Why Does the Thai Baht Continue to be So Strong?

[JakeSully]

ESPECIALLY would I want to drag the USA into this scenario.

- Geographical over expansion.

- Financial over expansion. (The astronomical budget-deficits are mostly covered by the rest of the world) and not by US-Citizens and their meager savings.

- The Influx of people from south of the Rio Grande will eventually have the same effect as 1600 years ago has happened the roman- empire.

Not ever have I seen such striking parallels in history as compared to the US of today versus the "the fall of the roman empire".

Same story, same outcome.. Except this time it happens in our lifetime.

Cheers.

You're nuts!

The Roman Empire fell due to invasion of goths, visigoths and because their army was weak.

As an American, I see people willing to give their lives so that their family has a green card. I see an army that is reasonably modern. I see no Canadian or Mexican army invading.

What do you think will cause us to collapse? Rising Oceans because of global warming? Ok maybe that's it.

Less crack and more swiss cheese!

[chiang mai]

For the GBP did u see the inflation numbers?

You reckon they will push up interest rates soon?

45 to the GBP beckons. Keep that stimulus coming.

45, shock of horrors!

[chiang mai]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Edited January 15, 2015 by chiang mai

[morrobay]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Ask who benefits from a strong baht and are in a position to manipulate it

[chiang mai]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Ask who benefits from a strong baht and are in a position to manipulate it

It's more probable that BOT is trying to prevent THB from becoming too weak against USD, for the sake of export values, smoothing out the hi's and lows over time. The value of THB against GBP is largely irrelevant since it's a function of USD strength plus current GBP weakness.

[SheungWan]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Ask who benefits from a strong baht and are in a position to manipulate it

Clearly foreigners with substantial baht holdings who get a kick out of listening to the 'woe is me' crowd.

[chiang mai]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Ask who benefits from a strong baht and are in a position to manipulate it

Clearly foreigners with substantial baht holdings who get a kick out of listening to the 'woe is me' crowd.

You called?

[clockman]

No transparency. And the slander and libel laws!

Edited January 15, 2015 by clockman

[bitcoinbob]

It looks like the Bank of Thailand is holding up the baht. with there reserves down they are holding up baht/dollar rate. the one caught holding the bag is the thai taxpayer. the reason is because of all the dollar borrowings thai companies have taken out like the rest of the world this is there chance to pay off there dollar loans before the collapse they learned there lesson in 1998 the smart thai companies are paying down dollar debt or refinancing . soon they will have to let it go ,it will be just like 98 33 to dollar 38 to dollar 42 to dollar it will gap down in a flash. after all the favored thai companies have paid down there dollar borrowers

[DKUNPUTAF713]

<<<I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!??

Only conjecture, of course!! Impossible to get proof!!>>> Quote

I was waiting to see when some one was finally going to catch on.

Greenhill you are the financial wizard of the day;

Congrats!!!

[Farang99]

No matter what our resident Genius says or anything else but it does seem to track the dollar . please now show me graphs going back 100 years proving it doesnt.

Until just after WWII the baht was tied to fixed values against the $US (25 THB) and the £GB (40 THB). Since it was freed to float it has fluctuated, but over the last few years it has remained high against western currencies.

[Eric Loh]

Baht is not strong but just that it depreciated less than some other countries. The capital outflow as a result of the Fed scaling down its accommodative monetary policy last year has bottom out. Now it's basically down to individual country fundamentals. Countries that depend much on foreign capital inflow like Indonesia will continue to suffer the consequences of outflows and currency depreciation. Thailand depend less on foreign capital inflow and most foreign capital have left our shores following Fed policy.

Oil exporting countries like Malaysia now suffered from larger current account deficit and the Ringgit has depreciated a lot more than the Baht. The low oil price will lessen Thailand current account and plus the high foreign reserve, the Baht has been steady and in fact, appreciated slightly today. I think the Baht will be range bound for the short term up till the massive infrastructure projects get started which will generate new dynamics to the Baht.

[lucky11]

No matter what our resident Genius says or anything else but it does seem to track the dollar . please now show me graphs going back 100 years proving it doesnt.

Officially it stopped being pegged to the US dollar over 40 years ago in 1973 - loosely however (quite strongly so it could be argued) it still does seem to track the Dollar at most times.

