Why Does the Thai Baht Continue to be So Strong?

[IMA_FARANG]

In a region of problems, Thailand appears to be a relative island of stability.

Not that Thailand is really doing that well, it just appears to be more stable now than others around it.

Don't worry, it won't last forever.

The politicians in Thailand will soon enough screw it up, they are well practiced at that.

The best thing that is happening right now in Thailand is that politics (as in political parties) is relatively quiet.

Compared to the chaos before the Junta, now it's relatively stable.

[samuijimmy]

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?

and your stupid response helped?

[stgrhe]

The Thai baht is not pegged to the US dollar but the US dollar has a significant impact on its currency. The US economy has improved a lot at late with improved unimployment and trade figures; this has strengthen the US dollar against many currencies, not least the European currencies including the EURO. Another important factor, related to the US economy, is that the US will probably be self-supporting in oil within a couple of years. This because shale oil descoveries.

The economy in the EURO-zone is currently poor and what makes it worse is that the German economy (the locomotive of the European economies) hasn't improved and the EURO is further burdened by the devastatin stagen of the Greek economy. With regards to the European contries outide of the EURO-zone, those countries have, for the most part, their major trade partner in Germany, not the US.

With regards to the Russian rubel, it is hampered by the trade blocade due to the Krim invasion and the military support to the Ukrainian rebels. Furthermore, Saudi-Arabia is pumping oil like never before to put pressure on Iran and Syria. This has led to a significant drop in the oil price on the spot market. Both of these two major factors are the reason for the drastic depreciation of the rubel.

[Naam]

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

[how241]

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.

Maybe your right. It does seem odd that the Thai baht stays so strong.

[GOLDBUGGY]

Thailand is a major Exporting Country. It is also a country which is a major Importer of Oil. With the recent 50% drop in Oil Prices, Thailand will get a significant savings on its Import Bill, while Exports will remain basically the same. So Thailand should enjoy a much better Trade Surplus then what it had 6 months ago.

Lower Oil Prices also contribute to lowering Production Costs in Farming, Transportation, and even Chemical Fertilizers. They may be getting less for their Rice, but it is also now costing them much less to produce, to harvest, and transport to markets. Keep in mind the Produce for Export, such as Rice, Corn, and Rubber are all traded in US Dollars. So Exporting Countries like Thailand stand to gain from a strong US Dollar.

The United States is still a major Importer of Oil. So with this reduced cost in Oil Imports they stand to benefit and thus help keep the US Dollar stable. Canada and Australia on the other hand are major Exporters of Oil & Gas. Both of which have suffered recently with these lower prices. Even the UK and Scotland are feeling the pain in the North Sea now, and thus pressure on their currency. Russia is now the Worlds Largest Exporter of Oil and we all know what has happened to their currency recently. Besides other things.

The Euro is more like a mixed bag of nuts. Some countries will benefit from these lower Oil Prices, and other will lose out. But generally for the Euro to be strong they need a healthy world economy, which we are not seeing right now. China has done nothing more they buying up all this discounted cheap Oil and stockpiling it. So that when the price does come back they will not have to pay it until their Reserves run out.

With these low Oil Prices I expect the Thai Baht to remain strong. They still have a booming economy and enjoy one of the lowest unemployment records in the world. Lower Oil Prices also tend to put more money into people pockets, which is a good thing. This will always help that countries economy. .

[watcharacters]

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~ !

Where did you come up with that wrong information?

[Pheat123]

It's so strong because we all spend to much money here! Now 5 years ago 2 people could live for the price one pay now!

4000 Bhat a minimum budget in Pattaya a day or in every other city

So you are stating you need an income of 120,000 Baht a month to live in Thailand?

Unbelievable

[Nobb]

The reason the U.S. dollar is holding its value is because of there oil reserve and the price of oil falling which is hurting other countries that count on a high oil price to survive. The Russians have dropped about 50 percent for there value!.

[Time Traveller]

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~ !

I to am watching the Canadian dollar bleed against the Thai baht and am puzzled. The Set is holding its own as well. I think the baht is linked to the American dollar in some way. The economy here does not look all that promising. The yen, euro, ruble have dropped so that will mean a big drop in tourism. A lot of the car manufacturers are looking elsewhere to set up shop consumers are loaded with debt. Chiang Mai is overbuilt so I would presume the rest of the country is to. We have no water for all the new buildings going up and God knows where the sewage is going I even hate to speculate about this one. I say a prayer each time I pull the handle. Pollution is building and they want to build more coal fired power plants in the future. My crystal ball imploded. The whole world is crazy.

