Thai baht dropping big time!

[Naam]

I said outside of the government not outside of the country.

how do you manipulate domestically "outside of the government" the existing currency without involving another currency? the answer is a clear "no can do!" because restrictions prevail in the domestic market too.

If I owned a non government Thai bank could I buy baht with dollars? As a Thai could I sell baht for dollars? Could a Thai buy gold with baht and dollars?

As a Thai I don't see what would prevent me from altering the supply of Thai baht into another currency or metal.

If I understand you what you are saying is; a private Thai bank or other private institution could not alter the money supply in Thailand?

So that makes the baht immune from fluctuations not orchestrated by Thai government?

The Thai government controls the rate of exchange between the Baht, dollar and pound?

If I understand you what you are saying is; a private Thai bank or other private institution could not alter the money supply in Thailand?

that's exactly what i am saying and any serious attempt would be public after a single day causing the BoT to invervene.

even a concerted action of several banks / hedge funds or whatever institution would be like a lukewarm fart in the hurricane the Bot could cause with a tiny fraction of its reserves.

[FiftyTwo]

I said outside of the government not outside of the country.

how do you manipulate domestically "outside of the government" the existing currency without involving another currency? the answer is a clear "no can do!" because restrictions prevail in the domestic market too.

You could increase your countries interest rates to 25%, and watch the foreign currencies flood in.

That wouldn't be involving 1 other currency.

[SailingHome]

As long as I get at least 30 for my $1 after transfer or atm, I am happy. Yeah, if we get way more Baht, the imports will rise, but it will still be about the same as the $/£/e we pay now equivelently, no? What would kill my ability to live in Thailand would be going back to 20/$. Rent, food, BTS, etc. would not fall accordingly so cost of living would be 33% higher. Of course, that will only happen if the US economy truly, truly tanks and Thai economy gets amazingly strong, in wgich case Thai economy would likely crash back unable to sell exports. I feel fairly safe, and any 1 extra Baht / $1 for my$2k/mo is a nice, cool, 2,000 Baht to have fun

[Naam]

I said outside of the government not outside of the country.

how do you manipulate domestically "outside of the government" the existing currency without involving another currency? the answer is a clear "no can do!" because restrictions prevail in the domestic market too.

You could increase your countries interest rates to 25%, and watch the foreign currencies flood in.

That wouldn't be involving 1 other currency.

the discussion was based on "outside of the government". moreover, if a country's currency pays 25% interest means that this country is bankrupt.

[BlueSkyCowboy]

Oh those halcyon days of B70 to the £1, bring them on

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

It was 90 something to the pound when i first got here (1998)

yea the Pound really took a bath and starts to look like a half pound

[build6]

The baht never weakened the last time it all kicked off so can't see why it would now..

your comment just reminded me - I'm not an expert, I don't track exchange rates for a living, I can't vouch for the truth of this, it's just what was told to me:

all the forex traders knew that the rioters against Abhisit the last time round were being paid, simply because of the exchange rate.

There is no need to rely on "my wife's cousin's friend told me that the red shirts were getting paid".

When you have this kind of unrest there is always "capital flight" where people take their money out - during the red shirt protests, it began that way ....... but then it stopped. The baht even ticked up at some points.

Someone was converting so much foreign assets into thai baht to pay protesters that he single-handedly overwhelmed all the money that was fleeing Thailand.

So the moral of the story for the forex trader was: "Thaksin Shinawatra - not a man to be <deleted> with"

[crumpled]

Now people are getting heavy with the currency talk and jargon

What I and others like me are looking at is how much more we get week on week for our £'s.

52.5 (2nd Dec) Mastercard rate (I use mastercard because I pay no transaction fees) and rising agian today. That is still way way better than the sub 45 not so many months ago.

It also means more beer per £. Penioners on a fixed income are smiling and flashing their false teeth in the bars and shops - what a 'wonderful' sight.

