Thailand’s economic outlook worst in 40 years

[Naam]

Why does the baht so closely follow the USD if it hasn't been pegged in nearly 20 years?

I'd appreciate a "Currency Exchange for Dummies" answer. I've only just reached the point when I can convert baht to USD in my head without having a dumbfounded look on my face. Math was never exactly my strong suit.

do you call these fluctuations "closely follow"?

[lostoday]

Why does the baht so closely follow the USD if it hasn't been pegged in nearly 20 years?

I'd appreciate a "Currency Exchange for Dummies" answer. I've only just reached the point when I can convert baht to USD in my head without having a dumbfounded look on my face. Math was never exactly my strong suit.

10 years ago it was 40 baht to the dollar today it's 32. That's not close following.

I meant a little more recently. It seems to have roughly followed what the USD is doing for the past few years. Although, it has flattened out some over the past year.

Screen shot 2015-04-17 at 2.54.03 AM.png

Screen shot 2015-04-17 at 2.52.02 AM.png

31.75 to 33.19 in the past 52 weeks is not following closely. That is a big spread. On savings of one million dollars in one year that is a 1,440,000 baht difference in cash holdings.

[Bellacissa]

Why does the baht so closely follow the USD if it hasn't been pegged in nearly 20 years?

I'd appreciate a "Currency Exchange for Dummies" answer. I've only just reached the point when I can convert baht to USD in my head without having a dumbfounded look on my face. Math was never exactly my strong suit.

do you call these fluctuations "closely follow"?

USD THB.jpg

Perhaps I worded it poorly. It seems like (see the graphics I posted above) that the when the USD gets weaker (i.e. - 2013) the baht follows it down. And as the USD gets stronger (i.e. - since 2013) the baht follows it back up. Also, I'm not talking about over 20 years, just in the past few years. I'm looking more at the trend than at the exact exchange rate.

Someone up in the thread said something about the BoT buying in USD. Maybe that has something to do with it? Or, like I said, I'm not exactly mathematically inclined. It could be that I'm seeing something that doesn't exist.

[Alwyn]

Off with his head!!!

[lostoday]

Why does the baht so closely follow the USD if it hasn't been pegged in nearly 20 years?

I'd appreciate a "Currency Exchange for Dummies" answer. I've only just reached the point when I can convert baht to USD in my head without having a dumbfounded look on my face. Math was never exactly my strong suit.

do you call these fluctuations "closely follow"?

USD THB.jpg

Perhaps I worded it poorly. It seems like (see the graphics I posted above) that the when the USD gets weaker (i.e. - 2013) the baht follows it down. And as the USD gets stronger (i.e. - since 2013) the baht follows it back up. Also, I'm not talking about over 20 years, just in the past few years. I'm looking more at the trend than at the exact exchange rate.

Someone up in the thread said something about the BoT buying in USD. Maybe that has something to do with it? Or, like I said, I'm not exactly mathematically inclined. It could be that I'm seeing something that doesn't exist.

Don't worry. Take a look at the Thai foreign exchange reserves. They are almost out of money so will not be buying much anymore. Unless they get a loan. China and Russia don't look like a good choice to ask for money nor does the ECB and America is still miffed.

Laos picked beer and we all know what Colorado picked. Maybe casino gambling in Pattaya? I don't see any other quick source of money to buy all the necessities.

Macau last year in baht 1,485,000,000,000

Edited April 17, 2015 by lostoday

[BlackJack]

ASEAN = http://thaicapitalist.com/2015/04/aseans-manufacturing-powerhouse-isnt-thailand/

trouble for Thailand

[lucky11]

Yet the supported Baht stays strong!

But when it finally crashes, what will they say then?

I believe the reason for it not to fall as it should, is because no one (very few) are trading it anyway.

It's overvalued and pegged against US$ for a reason.

Imagine how much the families in BKK would lose if THB would be depreciated, just import of "luxury" cars and other "luxury" products creates both high tax revenues as profit on top, especially if all other currencies are low.

Prices are still the same for consumers, but where is the currency difference when a BMW is now cheaper than ever before when Euro has fallen more than 20%.

Don't believe for a second Thailand is buying in US$.

Why do you think THB is pegged against US$.

Economy is not my field but I have over the years tried to understand the Thai economy and the politics behind it.

I still don't get it, but I believe I can see a pattern, please correct me if I'm off target.

It has not been pegged to the US dollar since 1997 so you are off target on that one.

[mercman24]

surely this cannot be right ?? an official telling the truth. about the thai economy, i think this guy could be in for a big "telling off"

[Pheat123]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

Along with a good few other expats, my pension has taken a beating as the baht stays strong and the Aussie dollar and others slowly sinks.

From 31 baht last year to 24 baht now. Makes it tough especially when all medical and dental costs remain high and many of us cannot even get insurance.

The reason you now only get 24 Baht to the AUS $ has nothing to do with the strength of the Baht

The problem is the weakness of the Australian economy and this is only going to get worse

This time next year you could easily be looking at 20/21 Baht to the AUS $ without a doubt

AUS has gone to the dogs

[pattayasnowman]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

Soon - Thai Baht exchange rate is tied to the US Dollar. It is now artificially high against this currency . The Thai government will be soon forced to devalue to a more realistic rate ( 37 - 38 )

[lostoday]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

Soon - Thai Baht exchange rate is tied to the US Dollar. It is now artificially high against this currency . The Thai government will be soon forced to devalue to a more realistic rate ( 37 - 38 )

Check numerous posts above Thai baht has not been tied to the US dollar for 20 years.

[Robert24]

Why does the baht so closely follow the USD if it hasn't been pegged in nearly 20 years?

