is now a good time to bring some GBP over?

[stevehaigh]

clearly the pound has shot up against the baht over recent weeks. where do you think its going in the next 2-3 months? i need to bring some money over but not sure if i should wait for a better rate.

of course i realize no one knows for sure but just general consensus would be good i guess

thx steve

[SheungWan]

Send the sterling over and change it as you need it.

[stevehaigh]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

[meatboy]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

how long have you been here? if its more than a few yrs then you should be happy with what it is now,we would all like to know what would happen but the last bloke who could predict it was nostrodamus.like i always say take what your happy with.

[SheungWan]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

You can ask your bank for a futures contract for delivery in 2 months. Maybe you will get better than a figure based on spot.

[nong38]

Whilst ever the UK economy is recovering and the politicians here act the fool, the rate will slowly climb, these are the two things I will be watching, further than that its a guess, just the same as looking at graphs and charts. We are now at about 54, 55 I would settle for if I were you but it will likely take a few weeks, but then on the 13th in Bangkok there is a big do and that might help the rate even more, keep watching.

[Daffy D]

Why not wait till it goes up to 90 like it was about 15 years ago

[i claudius]

Why not wait till it goes up to 90 like it was about 15 years ago

I should live so long

[PattayaPhom]

See what happens after the 13th.....if it rises wait, if it starts to slide transfer...Nobody really knows Steve but thats the best you can look at

[Zao]

Definitely wait.

The primary driver of GBP/THB (and USD/THB) is institutional money flow out of Thailand (and all MICs) to more vibrant asset classes back home, not protests. That said, even just your 2 mo's, definitely wait. The protests will work in your favor and give you a baht more or so.

For those with a view longer than 2 months and asking the same question, however, the protests - even a c d'etat - mean nothing. It's the institutionals. Institutional money has been shifting out of LOS for months now. Those with good memories will note that we were at 48/49 for several years, since 2010 or so. But the more useful data point for this question right now is not the last few years average, but the beginning of 2013. Remember? We were at 45. 45 to 54 in just 12 months. That's a solid gain in a short time. We can be confident it will get back to 64 - and I believe 70+ - by 2016.

Keep in mind, as well, the Thai government was not happy for the Baht's strengthening in the first place, and for a while, while BOT still had the funds, was spending heavily to prevent any more strengthening. That strengthening was caused by UK/EU/US institutionals shifting their money temporarily out of lacklustre returns back home while banks worked through their NPLs. For the UK and US, at least, that's coming to an end. In this instance, Ireland's a good leading indicator. The Thai govt will be very happy to see USD 35, GBP 58 by end 2014.

On top of all that, needless to say, Thailand's public finances and sovereign balance sheet are in a far less attractive position than they were in 2008 or so when all the strengthening started. Thai banks have curtailed their lending. Thai corporates are investing outside the country.

If you are able to wait, wait as long as you can. If you have a chunk in Thailand, the time to move it back home was last year - probably not worth the hassle and transfer fees now. But some might think about converting a chunk of their THB savings into USD/GPB and holding it here, or arranging to delay your pension transfers if you can. This is not the time for gold, either, imo.

[samran]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

Your last line sums it up really

[SheungWan]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

Your last line sums it up really

Another approach is if he thinks the rate is good now but might get better, to change half now and half later or permutations thereof.

[barry1312]

While exchange rates are difficult to predict over a short term the longer term trend should be a further weakening of the Thai Baht, the reasoning being that as the US continues with it's current policy of bringing down quantitative easing the USD will strengthen which generally brings currencies like Sterling along with it.

The UK also has a 375billion GBP Asset Purchase Facility which at some stage will be withdrawn this should also have the effect of strengthening Sterling when it happens.

In the longer term inflation is expected to pick up in Western economies which will undoubtedly be countered by the Central Banks raising interest rates thus adding further strength to their currencies

The current political situation will more than likely have a short term effect on Thai Baht rates and naturally political instability should cause it to weaken

My personal strategy at present would be to bring over smaller amounts for day to day expenses and bide my time for the above scenario to take place but it could theoretically be 2017 before we see all of the above playing out fully and of course my Thai girlfriend points out I have been wrong before, quite frequently apparently!!!!

[chiang mai]

I have a question:

GBP/THB is actually at or very near a level now that it was before QE started ((52 then (November 2008)vs 54 now)), factor in a couple of baht as a result of the current political unrest and the numbers broadly reconcile. That being true, why do people think that QE tapering will further weaken the baht?

[bigbamboo]

I used to be in the forex 'game' and there are three ways to predict currency movements.