Just don't tell the g/f wife you are now better off

Definitely don't tell the b/g's. They might push your rates up even further

[chiang mai]

For alfieconn

Spot the difference:

[attachment=243469:Forex.docx

Yes confirms what i said earlier

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher

The crux of it is you said if the Dollar is weak then you'll get more Baht per Pound, which i don't agree with :

In a thread that predominantly discusses GBP/THB, the statement, "if the Dollar is weak..." infers that the Pound is strong hence you will get more Baht per Pound and that remains true! The statement is designed as an indicator to holders of GBP rather than a discussion about the global strengths and weaknesses of a particular currency.

[chiang mai]

The baht never weakened the last time it all kicked off so can't see why it would now..

You've changed your tune I see, last week in a different thread you were beating every one up for not factoring a drop in THB caused by the unrest!

[chiang mai]

-make that July 2, 1997 please.

The hard peg was dropped in 1998 and the managed peg was adopted.

-a managed peg was neither adopted nor does it officially exist.

I stand corrected, the hard peg was indeed dropped in 1997. My nomenclature is also incorrect in that I had intended to refer to the managed float and not the managed peg, apologies to all. In practice however THB is measured against USD and BOT is active from time to time to ensure the relationship between THB and USD is maintained at desirable levels.

All central banks do us this with their currencies, nothing new or unique !

The UK's BOE for one does not, instead it allows the strength of GBP to be determined by market forces.

If you think there is no implied peg in place in Thailand, (albeit that peg is movable over time), I think you are mistaken, Thailand is an export driven economy and the strength of THB historically seems to have been important to various governments in recent times. The pain only started to show this year amongst exports when 29 was breached but generally government appears most happy with a rate around 30, even if expats and visitors would prefer 40!

[Gsxrnz]

Did an open Forward contract to sell THB in Aug at 24.1 against the Kiwi.

Just closed it out at 26.5 spot.

9.95% profit in 4 months. It's been in the money for the entire time but figured today is probably as good as it will get. And the profits in NZD anyway, so if the THB gets any weaker I'll just buy some actual THB and bring it over here.

Mind you, I think its been over sold so if it sees 27 I might just do a forward to sell THB against the Kiwi and make the money on the way back up.

Happiness fulfilled.

[alfieconn]

For alfieconn

Spot the difference:

[attachment=243469:Forex.docx

Yes confirms what i said earlier

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher

The crux of it is you said if the Dollar is weak then you'll get more Baht per Pound, which i don't agree with :

In a thread that predominantly discusses GBP/THB, the statement, "if the Dollar is weak..." infers that the Pound is strong hence you will get more Baht per Pound and that remains true! The statement is designed as an indicator to holders of GBP rather than a discussion about the global strengths and weaknesses of a particular currency.

Your going round in circles, "if the Dollar is weak..." infers that the Pound is strong hence" no it doesn't, the dollar is the dollar, the pound is the pound, they are not related, it could well be that you have a strong dollar and a strong pound, they don't have to be doing the opposite of each other !

E.G USD/THB 30.50 GBP/USD1.6450 GBP/THB 50.17

Now in that example the dollar is weaker than it is today, yet you are getting less Baht per pound !

[Naam]

Did an open Forward contract to sell THB in Aug at 24.1 against the Kiwi.

Just closed it out at 26.5 spot.

9.95% profit in 4 months. It's been in the money for the entire time but figured today is probably as good as it will get. And the profits in NZD anyway, so if the THB gets any weaker I'll just buy some actual THB and bring it over here.

Mind you, I think its been over sold so if it sees 27 I might just do a forward to sell THB against the Kiwi and make the money on the way back up.

Happiness fulfilled.

take a wild guess how many participants here (besides you and me) know what a "forward" is? i use forwards quite often but unfortunately they are not available for all pairs and one has to resort to NDFs.

Edited December 4, 2013 by Naam

[bushman1666]

Oh those halcyon days of B70 to the £1, bring them on

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

 

It was 90 something to the pound when i first got here (1998)

if only I'd known

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

[Gsxrnz]

Did an open Forward contract to sell THB in Aug at 24.1 against the Kiwi.

