Baht Moves To Strongest Level In 3 Months

[george]

Baht moves to strongest level in 3 months

BANGKOK: -- The Thai baht continued to appreciate at the opening of Thursday's morning trading session, staying at a range of 37.50-37.58 a US dollar, the strongest in three months, according to a money dealer of BankThai Public Company Limited.

The dealer said the sharp appreciation of the Thai currency stemmed from the United States

government’s policy on the weakening of the greenback aimed at solving the country’s economic slowdown.

The strengthening of the baht was also boosted by an inflow of foreign capital into the country, particularly the Stock Exchange of Thailand (SET).

Many parties on the local currency market were keeping a close watch on whether the Bank of Thailand (BOT) would intervene in the baht movement since most business persons view the baht is now too strong.

The appreciation of the Thai baht, if allowed to go on, would definite affect the country’s export competitiveness, he added.

--TNA 2006-08-10

[Loaded]

I need to buy some pounds and send them home. I'll wait a while though.

Any ideas when the baht might start dropping again?

[Scott]

It'll start dropping as soon as I go to change money!

[atlastaname]

actually the baht has increased in line with most currencies this last 10 days against the dollar which has been particularly weak since the fed indicated it may pause its interest rate rises. The pound has increased against the dollar from 1.82 to 1.89 now . The baht has just followed the trend rather than being strong itself .

[astral]

It is not a strong baht, it is the weak US dollar.

It hit 1.91 to the UK pound last week!!

[OldAsiaHand]

It is not a strong baht, it is the weak US dollar.

It hit 1.91 to the UK pound last week!!

Right you are.

And the comment in the piece about the baht being driven by 'an inflow of foreign capital, particularly to the SET,' is utter rubbish. Total volumes have been modest recently, as has net foreign buying. These wire service wrap-up pieces always seem to be written by clerks who know absolutely nothing.

[Soju]

It is not a strong baht, it is the weak US dollar.

It hit 1.91 to the UK pound last week!!

Right you are.

And the comment in the piece about the baht being driven by 'an inflow of foreign capital, particularly to the SET,' is utter rubbish. Total volumes have been modest recently, as has net foreign buying. These wire service wrap-up pieces always seem to be written by clerks who know absolutely nothing.

What are you guys talking about??? Or am I just stupid? I see the opposite of what you're discussing. Look at this chart of the GBP vs. THB for the past 5 days...

http://ichart.finance.yahoo.com/w?s=GBPTHB=X

It shows the THB strengthing against the GBP from 72.0 on Monday to 70.7 on Friday. The GBP has weakened against the USD also in the past 5 days. The THB has also strengthened against the USD, so if it was just following the USD decline it would have gone down with it. It has not. It's gone up. Is the yahoo data that wrong or is my brain just not working or what?

The THB is now at the strongest it's been against the USD for the past 5 years.

Edit: I just had a look at oanda.com to get historical data and I think the yahoo graph is a bit skewed on the dates. If you look strictly at the past 10 days, then the GBP has strengthened marginally against the USD from 1.88020 to 1.89030. Not really that much of a difference, and the trend for the last 5 days is definitely down. The data for USD vs. THB is from 37.92050 to 37.560 over the past 10 days and for GBP vs. THB it's from 71.29780 to 71.00120. Clearly IMHO the THB's recent strength (past 10 days) has nothing to do with a weak USD.

Edited August 13, 2006 by Soju

[Martin]

All currencies are just relative to each other.

Long ago they were relative to gold, but our predecessor generation (or two or three or four, depending on our ages) was persuaded that we, the people, could trust their governments and the fiat money that they printed. So the governments' currencies were taken off the Gold Standard. (That is, they were no longer backed by gold, held at Treasuries.)

Personally, I have lost faith in the fundamental sanity of governments, particularly since they seem to have lost sight of any sense of frugality and thrift, and now let bankers persuade people to get themselves into debt with plastic in place of fiat money in place of gold.

So I have gone back to the Gold Standard for my own finances.

By that token the Thai fiat baht has weakened and is now at 11000+ fiat bahts to one gold baht.

And the US fiat dollar has weakened by 50% over the past year---but is still held to be far too strong relative to the Chinese fiat rembini.

Where will it all end?

[Soju]

All currencies are just relative to each other.

Long ago they were relative to gold, but our predecessor generation (or two or three or four, depending on our ages) was persuaded that we, the people, could trust their governments and the fiat money that they printed. So the governments' currencies were taken off the Gold Standard. (That is, they were no longer backed by gold, held at Treasuries.)

Personally, I have lost faith in the fundamental sanity of governments, particularly since they seem to have lost sight of any sense of frugality and thrift, and now let bankers persuade people to get themselves into debt with plastic in place of fiat money in place of gold.

So I have gone back to the Gold Standard for my own finances.

By that token the Thai fiat baht has weakened and is now at 11000+ fiat bahts to one gold baht.

And the US fiat dollar has weakened by 50% over the past year---but is still held to be far too strong relative to the Chinese fiat rembini.

