for a while then buy Baht. Link to comment Share on other sites More sharing options...
Naam Posted January 26, 2014 Share Posted January 26, 2014 Wow. Well, I think I will buy some $NZ and hold them for a while then buy Baht. closing the stable door after the horse has bolted? USD NZD 5 years: Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 Nope. Opening the stable door for the milk cow. But, that's another topic. Link to comment Share on other sites More sharing options...
SailingHome Posted January 26, 2014 Share Posted January 26, 2014 ...although 29 was too strong but 35 may well be too weak, the Goldilocks rate is probably 34...Why 34? Seems like the average of (about) 30... clue me in? I think averages are not helpful and tend to be fairly meaningless in forex, my call of 34 is simply a sense of the relative position. When it was at 29 the exporters were screaming THB was too strong and it was hurting trade. So the right number is probably somewhere higher than 29 although it's nowhere near the wishful thinking of those that are calling for 40+, that would imply that the Thai economy has not grown at all in recent years and that's simply not the case. So for those reasons, 33/34 seems about right, intuitively but without any science to back it up. OK. Now, that makes sense. You mention Thai economic growth, which there has been, but isn't US growth out-stripping it? What caused THB to get to 28 last year? It was moving towards 28 quite naturally, that was what the market deemed its value to be at the time, albeit BOT had been spending money trying to weaken it and they finally gave up because it was becoming costly - at one point BOT appeared to be spending close to four billion US a month in an attempt to stop THB from becoming too strong, capital outflows then came into play and negated the need for that intervention, much to the relief of BOT I might add. So for BOT to now be spending USD 1.5 bill a month to help strengthen THB is really small change by comparison. wait... BOT spends to weaken, and also spends to strengthen? That is confusing. How does this work? Also, what does BOT say they want the Baht to be at? Link to comment Share on other sites More sharing options...
chiang mai Posted January 26, 2014 Share Posted January 26, 2014 Sure, every central bank has the same capability and many of them do exactly that, sell your home currency for USD and your home currency weakens, sell your USD (foreign currency reserves) and buy your home currency and your home currency strengthens - if you watch the central banks levels of foreign currency reserves you'll see them accumulate or reduce based on the banks actions. A currency like THB is very small and fairly insignificant in forex terms, it doesn't take a lot to move THB one way or the other and only the Thai central bank can do that, overseas investors can't because THB is pretty much a closed currency and not freely convertible. Central banks don't state where they want the currency to be, that will change continuously based on the state of the economy/trade etc. 1 Link to comment Share on other sites More sharing options...
Naam Posted January 27, 2014 Share Posted January 27, 2014 Nope. Opening the stable door for the milk cow. But, that's another topic. quite a watered down milk as NZD cash 1month pays 2% Link to comment Share on other sites More sharing options...
SailingHome Posted January 27, 2014 Share Posted January 27, 2014 Predicted that milk sales to rising middle classes will do to NZD what copper did to AUD, provided not another contamination scare. Link to comment Share on other sites More sharing options...
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