Just closed it out at 26.5 spot.

9.95% profit in 4 months. It's been in the money for the entire time but figured today is probably as good as it will get. And the profits in NZD anyway, so if the THB gets any weaker I'll just buy some actual THB and bring it over here.

Mind you, I think its been over sold so if it sees 27 I might just do a forward to sell THB against the Kiwi and make the money on the way back up.

Happiness fulfilled.

take a wild guess how many participants here (besides you and me) know what a "forward" is? i use forwards quite often but unfortunately they are not available for all pairs and one has to resort to NDFs.

Good point - it seems that crosses are a mystery to some as well.

I've been lucky as a Kiwi. In the 3 years I've been here the NZD/THB cross has climbed from circa 21 to circa 26. I'm 24% better off than I was in terms of buying power, plus profits on regular forwards. The Kiwi is a great currency to play with. Keeps getting overvalued and then oversold, 5cent moves against the USD over 3 months are routine - just got to be on the right side of it and don't be too greedy.

Naam - what pairs can't you trade via forward that you have to use NDF's?

[Naam]

Did an open Forward contract to sell THB in Aug at 24.1 against the Kiwi.

Just closed it out at 26.5 spot.

9.95% profit in 4 months. It's been in the money for the entire time but figured today is probably as good as it will get. And the profits in NZD anyway, so if the THB gets any weaker I'll just buy some actual THB and bring it over here.

Mind you, I think its been over sold so if it sees 27 I might just do a forward to sell THB against the Kiwi and make the money on the way back up.

Happiness fulfilled.

take a wild guess how many participants here (besides you and me) know what a "forward" is? i use forwards quite often but unfortunately they are not available for all pairs and one has to resort to NDFs.

Good point - it seems that crosses are a mystery to some as well.

I've been lucky as a Kiwi. In the 3 years I've been here the NZD/THB cross has climbed from circa 21 to circa 26. I'm 24% better off than I was in terms of buying power, plus profits on regular forwards. The Kiwi is a great currency to play with. Keeps getting overvalued and then oversold, 5cent moves against the USD over 3 months are routine - just got to be on the right side of it and don't be too greedy.

Naam - what pairs can't you trade via forward that you have to use NDF's?

restricted currencies which you can hold only domestically and not offshore e.g. INR and BRL. both quite interesting at ~9.5% p.a. however, Non Deliverable Forwards only available vs. USD.

[Naam]

I've been lucky as a Kiwi. In the 3 years I've been here the NZD/THB cross has climbed from circa 21 to circa 26. I'm 24% better off than I was in terms of buying power, plus profits on regular forwards.

so you missed the 2009 kiwi-shocker of NZD/THB at 17.50

by the way, for me NZD strength vs. AUD is quite surprising. from 1.375 to 1.10 !

[Gsxrnz]

I've been lucky as a Kiwi. In the 3 years I've been here the NZD/THB cross has climbed from circa 21 to circa 26. I'm 24% better off than I was in terms of buying power, plus profits on regular forwards.

so you missed the 2009 kiwi-shocker of NZD/THB at 17.50

by the way, for me NZD strength vs. AUD is quite surprising. from 1.375 to 1.10 !

Wasn't interested in the THB as a resident back then, but it was an investment currency I dabbled in. 2009 to now has been good fun all around really

Yeah, the Aussie Kiwi cross is interesting at the moment. I think the Kiwi is generally over valued and the Aussie has taken a bit of a hit of late. But the Kiwi is such a darling currency the markets love to play with it. I think the strength of the banks, relatively high interest rates, and viewed as a safe haven tends to attract the buyers. Kiwi has climbed virtually steadily since 2009 with a few hiccups. So did the Aussie, but has taken a tumble recently, probably been oversold.