Where will it all end?

If you'd bought gold back in 1980 when it peaked at over $800 per ounce, you'd be minus now. If you can buy low and sell high, then there's nothing wrong with having some gold. But if you buy high and sell low you could lose al lot of money. My personal opinion is that gold will fall considerably in the near future, so for me now would be a very bad time to be buying gold. Of course I have no crystal ball and could easily be wrong. I'd be more willing to invest in real estate if I lost all faith in goverments before investing in gold at this point in time. Of course you'd have to pick the real estate wisely as I believe real estate prices in many countries / locations are now also at their peak and ready for a big tumble.

[Martin]

I agree, 'soju'. The right real estate is the stuff to have. Buy productive land, such as the rice fields that we have in Thailand, and which I will buy more of, if convenient ones come up for sale at sensible prices.

But, in the meantime, in what should I do my saving-up?.

Just over a year ago, I had shown the Immigration Police that I had 400,000 fiat bahts saved up, and consulted readers on here on how best to save it for next time. Gold was at about 8,000 fiat bahts per gold baht. A year later, it was at 11,000+ fiat bahts per gold baht. So I was able to pocket a cool 150,000 bahts on top of the 400,000 bahts that I had to show.

At that time a year ago, someone raised the fact that gold had fallen from US$800+, so I looked back.

Apparently it only shot up to US$800+ when some speculators saw it rising and piled in. As soon as the bigger buyers saw they could take their profits and sold some, it quickly dropped back to sensible levels along its underlying trend. And the same happened (though this time not so dramatically) a few weeks ago.

I am not into "playing markets" in short-term speculation, just seeing that my wife and I leave something worthwhile to the next generations; so I will stick with rice fields and little gold bars for that.

[chownah]

All currencies are just relative to each other.

Long ago they were relative to gold, but our predecessor generation (or two or three or four, depending on our ages) was persuaded that we, the people, could trust their governments and the fiat money that they printed. So the governments' currencies were taken off the Gold Standard. (That is, they were no longer backed by gold, held at Treasuries.)

Personally, I have lost faith in the fundamental sanity of governments, particularly since they seem to have lost sight of any sense of frugality and thrift, and now let bankers persuade people to get themselves into debt with plastic in place of fiat money in place of gold.

So I have gone back to the Gold Standard for my own finances.

By that token the Thai fiat baht has weakened and is now at 11000+ fiat bahts to one gold baht.

And the US fiat dollar has weakened by 50% over the past year---but is still held to be far too strong relative to the Chinese fiat rembini.

Where will it all end?

The "gold standard" is just as artificial a standard as fiat money and plastic money. I say this because actually gold has very little utilitarian value....what can you make with it that makes it so valuable?....mostly gold is useless when viewed in utilitarian terms.....just as paper money is useless in utilitarian terms....what can you make with a piece of paper with pictures of dead presidents or living monarchs on them? Gold, paper, and plastic......as sources of monetary wealth are all subject to peoples confidence in their convertibility to other more utilitarian forms of value. Gold is no different than the others and historically people's desire to hold gold has fluctuated just like people's desire to hold various currencies. Go to a store that sells televisions and offer them a stack of crisp bills or a small piece of yellow metal and see which one they prefer....or go to the banker and ask to be able to deposit and withdraw pieces of yellow metal.

If someone wants to assert that holding gold related instruments is a good investment then I can understand this viewpoint....but if someone wants to assert that gold is some absolute standard and this is why it is the best investment then this is something that I do not understand as a valid viewpoint.

[PeaceBlondie]

chownah, thanks for informing me of what I was ignorant: that gold has no "intrinsic value" except for its use in jewelery, metallurgy, etc. I guess I believed the "gold bugs" to be saying that gold as some master, permanent, global standard was inviolable, or a deity to worship.

Kind of like buying future contracts for delivery of pork bellies. The neophyte investor thought if he didn't resell his future contract, the truck would deliver dead pork bellies to his front door!!

So, gold held for 26 years would now suffer a net loss, if sold? General Motors common stock is worth less now, I believe, than it was 30 or 40 years ago, and I wouldn't buy it now, for sure.

Oh, and then there's that real estate mantra, "They're not making any more land," as if all real estate is valuable. I always liked to tell American taxpayers why you couldn't depreciate land, as opposed to capital improvements like buildings: "Sir, land is just dirt; it doesn't get dirtier."

[Martin]

"I always liked to tell American taxpayers why you couldn't depreciate land, as opposed to capital improvements like buildings: "Sir, land is just dirt; it doesn't get dirtier."

Nice one, 'PeaceBlondie'.

But, seriously, some land is depreciating. There is a lot of land on the prairies where the grain growers can only keep up their yields by putting on more and more fertilizer. But that fertilizer is set to go up in price as it is necessary to use a lot of natural gas to manufacture it.

The thing that I like about our rice fields is that they convert sunshine into food, even without putting on any fertiliser other than the dung left behind by cattle which graze the fields between harvest and re-planting time.