Bank of Thailand Reserves and Dollar Liabilities

[cigar7]

Is the Bank of Thailand misleading the outside world about their reserves position and their country’s dollar liabilities?

[Seligne2]

Shit, we don't know. You tell us.

[cigar7]

Well they are misleading us about core inflation. The BOT governor stated core inflation is only 1%. I'd estimate that it is at least 5% per year and probably closer to 10%. Of all items in stores, basically everything has increased by far more than 1%.

I've been in Thailand since 2006 and I have never prices increase as quickly as they have in the last 2 years.

Do you know of anything that is the same price or lower, as compared to last year, or 2 years ago, except petroleum fuel and rice?

Edited March 16, 2015 by cigar7

[does]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

[Suradit69]

Well the people at Goldman Sach's & Bloomberg seem to find the figures as reliable as any other government data from around the world. They are not all-knowing, but their valuations are probably more accurate and based on facts than anything some Thai Visa poster is going to pull out of his ...

Probably more reliable than some of the data coming out of the collapsing Eurozone.

Thailand’s foreign-exchange reserves climbed to $157.3 billion last month, data compiled by Bloomberg show. Morgan Stanley’s trade-weighted baht index has risen 2.8 percent this year to 114.85 and reached 115 last month, the highest since April 2013.

Thailand’s balance of payments reverted to a $719 million surplus in January, from a $16 million deficit the previous month. The Bank of Thailand reported a $2.5 billion excess in the current account, part of the overall balance of payments and a fourth straight monthly surplus.

The balance of payments could remain in surplus by a range of $5 billion to $10 billion this year, which will likely be constructive for the baht, Sequeira said.

http://www.bloomberg.com/news/articles/2015-03-04/goldman-sachs-sees-baht-capped-by-intervention-to-shield-exports

Edited March 17, 2015 by Suradit69

[morrobay]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

Edited March 17, 2015 by morrobay

[Berkshire]

Well they are misleading us about core inflation. The BOT governor stated core inflation is only 1%. I'd estimate that it is at least 5% per year and probably closer to 10%. Of all items in stores, basically everything has increased by far more than 1%.

I've been in Thailand since 2006 and I have never prices increase as quickly as they have in the last 2 years.

Do you know of anything that is the same price or lower, as compared to last year, or 2 years ago, except petroleum fuel and rice?

You're only going by anecdotal evidence. I know the price of gas has gone down quite a bit and that would figure into the inflation figures. Yes, there is inflation...but not near the 10% that you're suggesting.

[does]

Thanks, Morrobay.

I understand having a strong currency is better than a weak currency, but does Thailand have a compelling reason to prop up the baht?

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

[morrobay]

I dont understand why the Bank of Thailand is maintaining a strong baht either but that appears to be exactly what they are doing. With exports in decline and + .7% GDP 2014 it is not for the economy in general. Ask yourself who benefits from a strong baht and are also in a position to influence BOT monetary policy. You do not have to be Oliver Stone to see a conspiracy here.

[does]

The only people I can think of benefiting from a strong baht would be currency speculators. But I can't see speculators being able to influence BOT policy.

As an aside, would Thai monetary policy be now more influenced by China instead of the US?

I dont understand why the Bank of Thailand is maintaining a strong baht either but that appears to be exactly what they are doing. With exports in decline and + .7% GDP 2014 it is not for the economy in general. Ask yourself who benefits from a strong baht and are also in a position to influence BOT monetary policy. You do not have to be Oliver Stone to see a conspiracy here.

[fletchsmile]

Is the Bank of Thailand misleading the outside world about their reserves position and their country’s dollar liabilities?

No

[hugh2121]

Is the Bank of Thailand misleading the outside world about their reserves position and their country’s dollar liabilities?

No

Yes

[cigar7]

Well they are misleading us about core inflation. The BOT governor stated core inflation is only 1%. I'd estimate that it is at least 5% per year and probably closer to 10%. Of all items in stores, basically everything has increased by far more than 1%.

I've been in Thailand since 2006 and I have never prices increase as quickly as they have in the last 2 years.

Do you know of anything that is the same price or lower, as compared to last year, or 2 years ago, except petroleum fuel and rice?

You're only going by anecdotal evidence. I know the price of gas has gone down quite a bit and that would figure into the inflation figures. Yes, there is inflation...but not near the 10% that you're suggesting.