In case you have been in a coma for the last few months. Oil - one of Canada's key exports - has lost 50% of it's value over the last 6months. And many other ocmmodities which Canada exports have seen similar declines.

Hence, the C$ is weakening.

[thejcb]

You feel this is the place to ask such a question ?

Thai Visa ? Have you read some of the offerings by the members of this forum ?... and their replies !!

If you had, you wouldn't even ask where the next street is let alone future predictions for foreign exchange.

Amazing !

[thejcb]

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.

So funny, just writing anything with no justification, no reasoning.

I can also do this.... I see the US dollar to baht being around 100-120 next month and then dropping to 10-12 in March.

I can also just write any nonsense too.

[Naam]

You feel this is the place to ask such a question ?

Thai Visa ? Have you read some of the offerings by the members of this forum ?... and their replies !!

If you had, you wouldn't even ask where the next street is let alone future predictions for foreign exchange.

Amazing !

[chiang mai]

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.

If indeed the BOT wanted a weaker Baht in order to aid exports they wouldn't spend USD 12 bill. over the past 6 months trying to strengthen it!

[jabis]

It's so strong because we all spend to much money here! Now 5 years ago 2 people could live for the price one pay now!

4000 Bhat a minimum budget in Pattaya a day or in every other city

... Yeah right ...

[AnotherOneAmerican]

My pet theory,

All the Thai hookers ladies working around the world sending money home.

Thailand gets an endless supply of free foreign currency this way.

The commodity that never runs out!

Edited January 15, 2015 by AnotherOneAmerican

[Dustdevil]

Next to short term measures and market influences. the "Global-Investors-Community" is starting to take a long-term look at things:

Like: Where can long term growth of the world-economy be expected?

- In Europe & USA ? Hardly. (Read up on the fall of the roman-empire).

- In south-america ? (They have tried too many times and failed).

- Africa ? Hardly. ( They head for Europe, in hope to gain "Refugee-Status")

What's left? S/E Asia ! The hunger of China (the Locomotive) for raw materials and knowledge will remain as a "suction -pump" for the rest of S/E Asia for at least 20 more years.

Since Thailand is within the reach of this "suction-pump" it will be part of it (rightly so or not)

.

THIS IS WHY THE THAI-BAHT IS STRONG. Other reasons for the strength of the Thai-Baht, I have so far not been able to isolate.

Cheers.

I don't think being in SE Asia has much to do with the baht's resilience. Look at the Malaysian ringgit--in the last few months it's gone from 3 per dollar to 3.56.

[Leung Falang]

We have seen the Baht strengthen in the past when external money came into the stock market (foreign money sold to buy Baht) and weakened when this money left the stock market. When the Baht and the $ are keeping steady, it seems both economies are similar, and no scares.

The Big Mac Index shows Thailand:

Year Actual Implied Value

Jan 2014 31.7 23.5 stronger

July 2014 31.9 24.0 stronger

Jan 2013 29.8 22.4 stronger

The index which uses the Big Mac, exchange rates, and Purchasing Parity Index shows the Thai Baht to be undervalued in the mid 30% range but years. The index for 2015 is not yet released. If you look it up, you will see China in a similar position of undervalue. For those of us who have investments here, it would be nice to see the baht strengthen as we sell out and leave......but all you folks still here would need more FX to live and if none, spend less.

Edited January 15, 2015 by Leung Falang

[SinCityGr8One]

In a recent Business article, it stated that Thai household debt has more than tripled in a decade to a record high 83.5% of GDP. That is an astounding amount of debt for a small Country like Thailand. You would think with that large of a debt load, the Baht would definitely weaken against the Globe's Major Currencies. It just does not make any sense why it has not.

[Naam]

In a recent Business article, it stated that Thai household debt has more than tripled in a decade to a record high 83.5% of GDP. That is an astounding amount of debt for a small Country like Thailand. You would think with that large of a debt load, the Baht would definitely weaken against the Globe's Major Currencies. It just does not make any sense why it has not.

it does not make sense to claim that household debt influences the exchange rate of a country's currency

[FrankOff]

I to am watching the Canadian dollar bleed against the Thai baht and am puzzled.

CAD is tied to the crude oil commodity price...Canada has the 3rd largest known oil reserves. Perhaps the other downgraded currencies are linked in a similar way.

Don't expect thing to go up for at least another 4 months where crude prices may bottom out (hopefully) at around $42 per.barrel

[Pib]

In a recent Business article, it stated that Thai household debt has more than tripled in a decade to a record high 83.5% of GDP. That is an astounding amount of debt for a small Country like Thailand. You would think with that large of a debt load, the Baht would definitely weaken against the Globe's Major Currencies. It just does not make any sense why it has not.

it does not make sense to claim that household debt influences the exchange rate of a country's currency

Lot of small European countries on this list with the highest household debt load measured different ways. While Thailand household debt load has increased greatly it's still much lower when compared to many other countries.