You can study the form and try to make sense of it all before forming your own opinion. You can listen to the experts trying to make sense of it all and then give you conflicting opinions. Or you can flip a coin.

All have about the same chance of being correct.

[tomtom47]

Definitely wait.

The primary driver of GBP/THB (and USD/THB) is institutional money flow out of Thailand (and all MICs) to more vibrant asset classes back home, not protests. That said, even just your 2 mo's, definitely wait. The protests will work in your favor and give you a baht more or so.

For those with a view longer than 2 months and asking the same question, however, the protests - even a c d'etat - mean nothing. It's the institutionals. Institutional money has been shifting out of LOS for months now. Those with good memories will note that we were at 48/49 for several years, since 2010 or so. But the more useful data point for this question right now is not the last few years average, but the beginning of 2013. Remember? We were at 45. 45 to 54 in just 12 months. That's a solid gain in a short time. We can be confident it will get back to 64 - and I believe 70+ - by 2016.

Keep in mind, as well, the Thai government was not happy for the Baht's strengthening in the first place, and for a while, while BOT still had the funds, was spending heavily to prevent any more strengthening. That strengthening was caused by UK/EU/US institutionals shifting their money temporarily out of lacklustre returns back home while banks worked through their NPLs. For the UK and US, at least, that's coming to an end. In this instance, Ireland's a good leading indicator. The Thai govt will be very happy to see USD 35, GBP 58 by end 2014.

On top of all that, needless to say, Thailand's public finances and sovereign balance sheet are in a far less attractive position than they were in 2008 or so when all the strengthening started. Thai banks have curtailed their lending. Thai corporates are investing outside the country.

If you are able to wait, wait as long as you can. If you have a chunk in Thailand, the time to move it back home was last year - probably not worth the hassle and transfer fees now. But some might think about converting a chunk of their THB savings into USD/GPB and holding it here, or arranging to delay your pension transfers if you can. This is not the time for gold, either, imo.

Thanks for the great analysis of where you think the baht will go from here. From a US dollar perspective, I also see the baht continue to weaken against the US dollar. The political turmoil has had an impact but not to the extent of the Fed's plan to ease it's Quantitative Easing plan. If we see a major political shift (ie, Coup) we will see a slight bump, but when the full impact of QE takes effect, that's when you'll see the baht bottoming out around 35 to 36.

[phitsanulokjohn]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

This is what i've done.I've opened a foreign deposit a/c in pounds sterling.This allows you to keep your money in pounds or whatever countries currency your from.I can continue to send pounds into my pound a/c while keeping an eye on the baht..As you say it's anyones guess,but i think when the USA ends its quantative easing program,forecast to be at the end of this year,the baht will plunge.The USA has already started reducing it by $10 billion a month,from $85 to $75 billion a month,and already the pounds moving in a nice upward direction,so my feeling is when they finally end it,it will be bingo for the pound.

If that fails to happen i've lost nothing as I still have my pounds,and so basically hedging my bets.

[bangon04]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

how long have you been here? if its more than a few yrs then you should be happy with what it is now,we would all like to know what would happen but the last bloke who could predict it was nostrodamus.like i always say take what your happy with.

We don't have Nostrodamus, but we do have Naam! Where is he when we need him?

[Pinot]

No one can tell the future or where the baht will be. Your guess is as good as anyone else's. I'm bringing in American $'s now because the rate is the best it's been in years. Just as if you were buying stock you gradually bring in money. In the stock market it's known as "dollar cost averaging". If it GPB (or the $) continues to climb you continue to bring it in. Stop if it falls.

Trying to predict when the best price will be, doesn't make sense IMHO. Bring in 50 or 100k baht a month and you take advantage of the current low price.

[iancnx]

69 to the £ when I arrived. Bought my condo's and built my house with that cash. If it returns to anywhere near 69 I will be a very very happy, as the pension @45 to the £ has been a tad stretched! I agree with the posters that believe foreign currency outflows are the MAIN cause. US QE has a contributory effect. Current political turmoil once sorted will have little effect in re-strengthening the baht. Also it never made any sense to have a super strong baht from an Exporters (including rice!) perspective.

69 £. Can get back to my retirement travelling plan with that.

[chiang mai]

This is what i've done.I've opened a foreign deposit a/c in pounds sterling.This allows you to keep your money in pounds or whatever countries currency your from.I can continue to send pounds into my pound a/c while keeping an eye on the baht..As you say it's anyones guess,but i think when the USA ends its quantative easing program,forecast to be at the end of this year,the baht will plunge.The USA has already started reducing it by $10 billion a month,from $85 to $75 billion a month,and already the pounds moving in a nice upward direction,so my feeling is when they finally end it,it will be bingo for the pound.

