EDITORIAL
Baht-yuan swap agreement grabbing global attention
The Nation

The deal between Thailand and China could be the tip of the iceberg in a currency war

BANGKOK: -- No country is immune to the impacts of the ongoing currency showdown between eastern and western superpowers.

A recent development in Beijing suggests that the war has now reached Thailand's doorstep.

Thailand's trade activities and finances have for generations been under the spell of the US dollar, but that now looks set to change.

The arrangement might never be the same again.

US authorities must have been alarmed by the outcome of the recent meeting in Beijing between Prime Minister Prayut Chan-o-cha and his Chinese counterpart, Li Keqiang, which yielded four memoranda of understanding.

These will allow businesses to drop the dollar and instead use yuan and baht in bilateral trade and investments.

Though the dollar still holds sway in global trade, the agreement signed on December 22 is a landmark deal, coming amid a backdrop of growing frustration in the Thai business elite with what it sees as Washington's heavy-handed response to the May 22 coup and its aftermath. The disdain is especially evident in messages posted by Thai netizens on the US Embassy Facebook page.

The baht-yuan swap agreement is seen as an added alternative for Thai trade.

The dollar's status as a global currency is weakening, while the yuan is enjoying a surge in popularity.

By signing the deal with China, the Thai government has achieved greater balance in trade in foreign currency.

The volume of business deals and investments under the deal might not be significant at first, but the currency swap is a major step in preparing for a new future.

Leaders of top agencies in Thailand that have overseen the close baht-dollar relation are now speaking out in favour of the country's first serious flirtation with the yuan.

Bank of Thailand Governor Prasarn Trairatvorakul believes the swap agreement will allow the Thai central bank and Bank of China to access liquidity of the two currencies.

The business sector and financial institutions will have more confidence.

Stock-market investors will also benefit from the deal because Chinese investors will be encouraged to invest in Thailand and list their companies on our stock exchange.

Sathit Limpongpan, chairman of the SET board of governors, anticipates an increase its market capitalisation.

The landmark agreement might not have an apparent impact overnight, but it's a bold move.

Thailand has decided to allocate a few of its "eggs" to the yuan basket and put itself on a more "neutral" stance should a currency war between East and West actually take place.

The move is not just being watched closely by the United States, but also by the rest of the world.

Source: http://www.nationmultimedia.com/opinion/Baht-yuan-swap-agreement-grabbing-global-attention-30250987.html


-- The Nation 2014-12-31

Does anyone have the terms of this particular swap, cause from what I can discern it could be anything and when it comes to swaps terms are everything.

Though if they are trying to hedge in the event of a currency devaluation, does anyone feel like this is perhaps a rather small hedge?

Anyone have any ideas as to what this will do with the Baht-Dollar exchange rate for those living in Thailand and dependent on U.S. pensions?

AS I see it the Yuan is aligned to the US$ at a value the US may not be happy with so is this simply a win win for the Thai authorities?

Appearing to send a message but al in all, nothing has changed..

Countries are tired of being pawns in someone else's games. Trade is fine, but games are taxing and costly in human lives. Today we are friends -- Afghanistan, Iraq, Ukraine -- tomorrow we are enemies and wreck each other's economies struggling to be the flavor of the week.

Smaller economies can wage peace, much to the chagrin and dismay of war mongers everywhere.

Speaking of friends I have never been able to fathom why the governments of the US and Thailand are supposed to be so close. They do not share interests, culture, or geography. The Thais seem to benefit more from it than the US with one sided 'free trade agreements' that means Thai products are untaxed and US products are taxed 100%. Anyway, I suspect this currency swap business will fail to matter when China finally has to let their currency trade freely.

"US authorities must have been alarmed by the outcome of the recent meeting in Beijing between Prime Minister Prayut Chan-o-cha and his Chinese counterpart, Li Keqiang, which yielded four memoranda of understanding."

Yeah sure the US is crapping all over itself over this development. China's illiquid credit market is about to go tits up and Thailand is welcome to join it.

Isn't this deal similar to the Russia-China deal to accept each other's currencies?

Having a global reserve currency has advantage - a bit like the way Microsoft standardized the PC - but many countries believe the US is abusing its currency monopoly. The Euro - originally a French idea - was partly meant to be a counter force to to dollar but it has failed. China seems to only power able to offer an alternative.

I am hoping the Aussie$ to Yuan will be of some benefit to my business in Australia. Everything I sell is made in China!

Isn't this deal similar to the Russia-China deal to accept each other's currencies?

Having a global reserve currency has advantage - a bit like the way Microsoft standardized the PC - but many countries believe the US is abusing its currency monopoly. The Euro - originally a French idea - was partly meant to be a counter force to to dollar but it has failed. China seems to only power able to offer an alternative.

I think that was more Russia's idea to move the needle toward a petro-Ruble. With the collapse of oil and the Russian economy along with it, I'll bet the Chinese are wincing at having to accept Rubles.

^{From the editorial, "Though the dollar still holds sway in global trade, the agreement signed on December 22 is a landmark deal, coming amid a backdrop of growing frustration in the Thai business elite with what it sees as Washington's heavy-handed response to the May 22 coup and its aftermath. The disdain is especially evident in messages posted by Thai netizens on the US Embassy Facebook page."}

^{Appears that the Thai Business elite like the current government that is all for, from and about the elite. Sad state of affairs that this is warranted as good by the Nation's lame editorial staff.}

Anything that is good for the Thai elite is good for all ordinary every day Thais.

This article is so over exaggerated. They made it seem like the world is going to end that Thailand and China made an agreement to make trade with their own currency. I am sure that Thailand and China are not the first.

Long spoons gentlemen, don't forget your long spoons.