[iphad]

Thailand has a floating currency rate and is determined by the market forces of supply & demand. How much demand there is in relation to supply of a currency will determine the currency's value in relation to another country's currencies.

I believe Thailand's economy is ok...better than during the protests but probably worse than pre - protest.

Trade surplus will increase the demand for country's currency by foreigners, so there should be appreciation in value. A trade deficit would weaken the currency.

Thailand is basically self sufficient in many areas but the previous high cost of oil that has now been greatly reduced has helped ease the flight of Thai baht from the country which probably offsets any real improvement in the economy.

A country's currency has nothing to do with gold reserve..although it probably should...but this gets into the argument of gold vs fiat currency.

The Foreign exchange market ( Forex, FX, or currency market) is a global decentralized market for the trading of currencies. It is by far the largest Market in the world in terms of volume of trading, The main players in the Forex are the large international banks.

Unfortunately, the Western banksters control (or try to) the World. All the Markets are fixed now.. the Stock Market,Forex etc.

Capitalism has been replaced.

The large Banks are too Big to Fail but they will..It's all a "House of Cards" ready to collapse.

Thailand is in the middle..not doing great & not doing that terrible.

[worgeordie]

Its a mystery,better not think too much about it or

you will get a headache.

regards Worgeordie

[csabo]

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

This statement is entirely false. Please do not make fantastic and erroneous claims about important things such as money.

[Captbonio]

From an FX punters point of view , I would say it's not so much that the Baht is strong , but rather that the others are weak.

I think market traders and funds built up sizeable shorts when the protests started to gather momentum and then added come the coup... Of course the west totally misunderstood what happened here, and certainly didn't look at any history as to know that actually what was about to transpire was a good thing for Thailand. Eur/Thb and gbp/Thb are classic examples.. Both euro and sterling really struggling... And the crosses overwhelm any real usd/Thb interest.

Like others on here I agree it will unwind slowly. The oil price collapse has had real impact on producing countries and that's another factor.. Thailand being a net consumer of energy benefits helps as well ... Put it all together and it's probably a good reason why it's still here... Who breaks first on interest rates will probably be the trigger for the next direction change...Chf/Thb anyone ?

[MyFriend You]

What makes you think you are out resident genius?

Who are you talking about?? Try replying to a specific post rather than ranting in the wind...........

[chiang mai]

Thailand has a floating currency rate and is determined by the market forces of supply & demand. How much demand there is in relation to supply of a currency will determine the currency's value in relation to another country's currencies.

I believe Thailand's economy is ok...better than during the protests but probably worse than pre - protest.

Trade surplus will increase the demand for country's currency by foreigners, so there should be appreciation in value. A trade deficit would weaken the currency.

Thailand is basically self sufficient in many areas but the previous high cost of oil that has now been greatly reduced has helped ease the flight of Thai baht from the country which probably offsets any real improvement in the economy.

A country's currency has nothing to do with gold reserve..although it probably should...but this gets into the argument of gold vs fiat currency.

The Foreign exchange market ( Forex, FX, or currency market) is a global decentralized market for the trading of currencies. It is by far the largest Market in the world in terms of volume of trading, The main players in the Forex are the large international banks.

Unfortunately, the Western banksters control (or try to) the World. All the Markets are fixed now.. the Stock Market,Forex etc.

Capitalism has been replaced.

The large Banks are too Big to Fail but they will..It's all a "House of Cards" ready to collapse.

Thailand is in the middle..not doing great & not doing that terrible.

A couple of points:

THB is not a freely convertible currency plus it is very small in global currency terms, western banks are not interested in controlling or manipulating THB, even if they could (which they can't). The only entity that could manipulate THB is BOT and if/when they do so, evidence is clearly seen that they have done so.

[ExPratt]

A lot of my dough is in Malaysian Ringgit , its gone from 9.8 to 9.1 to the Baht to RM, costing me a few bob. Trying not to use the CC either as that is HSBC Malaysia

[NeverSure]

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.

So funny, just writing anything with no justification, no reasoning.

I can also do this.... I see the US dollar to baht being around 100-120 next month and then dropping to 10-12 in March.

I can also just write any nonsense too.

What are you smoking? I made no predictions and I gave no reasons.

I merely pointed out the the trading range of TBT/USD had been in a narrow range recently.

Are you in another galaxy?