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

If that fails to happen i've lost nothing as I still have my pounds,and so basically hedging my bets.

That's a good approach but why use a Thai bank to store Pounds, if you do that you will pay a fee of around 2/3% or so if you don't buy baht, even if you try to transfer those Pounds out? Maybe better to keep the Pounds offshore and earn a paltry 1.7% interest and transfer them in as needed, that way you will not pay a penalty if you don't convert in Thailand.

[pjthefey]

I don't know about GBP/euros, but in general I suspect that the THB will become a lot weaker in the next month due to the protests and the Bangkok shutdown.

[denby45]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

This is what i've done.I've opened a foreign deposit a/c in pounds sterling.This allows you to keep your money in pounds or whatever countries currency your from.I can continue to send pounds into my pound a/c while keeping an eye on the baht..As you say it's anyones guess,but i think when the USA ends its quantative easing program,forecast to be at the end of this year,the baht will plunge.The USA has already started reducing it by $10 billion a month,from $85 to $75 billion a month,and already the pounds moving in a nice upward direction,so my feeling is when they finally end it,it will be bingo for the pound.

If that fails to happen i've lost nothing as I still have my pounds,and so basically hedging my bets.

Please can you explain how your strategy is "Hedging your bets"

My strategy is to hold my assets in several different currencies. Right now I am holding Sterling, Euro, USD, CNY, PHP and THB. I tried recently to get into INR while it is oversold and interest rates at 10% but unfortunately was not successful. I am overweight the USD at present but I have a feeling the USD will strengthen at the beginning of this year. Also I am very underweight the THB which I only recently started to accumulate. I feel it is going to continue it's spiral downward movement for the time being. At some time I will balance the USD/THB so the currencies I hold will be almost on par with the others. Now that is what I consider hedging your bets.

Looks to me the only action you took was to move sterling from a sterling account to another sterling account in Thailand. It's still Sterling wherever you hold it.

Den

Edited January 10, 2014 by denby45

[Naam]

Send the sterling over and change it as you need it.

i was hoping for an informed analysis of the likely prospects for the baht/sterling exchange rate over the next couple of months

i suppose its anyone guess in reality

how long have you been here? if its more than a few yrs then you should be happy with what it is now,we would all like to know what would happen but the last bloke who could predict it was nostrodamus.like i always say take what your happy with.

We don't have Nostrodamus, but we do have Naam! Where is he when we need him?

by now it should be common knowledge that i don't make exchange rate forecasts. moreover, this forum is bombarded by many lurned eggsburts who excel in eggonomic forecasts. no need for additional ones.

[Zao]

I have a question:

GBP/THB is actually at or very near a level now that it was before QE started ((52 then (November 2008)vs 54 now)), factor in a couple of baht as a result of the current political unrest and the numbers broadly reconcile. That being true, why do people think that QE tapering will further weaken the baht?

The key to the answer is that QE tapering is but one factor and the starting point makes a difference.

For comparison, you've chosen start of QE money flow, with good reason. However, the "start" of QE is arguably when the tensions built up in the US economy: not so much when Lehman collapsed, as when the causes of the collapse took root.

Some observed this as early as 2003. For those in the industry, there was this unprecedented and really weird aberration in the way MBS (issued by Fannie/Freddie) moved in relation to US T's. US T's had been a highly reliable and exhaustively modeled hedge for riskier MBS. The aberration occurred twice: in March and October 2003. It actually caused the collapse of a little-known, but in its niche huge bond fund called Clinton Group.

Arguably, this time could a comparator.

Another could be 2006. By 2006, amidst the orgy of mortgage origination, AAA-rated CDO bonds yielded only 2% more than US T's, the global benchmark for safety. Simultaneously, by late 2006, the cost of default swaps on subprime CDOs had jumped sharply.

What does that mean?

Only someone in the industry would see the gaping contradiction here: investors - primarily Europe's banks, searching for an easier way to increase their profits than, God forbid, taking deposits and lending money - had convinced themselves that CDO bonds were as safe as US government bonds: the extra interest they required of the high-risk CDOs by 2006 was almost zero. Just a few quarters back, the interest rate differential had been much higher.

And what of the swaps? Credit default swaps are insurance. At the same time that Europe's banks had convinced themselves that high-risk CDOs were cash-equivalent (and were adding billions of them to their balance sheets each quarter as Tier 1 capital, ie, without adding reserve capital), the cost of insuring against credit default had risen to the highest point ever recorded. This was a blaring siren that something was amiss. Banks had simply to look at the cost of default swaps and act. Instead, most simply broke their "unnecessarily conservative" asset-risk-management rules and stopped buying default-swap insurance.