Yes you are right, petroleum fuels have decreased slightly. However, minimum wages increased 50% in the last 3 years, and many people were working at minimum wage. Wages are included in every product and service provided in Thailand. I know pork, chicken and beef prices at Big C have increased about 10% in the last year, I know prepared meals, at supermarkets, restaurants have all increased 10-20% in the last 2 years in Pattaya.

The core inflation rate is no where near 1% as stated by BOT, and is at least 5%. Maybe the BOT is also misleading us on reserves and non-baht denominated debt?

[12DrinkMore]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

Nonsense.

The THB is not being propped up, they have just dropped the interest rate to soften the THB.

Some people just don't seem to be able to consider that the Thai economy is doing well.

[CaptHaddock]

You don't understand that from reading any book on economics.

Thanks, Morrobay.

I understand having a strong currency is better than a weak currency, but does Thailand have a compelling reason to prop up the baht?

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

[HerbalEd]

Shit, we don't know. You tell us.

"We"?? So are you speaking for all tv.com members?

[SOUTHERNSTAR]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

Why would they try to keep the Baht up if they are trying to get it down. The recent rate decrease was intended to decrease the value of the Baht to promote exports. Deutche bank see a medium term Baht/USD exchange rate of 35. The biggest problem for Thailand is not foreign reserves or government debt but rather private debt (company and personal). Here is more info on the debt situation http://www.zerohedge.com/news/2015-02-23/biggest-problem-facing-world-today-9-countries-have-debt-gdp-over-300.

[marioc]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

Nonsense.

The THB is not being propped up, they have just dropped the interest rate to soften the THB.

Some people just don't seem to be able to consider that the Thai economy is doing well.

I wouldn't say that the Thai economy is doing well, surely in the last 3 years is weakening. Probably it is safer to affirm tat the Thai economy is doing better than many, many other economies around the world, but not doing "well". The world global recession may let us believe than Thailand is doing good, unfortunately not.

[Berkshire]

Yes, things are getting more expensive. But how do you get from inflation to Thailand's reserves position and dollar liabilities? How are they related?

The Bank of Thailand is using dollars to buy baht in order to prop up the bahts exchange rate. If they are deceptive on their dollar holdings and are unable to continue artificially propping up the baht then the baht will devalue and inflation will go above the present , at least 10%, level. With 10% inflation for two years something 100 baht then is now 121 baht. (1.1)² = 1.21

Nonsense.

The THB is not being propped up, they have just dropped the interest rate to soften the THB.

Some people just don't seem to be able to consider that the Thai economy is doing well.

Agree. Further, it would seem that there are some who are not doing well financially and want to blame someone (usually the Thais). But their pseudoscience of coming up with some ridiculous theory and then trying to find evidence for it is rather silly. The EURO is weak because their economy is a mess. CAD/AUD are weak because of weak commodity prices. The US$ is holding its own because the US economy has improved and unemployment is low. If people want to blame someone for the weakness of their home currency to the THB, simply look at home.

[elgordo38]

Well they are misleading us about core inflation. The BOT governor stated core inflation is only 1%. I'd estimate that it is at least 5% per year and probably closer to 10%. Of all items in stores, basically everything has increased by far more than 1%.

I've been in Thailand since 2006 and I have never prices increase as quickly as they have in the last 2 years.

Do you know of anything that is the same price or lower, as compared to last year, or 2 years ago, except petroleum fuel and rice?

Show me one country in the world that is telling the truth about inflation. Your figures of 5 to 10% are probably closer to the true amount. All countries on a concerted basis have been rejigging the items in the inflation basket to get a lower reading. They have rejigged the basket so much that we are now looking at stagflation or disinflation which is at the other end of the spectrum. Governments are but one of the three horses of the Apocalypse. The others are the stock market manipulators and banksters especially central banks. I have never in my 77 years seen such a mess in the world. All the old norms no longer apply. Its a dog eat dog world. I was just reading about the guy in Detroit who walked some 30 kilometres to work. The social media raised about $350,000 for him. He has a new apartment closer to work and a new car. His wages are $10.55 in a car parts factory. Incredible I made more than that 22 years ago when I retired as a letter carrier.