The AUD/NZD cross has therefore benefitted the Kiwi. If I were a betting man, the Aussie at anything north of 91 on the NZD cross is in relatively uncharted waters (in recent years) and worth a punt. Not much headroom to lose, but it's a decent trip back to low 80's where it really belongs.

[chiang mai]

For alfieconn

Spot the difference:

[attachment=243469:Forex.docx

Yes confirms what i said earlier

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher

The crux of it is you said if the Dollar is weak then you'll get more Baht per Pound, which i don't agree with :

In a thread that predominantly discusses GBP/THB, the statement, "if the Dollar is weak..." infers that the Pound is strong hence you will get more Baht per Pound and that remains true! The statement is designed as an indicator to holders of GBP rather than a discussion about the global strengths and weaknesses of a particular currency.

Your going round in circles, "if the Dollar is weak..." infers that the Pound is strong hence" no it doesn't, the dollar is the dollar, the pound is the pound, they are not related, it could well be that you have a strong dollar and a strong pound, they don't have to be doing the opposite of each other !

E.G USD/THB 30.50 GBP/USD1.6450 GBP/THB 50.17

Now in that example the dollar is weaker than it is today, yet you are getting less Baht per pound !

This conversation does seem to be getting repetitive hence I am going to bring it a close, my involvement at least! There is some amount of semantics in what's being said here plus a degree of precision is being sought that is really unnecessary.

You asked earlier what does the US Dollar have to do with the Baht and the Pound and I have told you and I have shown examples how GBP/USD and GBP/THB both follow very similar trading patterns. I referred to holders of GBP earlier being able to get more THB for their Pound when the USD was weak, this in the context that GBP has strengthened against USD from around 1.59 to 1.64 recently and that the audience here is not comprised of currency or day traders who require to understand comparative strengths and weaknesses of global currencies but merely expats and tourists looking for when to exchange money. None of that is to say that USD is a weak currency however it is reasonable to suggest that it is the weaker of the (only) two currencies that we are discussing in comparative terms over recent times.

[Gsxrnz]

For alfieconn

Spot the difference:

[attachment=243469:Forex.docx

Yes confirms what i said earlier

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher

The crux of it is you said if the Dollar is weak then you'll get more Baht per Pound, which i don't agree with :

In a thread that predominantly discusses GBP/THB, the statement, "if the Dollar is weak..." infers that the Pound is strong hence you will get more Baht per Pound and that remains true! The statement is designed as an indicator to holders of GBP rather than a discussion about the global strengths and weaknesses of a particular currency.

Your going round in circles, "if the Dollar is weak..." infers that the Pound is strong hence" no it doesn't, the dollar is the dollar, the pound is the pound, they are not related, it could well be that you have a strong dollar and a strong pound, they don't have to be doing the opposite of each other !

E.G USD/THB 30.50 GBP/USD1.6450 GBP/THB 50.17

Now in that example the dollar is weaker than it is today, yet you are getting less Baht per pound !

This conversation does seem to be getting repetitive hence I am going to bring it a close, my involvement at least! There is some amount of semantics in what's being said here plus a degree of precision is being sought that is really unnecessary.

You asked earlier what does the US Dollar have to do with the Baht and the Pound and I have told you and I have shown examples how GBP/USD and GBP/THB both follow very similar trading patterns. I referred to holders of GBP earlier being able to get more THB for their Pound when the USD was weak, this in the context that GBP has strengthened against USD from around 1.59 to 1.64 recently and that the audience here is not comprised of currency or day traders who require to understand comparative strengths and weaknesses of global currencies but merely expats and tourists looking for when to exchange money. None of that is to say that USD is a weak currency however it is reasonable to suggest that it is the weaker of the (only) two currencies that we are discussing in comparative terms over recent times.

Both of you need to use the term "cross rate" in your discussion, and understand that in every cross currency transaction, the USD is invisibly involved. The relative value of any one currency (say GBP) against another currency (say THB), is called a cross rate. Each of those currencies will also have a value against the USD. It's the relevant value of the GBP and the THB respectively against the USD that gives you a GBP/THB cross.