[timewilltell]

ESPECIALLY would I want to drag the USA into this scenario.

- Geographical over expansion.

- Financial over expansion. (The astronomical budget-deficits are mostly covered by the rest of the world) and not by US-Citizens and their meager savings.

- The Influx of people from south of the Rio Grande will eventually have the same effect as 1600 years ago has happened the roman- empire.

Not ever have I seen such striking parallels in history as compared to the US of today versus the "the fall of the roman empire".

Same story, same outcome.. Except this time it happens in our lifetime.

Cheers.

You're nuts!

The Roman Empire fell due to invasion of goths, visigoths and because their army was weak.

As an American, I see people willing to give their lives so that their family has a green card. I see an army that is reasonably modern. I see no Canadian or Mexican army invading.

What do you think will cause us to collapse? Rising Oceans because of global warming? Ok maybe that's it.

Less crack and more swiss cheese!

It will collapse through the financial system. There are many ways an empire can implode and the implosions are getting much more rapid. Unfortunately the fiat currency systems are unsustainable because they depend on ever increasing growth and inflation to avoid default since very few countries could afford to repay their debt without the help of inflation and growth. That is the reason governments are anal about avoiding deflation - it leads to huge problems with their debt burdens.

As for the Thai baht, it will almost certainly weaken once interest rates start rising in the West since most of the strength is from traders looking for better returns from the carry trade. South East Asia is not the most stable area in the world so it will be abandoned to a large degree when interest rates move toward parity. My concern is that China and Russia along with oil exporting nations with leverage will trigger a financial event. China is approaching deflation with a huge stock of property that cannot be sold which will be a huge punch in the face for their banks when developers cannot repay their loans and the same for oil companies who default if the oil price is too low to make extraction possible. We live in dangerous times.

[KhnomKhnom]

Last I looked the other day the US, Canada and Aussie $ had all dropped... two or three baht...

One does have to wonder why, the baht is so strong, for sure~ !

How on God's Green Earth does your comment in any way answer the question, and do you need such an ego shot... such as it is?

[KhnomKhnom]

USA has stayed in a range of 32.5 - 32.9 has not dropped significantly in a long time. Other currencies have not been so lucky.

How on God's Green Earth does your comment in any way answer the question, and do you need such an ego shot... such as it is?

[KhnomKhnom]

I don't see the $USD drop of 2 or 3 baht. I see a recent drop of more like less than 2/10 of a baht, but it's been trading up and down in a narrow range.

I don't know why the baht seems strong either.

How on God's Green Earth does your comment in any way answer the question, and do you need such an ego shot... such as it is?

[Don Aleman]

Every economic factor influencing strong currency, anywhere, is totally missing in Thailand but, in spite of the fact that this unjustifiably strong Baht is destroying Thai exports, it continues to remain strong.

[chiang mai]

Every economic factor influencing strong currency, anywhere, is totally missing in Thailand but, in spite of the fact that this unjustifiably strong Baht is destroying Thai exports, it continues to remain strong.

Except the absence of significant debt, strong foreign currency reserves, a strong export market - shall I continue!

[Robert24]

I would ask this question to the Bank of Thailand!! I would imagine there's quite a bit of manipulation going on by them!!?? Only conjecture, of course!! Impossible to get proof!!

Foreign currency reserves are down USD 12 Billion in six months which suggests manipulation could be a factor.

http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

Ask who benefits from a strong baht and are in a position to manipulate it

It's more probable that BOT is trying to prevent THB from becoming too weak against USD, for the sake of export values, smoothing out the hi's and lows over time. The value of THB against GBP is largely irrelevant since it's a function of USD strength plus current GBP weakness.

I don't think that's true. I'm sure the BoT would prefer a slightly weaker baht to help the Thai economy as growth is rather sluggish. And especially since there is absolutely no pressure on the inflation front anymore, they could easily do with a slightly weaker baht.

[Robert24]

It looks like the Bank of Thailand is holding up the baht. with there reserves down they are holding up baht/dollar rate. the one caught holding the bag is the thai taxpayer. the reason is because of all the dollar borrowings thai companies have taken out like the rest of the world this is there chance to pay off there dollar loans before the collapse they learned there lesson in 1998 the smart thai companies are paying down dollar debt or refinancing . soon they will have to let it go ,it will be just like 98 33 to dollar 38 to dollar 42 to dollar it will gap down in a flash. after all the favored thai companies have paid down there dollar borrowers

As I mentioned in the other post, the BoT doesn't have an interest in a very strong baht especially since inflation has come down significantly and the economy is rather sluggish. I'm sure they would prefer a weaker baht to help the economy and exports.