[NeverSure]

I think it's much too complicated for me to fully understand. Countries that engage in much international trade have to have US dollars to back their trades. The dollar is the international unit of trade aka the petro dollar. Almost no one will accept baht or even Euros or Can, Aud etc. for what those countries import. Inter Euro imports excepted of course. There are other exceptions too of course put the principle holds.

These countries such as Thailand have to own these dollars and they usually own them in the form of US treasuries. So when a Thailand or China says it has foreign reserves it doesn't mean it's liquid in the sense that they could spend it and be out of the import/export biz. When they say they own US debt it doesn't mean they have surplus money. It only means they have to have it to back the dollar trades.

There is much more to the US than the current economy. The government owns a massive amount of assets that it won't sell. It owns most of the Rocky Mountains and most of the land in the states that are West of those mountains, including Alaska. I'll attach a map showing it in red. That land is loaded with minerals, oil, vast tracts of timber and of course the land itself has value. The US has 88,000 miles of saltwater shoreline and vast fisheries.

In the private sector the US has more good farmland than any other country.

The private sector is awash in technology that creates new wealth every day. When Microsoft can take an inexpensive blank DVD and using automation turn it into a $200 copy of Office, that's a lot of new wealth. That concept made Bill Gates the richest man in the world. There are so many others innovating and making virtual money. Think of Google, Amazon... the list is almost endless.

I don't think, but I don't know, that faith in the dollar is misplaced. There's a lot backing it "in them thar hills."

Cheers

[UDONJIM]

Some interesting info. here.

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

[nithisa78]

The Tuk Tuk driver told me the other day, oh never mind.

[Berkshire]

Some interesting info. here.

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

That's a pretty old article. Just for reference, what do you think the price of oil was back then? Anyways, you can hope, and wish, and pray, that the Thai baht will crash. But it's not going to happen anytime soon. Better to plan accordingly rather than put your faith in outdated predictions.

[UDONJIM]

Some interesting info. here.

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

That's a pretty old article. Just for reference, what do you think the price of oil was back then? Anyways, you can hope, and wish, and pray, that the Thai baht will crash. But it's not going to happen anytime soon. Better to plan accordingly rather than put your faith in outdated predictions.

Yes, it is a pretty old article but I believe the fundamentals are as accurate today as they were back then. I disagree with you re. the Thai baht. 26 countries around the world have devalued their currencies including Malaysia, Indonesia and Singapore and other countries around the S.E.Asian region are considering devaluation. Chinese yuen is weakening and HAS to continue to keep the exports going. Japan is the same. My belief is the small exchange BOT rate cut is only the beginning. I've said about 3 times here on TV that IMHO the baht WILL weaken, sooner rather than later.

[Pib]

Is the Bank of Thailand misleading the outside world about their reserves position and their country’s dollar liabilities?

No

Yes

You can look at BOT's foreign reserves at this BOT webpage....select the date range you want to use.

http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=94&language=eng

[12DrinkMore]

Yes, it is a pretty old article but I believe the fundamentals are as accurate today as they were back then. I disagree with you re. the Thai baht. 26 countries around the world have devalued their currencies including Malaysia, Indonesia and Singapore and other countries around the S.E.Asian region are considering devaluation. Chinese yuen is weakening and HAS to continue to keep the exports going. Japan is the same. My belief is the small exchange BOT rate cut is only the beginning. I've said about 3 times here on TV that IMHO the baht WILL weaken, sooner rather than later.

Yeah, so they all go devaluing and end up the same.

Playing currencies is a total mugs game. There is nobody on the planet who can accurately say which way a currency is going to head against another currency.

The Asian currencies try to maintain a rough basket and avoid huge fluctuations. But at some point any one of them could spring out and do something different.

China is reaching the point where it is not utterly dependent on exporting to the west. They have enough natural resources coupled with huge USD holdings to grow internally and iside Asia.

Japan has massive demographic issues with its aging population. They will use QE to pay for this, but it will be interesting to see how far that can actually go. It is a world leader in showing how developed economies will evolve.

So you reckon the THB will weaken?

Against what?

It is already at a high level against the second largest traded currency the EUR.

The GBP is not going to maintain strength against its major trading partners. But it could do for longer than anybody could expect.

The Scandinavian currencies, following the EUR, are way down against the THB.

Yep, I agree, at some point the THB will weaken against something.

But I doubt whether anybody has a clue.

Edited March 17, 2015 by 12DrinkMore