If you say something like "the GBP is weak", then you are automatically pegging it against the USD because that's the jargon. More correct to say something like "the GBP/THB cross is weak, or strong, or stable....or whatever when you're talking about cross rates But know which way you are talking, because GBP/THB is not the same as THB/GBP.

Assuming over two days, the GBP and the THB do not move an iota against the USD respectively, the cross between the two currencies will be identical over the two days. Over the same two days, if the NZD firmed against the USD, the NZD/GBP and the NZD/THB will show that the NZD has more value over both currencies than two days earlier. Simply because you can now buy more USD with your NZD, and therefore buy more GBP and THB because they stayed the same against the USD.

Hope that's understandable, I kept it as simple as I could and skipped a few technical points.

Edit: Could have made life simpler by just showing the formula - Currency A / Currency B = (Currency A / USD) x (USD / Currency B )

Edited December 4, 2013 by Gsxrnz

[chiang mai]

Talking of dropping:

[alfieconn]

Both of you need to use the term "cross rate" in your discussion, and understand that in every cross currency transaction, the USD is invisibly involved. The relative value of any one currency (say GBP) against another currency (say THB), is called a cross rate. Each of those currencies will also have a value against the USD. It's the relevant value of the GBP and the THB respectively against the USD that gives you a GBP/THB cross.

If you say something like "the GBP is weak", then you are automatically pegging it against the USD because that's the jargon. More correct to say something like "the GBP/THB cross is weak, or strong, or stable....or whatever when you're talking about cross rates But know which way you are talking, because GBP/THB is not the same as THB/GBP.

Assuming over two days, the GBP and the THB do not move an iota against the USD respectively, the cross between the two currencies will be identical over the two days. Over the same two days, if the NZD firmed against the USD, the NZD/GBP and the NZD/THB will show that the NZD has more value over both currencies than two days earlier. Simply because you can now buy more USD with your NZD, and therefore buy more GBP and THB because they stayed the same against the USD.

Hope that's understandable, I kept it as simple as I could and skipped a few technical points.

Edit: Could have made life simpler by just showing the formula - Currency A / Currency B = (Currency A / USD) x (USD / Currency B )

If you'd read previous post's (see below) then you will see that i have mentioned "cross rate" in discussion and shown how the cross works,

alfieconn, on 02 Dec 2013 - 19:10, said:

So are you saying that the USD/THB has fixed paramters that it can't move out of ? as i don't know what you mean by "managed peg"

The GBP/THB is worked on the cross between the Cable ( GBP/USD) and the USD/THB, if the dollar is weak against the pound then you would also expect to be weak against other currencies including the baht, eg. a higher cable and a lower USD/THB therefore in theory the GBP/THB wouldn't change agreat deal.

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher but if the GBP/USD was higher because of the dollar being weaker then it wouldn't affect the GBP/THB price.

Posted Yesterday, 15:17

The crux of it is you said if the Dollar is weak then you'll get more Baht per Pound, which i don't agree with :

E.g. USD/THB 32 CABLE 1.63 GBP/THB 52.16

DOLLAR WEAKENS by approx 12% TO all currencies, so USD/THB 28.16 CABLE 1.8536 GBP/THB 52.20 Roughly the same GBP/THB rates

[chiang mai]

[hawker9000]

I know I'm not quite getting it, but I can't help but latch on to the idea that the USD only being an intermediary currency in these transactions (i.e., have to buy it to sell currency A, then turn around and immediately sell it to buy currency , its rate relative to the two principles is irrelevant, particularly if that intermediary exchange is implicitly factored into the cross-rate in the first place.

Otherwise, computers would be arbitraging the heck out of it, wouldn't they?

I know, my thinking is muddled on this... When the USD is your "own" currency, it takes practice to think in terms of these crosses.