With that gibberish in mind, we can look at dates: GBP/THB at Lehman's collapse: it had jumped up to about 66. During the 2006 origination orgy, about 70. In 2004, after the 2003 aberrations had become clear, 75.

Thus, QE tapering could easily take us back to 66, rather than just 52 or so when the QE money started flowing. More important, in 2008, the balance sheets (corporate, personal and sovereign) of economies such as Thailand were cash-rich and in very good shape. They are not now.

The one thing that will moderate GBP/THB (and USD/THB) movements in the near-term is when BOT raises interest rates back to 3%, or even more. They will need to do this - probably around October 2014, but maybe earlier - to attract foreign capital into the economy away from now higher-yielding US govt bonds and to keep a lid on property speculators. However, this will have only a short-term impact. My guess is we get back to 3% interest rates this year, and not much more.

Thereafter, the Thai economy will adjust to supplant costlier foreign capital with domestic sources, or with countries such as China seeking to diversify their reserves away from USD. With QE done and Thai interest rates not artificially drawing in cash, exchange rates will continue to move to reflect economic fundamentals. I think it is at least 2016 by when all the excess capacity and credit in Thailand's economy gets worked out.

The AEC, tourism, manufacturing, and other positives in Thailand's economy will certainly moderate the Baht's retreat. Thailand's economy has a lot to be proud of. But I'm not sure that we fully appreciate the potential, magnitude and force of Burma's and Viet Nam's economies. They won't immediately affect LOS economic growth (or benefit its consumers!) Thailand's insular import tax crutch takes care of this. But they will affect LOS exports. As alternatives to Thai products become more and more available, Thailand's manufacturers will struggle to maintain exports. A weaker Baht will be one tool to support them.

On this point, a slightly unrelated anecdote: have you noticed how much cheaper Thai goods are outside the country? Cambodia is the easiest example, with its proximity and favorable import regime. But check it out when you are back home, too. In Cambodia, you can get all kinds of Thai-made goods for about 15% less than what you can buy them here. Viet Nam products - from furniture to food - are phenomenally high quality and cheap.

It's the old two-tier pricing in reverse! Tourists aren't the only ones who get it. Thai corporates are milking the Thai consumer. Long term, that will come back to bite.

[chiang mai]

Thank you for that explanation.

[olfu]

I guess if we lost at discussion about rates we are looking in wrong direction and wrong data.

Happens a lot.

[SheungWan]

For deciding about whether to change sterling into baht I think I am a little more focussed on current Thai political developments than meanderings about the origination of the most recent US financial crisis.

[Zao]

For deciding about whether to change sterling into baht I think I am a little more focussed on current Thai political developments than meanderings about the origination of the most recent US financial crisis.

Ha, ha. Fair enough. The meanderings were over the top. No one wants to re-hatch all that crap. I can't even keep my eyes focused long enough to re-read it!

He did bring up QE and ask for an explanation - not on changing (that was OP), but on why one might expect a post-54 Sterling. You're not at least intrigued by LAS - Life After Suthep? C'mon. Most in Bangkok have to turn on their TVs to get any sign of protests.

That said, clearly, busloads of Pearl Delta housewives agree with you and your focus on current Thai politics. They're cancelling their LOS shopping sprees, and heading off to Harrod's. Happiness for us.

But you know well. Institutional money moves the exchange. They could care less. We're talking forex here, not SET. If institutionals were planning to move money here last year, they will still do so. If BOT is unhappy with the short-term protest effects, they will just buy. But most institutionals have been taking cash back home long term for reasons that have nothing to do with the current fun, and BOT can do little about that.

However, if you're interested in the short term - and OP is - the real question is when BOT will return LOS to 3%. That will have the bigger, and let's be honest, the only impact on the Baht this year. Beyond that, Sterling continues its recovery.

[Zao]

I guess if we lost at discussion about rates we are looking in wrong direction and wrong data.

Happens a lot.

Yes, that's right. It's 100% forward looking. So, what is the context for Sterling/Baht by late-2015, when I will face the final transfer on my condo? Suthep still around? A Soros to rain on my parade?

The challenge is how to frame it in actionable reality. That requires a bit of history to set the context, even if rates reflect future fundamentals. No one really expects a Soros to bust Sterling tomorrow. But yes, the direction and data have to be forward looking.

You'd be surprised though. CTAs are among the monsters in the exchange markets. They are basically looking at charts - buy and sell signals. They don't pay any attention to future expectations or forecasts.