[Robert24]

I think the key reasons why the baht has been relatively strong are:

- investor confidence in the Thai economy/stock market and currency has returned after Prayuth took over last May

- business confidence about outlook of Thai economy is up since the coup.

- FDI continues to be strong

- Gov debt to GDP relatively low/fiscal budget was brought under control since coup

Personally I wouldn't be surprised if the BoT will try to weaken the baht a little because it does have a negative impact on export, but rather through direct interventions in the FOREX market, they may actually lower interest rates if economic growth continues to be sluggish.

[Si Thea01]

Not really sure but apparently the most popular exchange rate for the Baht is against the Euro, which has had a fall against the US dollar. The Baht is around B32.5 whilst the A$ has fallen to around .82 cents to the US$. 12 months ago the A$ was.96 cents to the US$ and the we were getting almost 33 Baht, whilst the US$ was down around 29Baht. It's now reversed because of the weakening of the A$ and the strengthening of the US$ and on the exchange us Aussies are only getting around 26 Baht per dollar. The Euro is pulling in 38.5 baht, whilst the dollar against the euro is seeing an exchange of 84.8 Euros to the dollar, whilst the GBP is seeing a rate of about 49.9 baht, however, against the US$ the rate is 1.53 dollars to the GBP.

The A$ is down to 81.4 to the US$, so if we look over all at the falling currencies around the world, then it may well explain why the baht is remaining steady n the market, as there does not seem to be any other factors affecting it, that is unless some of the market players are manipulating certain currencies, which they do when they sell off or buy, so who really knows. Whatever it is, it's costing me money every time I send some hard earned bucks form Australia to here. Since the downturn started around march last year I have seen about 350,000 baht go westward owing to the poor rate of exchange.

[smotherb]

USA has stayed in a range of 32.5 - 32.9 has not dropped significantly in a long time. Other currencies have not been so lucky.

Well, try high 31s to low 33s in the last year--about a 1.5 baht range

[rijit]

Thailand has been super stable, since Prayuth took over. I don't see financial disaster/bankruptcy or collapse of the economy, on the horizon. Thus, a stable baht.

Nah more to it than that , even.when thaksin was given the boot, the baht back in 2007 lost just 5ish baht, imagine there was s a coup in the west !! How much its currency a western democracy would lose ,; it loses that if the wind changes !!!

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[someonelovesyou]

I think much more to do with other currencies weakening than the Baht strengthening.

The THB has remained steady against China, Laos, Burmese, Philippine currencies - with slight gains against Indonesia and Singapore.

NZD has weakened considerably against almost all currencies due to a fall in commodity prices affecting milk exports

AUD has weakened considerably against almost all currencies due to a fall in commodity prices affecting mineral (mining) exports

[mikiea]

Thailand has been super stable, since Prayuth took over. I don't see financial disaster/bankruptcy or collapse of the economy, on the horizon. Thus, a stable baht.

ehhh.... stable bht in the future ? who is gunna pay for the bail out over-extended builders ? not the people buying homes they cannot afford ,not the banks that gave these people a life style they were not ready for . debt trickles up also , just takes a little longer, but when the banks loose money , building contractors close up shop, , vacancy rates at 38% , it matters not the strength of the bht . this is called a "recession" . people have money , but they do not spend it , and some run away from the debt they owe . all of this back sliding still will not effect the bht/usd . it will effect the people of thailand as usd buckaroos for investment will go elsewhere.

[Anon999]

Everything is relative and the Baht has been stable while the Euro and Sterling have both weakened. Despite the £ being a t a 5 year high against the Euro it is weak against the US$. Therefore you have the US$ at >32/baht and stable, the Euro at >38 and the £ at around 49.5 both weak. Therefore it is more about a stable baht and other currencies being weak.

[alain soulard]

BOT is the answer. Using FX reserves to prop up the Baht. Quite a stupid policy but what to expect from a smart government

[flyingdoc]

No-one has mentioned ASEAN, of which Thailand becomes a leading member from 1st January this year!