[chiang mai]

The baht never weakened the last time it all kicked off so can't see why it would now..

You've changed your tune I see, last week in a different thread you were beating every one up for not factoring a drop in THB caused by the unrest!

Bump, Hoirat, what say you?

[Ticker2000]

Naam/Gsxrnz - Interesting for a change on currency threads.....

[jonathan63]

was going to change 10m baht into dollars think my timing is not so good

[thailiketoo]

Thread started 52.8. Today 52.8

Ya baht dropping big time.

[Ticker2000]

Thread started 52.8. Today 52.8

Ya baht dropping big time.

Not rising either my friend - which is amazing seeing the world press today - markets not quite so sure. Even I was expecting a stronger baht by the end of play... Did not happen - closed as opened.

If the political problems persist for much longer and thai economy continues to weaken and the West continues to strengthen it will bridge the gap between here and US tapering in the powers that be in the market. There was no bridge before with the change of sentiment at the fed post benny

Various ifs but real ifs...

Edited December 4, 2013 by Ticker2000

[steinghan]

So to put it in simple terms if the cable GBP/USD is higher because of the strength of the pound then the GBP/THB would go higher but if the GBP/USD was higher because of the dollar being weaker then it wouldn't affect the GBP/THB price.

On the bottomline you are correct and I am not going to dispute this statement. Also I didn't pick it for any particular reason other than it is a good example of what I have in mind to post about - multiple similar quotes from you or other posters in this thread could have served as example as well.

I think a major reason for arguments having gone in circles is due to a confusion about global strenght of a currency versus it's relative strenght. As I read the quoted you are talking about the global strenght of GBP respectively USD, but you are "illustrating" it by means of the relative strenght of currency pairs which is like explaining apples by showing pictures of bananas. I gather from yuor posts that you yourself are quite familiar with the terms, but that doesn't make it less confusing for others.

A rise in GBP's global strenght would be due to improvement in the overall economic situation in UK - e.g news that it's BNP has increased and a fall in USD's global strenght could be due to news that USA's unemploiment rate had increased. None of this would in and on itself mean that the currency's value automatically changes - no exchange rate would change a micro-penny unless the currency is traded. Of course, a few split seconds after the news about UK's BNP were out, every trader would want to buy GBP and thus the GBP fx-change would about instantly rise on the currency market (or fall depending on wether it is the base or the quote currency). So certainly, there is a lot correlation between global and relative strenghts, but they still are two different things.

Currencies are always traded in pairs - you have to sell one to get one. When considering pairs like GBP/USD, GBP/THB or USD/THB the value of the first part (base currency) of each pair is by convention always a fixed '1' regardless of what else may may happen to the currency on the spot market.

Let's say that the GBP/USD rate changes and for the sake of argument let's say that nothing else were traded that day. How would this effect the GBP/THB or USD/THB x-rates ? Not at all ! While THB wasn't traded that day as we have decided - and thus no x-rates involving THB changed - the GBP respectively USD would remain fixed at 1 in the mentioned pairs regardless of whatever happens to the relative strenght of GBP vs. USD.

Therefore it is intrincically flawed to discuss whether the weakness of USD or the strenght of GBP is more important for any THB exchange rate in terms of currency pairs as it has been done throughout this thread.

Furthermore - it isn't an ultimate truth that a globally strong GBP has more influence on the rate you get when exchanging GBP for THB than than the global strenght of USD has. It all depends. Consider the USD/THB pair: If the USD globally weakens, traders want to get rid of it which they only can do by buing the Baht meaning that the value of THB will go up whereby it becomes a bit more expensive also for Britains to buy it. Conversely, if the USD strenghtens, the THB will decrease in value and thus get a bit cheaper also for Britains. So, wether the global strenght of USD or the global strenght of GBP is the more important for the current low GBP /THB rate isn't as simple a matter as various posters attempt to explain it - we'll all need to know a lot more about the finer economical details than have been disclosed to determine that. - I for one don't have a clue about such finer details.