US authorities must have been alarmed by the outcome of the recent meeting in Beijing between Prime Minister Prayut Chan-o-cha and his Chinese counterpart, Li Keqiang, which yielded four memoranda of understanding.

Nah, not at all alarmed. The US knows that these four Memoranda of Understanding will be turned into Memoranda of Misunderstanding in no time.

Anything that is good for the Thai elite is good for all ordinary every day Thais.

Any deal signed with china is good for china and china alone. In the long run that is.

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

No, not doomsday at all but an opportunity for buying USD's. If the new party wins in Greece, they want to write off a lot of the debt whether Brussels agrees with this or not and a 50/50 chance they opt out of the eurozone. At 25% unemployment, they have much of population with them this time around.

Cant say they are that tight just yet: source: https://en.wikipedia.org/wiki/Internationalization_of_the_renminbi

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

Leaving the Euro isn't doomsday, only people making doomsday predictions would come out with such nonsense.

One thing you can be 100% sure of is Greece cant pay off their debt without very high inflation which isn't happening in a deflationary world, or by defaulting.

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

No, not doomsday at all but an opportunity for buying USD's. If the new party wins in Greece, they want to write off a lot of the debt whether Brussels agrees with this or not and a 50/50 chance they opt out of the eurozone. At 25% unemployment, they have much of population with them this time around.

It won't happen.

Now I'm going to stick my neck out here and state no, it isn't grabbing global attention and in all likelihood about 0.0000001% of the world know or care.

Does The Nation really think the TV salesman in Addis Ababa or the blues singer in Clearwater, Florida are on tenterhooks this new year's eve?

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

No, not doomsday at all but an opportunity for buying USD's. If the new party wins in Greece, they want to write off a lot of the debt whether Brussels agrees with this or not and a 50/50 chance they opt out of the eurozone. At 25% unemployment, they have much of population with them this time around.

It won't happen.

I have so many greek relatives still living in greece. What they tell me is that most greeks don't want to exit the eurozone, but feel it must be done to get their country back on track again. Never say never. Many countries could get out of debt simply by manipulating their currencies. When they joined the euro they could not do that anymore, so there is a good chance that not only greece, but spain and italy see this as a way out of their problems.

After Greek elections on Jan 25, 2015, it could be another huge slide for the euro again and huge win for the USD by the end of 2015. If greece eventually moves out of the euro, guess what italy and spain are going to do?

Greece won't move out of the euro. Neither will Spain or Italy.

I know its the New Year and all that, but really doomsday predictions?

Leaving the Euro isn't doomsday, only people making doomsday predictions would come out with such nonsense.

One thing you can be 100% sure of is Greece cant pay off their debt without very high inflation which isn't happening in a deflationary world, or by defaulting.

Right, lets see:

I didn't say Greece leaving the euro was doomsday. I said Greece followed by Italy and then Spain leaving was a doomsday prediction.

I stand by that.

Because it is.

Decidedly so.

Isn't this deal similar to the Russia-China deal to accept each other's currencies?

Having a global reserve currency has advantage - a bit like the way Microsoft standardized the PC - but many countries believe the US is abusing its currency monopoly. The Euro - originally a French idea - was partly meant to be a counter force to to dollar but it has failed. China seems to only power able to offer an alternative.

I think that was more Russia's idea to move the needle toward a petro-Ruble. With the collapse of oil and the Russian economy along with it, I'll bet the Chinese are wincing at having to accept Rubles.

Good point, Sharchen. But could the slow move against the dollar be a long-term strategy to break the hold of the (petro) dollar on the world? Some people predict the Yuan will be fully convertible in about 5 years.

If and when the China becomes the largest economy in the word, it would not make much sense to keep the US dollar as the global currency. Take a look at this Bloomberg article:

http://www.bloombergview.com/articles/2014-12-25/china-steps-in-as-worlds-new-bank

"coming amid a backdrop of growing frustration in the Thai business elite with what it sees as Washington's heavy-handed response to the May 22 coup and its aftermath. ". ----

What response? Which business elite? I doubt any legitimate business is concerned about anything Washington has done. Business people are concerned with profits not politics.

This is another antiAmerican propoganda article by the Nation. It's funny to think some sad angry journalist hack has to sit down and write out meaningless drivel like this..

I think Preyuth in his short term in power has sold Thailand to China!

Speaking of friends I have never been able to fathom why the governments of the US and Thailand are supposed to be so close. They do not share interests, culture, or geography. The Thais seem to benefit more from it than the US with one sided 'free trade agreements' that means Thai products are untaxed and US products are taxed 100%. Anyway, I suspect this currency swap business will fail to matter when China finally has to let their currency trade freely.

The answer is your question lies in the aftermath of World War II. Thailand had declared war on the US after Pearl Harbor, and was technically an ally of Japan, though you will hear conflicting stories about how the Japanese " forced " to be allies. Be that as it may, Thailand was under a military dictatorship headed by Field Marshall Phibun, who had been trained in Japan, and allowed Japanese troops transit to fight in Burma .

In the orocess, allied prisoners of war were sent to build a railway near Kachanaburi, which was immortalized in David Lean's " Bridge on the River Kwai."

Most of those orisoners were Aussies and Brits, and the governments of those countries wanted to occuoy Thailand as an axis power. The Americans vetoed that occupation and helped restore the monarchy. Thailand became a lynchpin in American Cold War strategy vis a vis China, and the country was a staging area for the Vietnam War.

Given this history, I think it is fair to say the two countries have enjoyed a symbiotic relationship. Until now.

Think the Pentagon may have over estimated the loyalties of some people they have trained and armed.

It will be interesting to see what they do as things develop further...

I think Preyuth in his short term in power has sold Thailand to China!

Yeah, right.

So you're saying PT, yingluck and their dear leader kept China at bay, refusing to have anything to do with them?