I'd appreciate a "Currency Exchange for Dummies" answer. I've only just reached the point when I can convert baht to USD in my head without having a dumbfounded look on my face. Math was never exactly my strong suit.

do you call these fluctuations "closely follow"?

USD THB.jpg

Perhaps I worded it poorly. It seems like (see the graphics I posted above) that the when the USD gets weaker (i.e. - 2013) the baht follows it down. And as the USD gets stronger (i.e. - since 2013) the baht follows it back up. Also, I'm not talking about over 20 years, just in the past few years. I'm looking more at the trend than at the exact exchange rate.

Someone up in the thread said something about the BoT buying in USD. Maybe that has something to do with it? Or, like I said, I'm not exactly mathematically inclined. It could be that I'm seeing something that doesn't exist.

Don't worry. Take a look at the Thai foreign exchange reserves. They are almost out of money so will not be buying much anymore. Unless they get a loan. China and Russia don't look like a good choice to ask for money nor does the ECB and America is still miffed.

Laos picked beer and we all know what Colorado picked. Maybe casino gambling in Pattaya? I don't see any other quick source of money to buy all the necessities.

Macau last year in baht 1,485,000,000,000

Foreign currency reserves of the BoT are at about $148bn. I think they have a lot of fire power left if needed. Not sure where you get the idea the BoT is out of ammunition in terms of foreign currency reserves.

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

[pattayasnowman]

It has not been pegged to the US dollar since 1997 so you are off target on that one.

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

[Bellacissa]

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

Ahh, I think this might be the part I was missing. I knew it wasn't pegged by an exact amount, but it does seem to follow USD trends. I guess this might be why?

[lucky11]

It has not been pegged to the US dollar since 1997 so you are off target on that one.

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

It is not pegged to anything as it is a floating currency. I agree that it is coupled to currencies but this is a much loser relationship than pegging.

In another thread they talk about the 'BOT to ensure that it doesn't allow the Baht to strengthen against the Dollar' which proves beyond all doubt that it isn't pegged to any other currency or basket of currencies!!

Edited April 17, 2015 by lucky11

[Card]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

The baht is linked to the US dollar - if you look at historical rates of both against the pound, they correlate almost exactly. The BOT presumably keeps the baht in line with the dollar, at least until that strategy is unsustainable.

[chiang mai]

It has not been pegged to the US dollar since 1997 so you are off target on that one.

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

THB is not pegged to anything except in the minds of some posters, for everyone else the value of THB is maintained via a managed float system which looks at the value of USD AND importantly, the value of ASEAN currencies. Against USD over the past five years, THB has swung by up to about 12%, currently there is no evidence that BOT is actually manipulating its value since foreign currency reserves continue to rise at a normal pace. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG

Edited April 17, 2015 by chiang mai

[laocowboy2]

Actually quite a sound piece of analysis

[TheAppletons]

THB is not pegged to anything except in the minds of some posters, for everyone else the value of THB is maintained via a managed float system which looks at the value of USD AND importantly, the value of ASEAN currencies. Against USD over the past five years, THB has swung by up to about 12%, currently there is no evidence that BOT is actually manipulating its value since foreign currency reserves continue to rise at a normal pace. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=94&language=ENG

Finally, someone who gets it.

[lostoday]

Don't worry. Take a look at the Thai foreign exchange reserves. They are almost out of money so will not be buying much anymore. Unless they get a loan. China and Russia don't look like a good choice to ask for money nor does the ECB and America is still miffed.

Laos picked beer and we all know what Colorado picked. Maybe casino gambling in Pattaya? I don't see any other quick source of money to buy all the necessities.

Macau last year in baht 1,485,000,000,000

Foreign currency reserves of the BoT are at about $148bn. I think they have a lot of fire power left if needed. Not sure where you get the idea the BoT is out of ammunition in terms of foreign currency reserves.

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

I see what you are saying. Is the chart below in error?

http://www.tradingeconomics.com/thailand/foreign-exchange-reserves

Edited April 17, 2015 by lostoday

[chiang mai]

No it's not, you need to look at the total figure on the BOT website which shows USD 158 bill. currently.

[Mango Bob]

Wait a damn minute here. The self appointed PM just said that everything is rosey here in Thailand now. He said the country on track and Thailand has a bright future. So who the hell is this guy, who comes along and stay telling the truth.

[Anon999]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

Taking the same starting point of July 2014 the exchange rates as of today of the baht against the US$ it is unchanged while the GBP is down 12.6% and the Euro is down 21.3%. That does not make it particularly easy to weaken the baht with anywhere near even results. If the BOT are watching the $/baht exchange rate as their main guide then the US$ needs a to weaken by a significant amount. It would therefore appear the US$ is the main cause of everyone else having to suffer.However, the euro is affecting the GBP, causing it to weaken and that is unlikely to change in the foreseeable future.

[chiang mai]

Less than a year ago, Christine Lagard of the IMF declared that the UK was in financial dire straights, three months later she published a grovelling apology for being wrong. So, I wouldn't get too excited about one mans views on the Thai economy, even if it does suit your "anti-dictator" or "the baht will fall to 44" arguments.

[Pheat123]

The reason you now only get 24 Baht to the AUS $ has nothing to do with the strength of the Baht

The problem is the weakness of the Australian economy and this is only going to get worse

This time next year you could easily be looking at 20/21 Baht to the AUS $ without a doubt

AUS has gone to the dogs

The reason is that the AUS $ has lost alot of value against the US$ which has been strong against "ALL" currencies.

So long as the Thai Baht is pegged to the US$ it will strenghten against all other currencies..

The Baht is not pegged to the US$

As already stated Australia's Economy is failing

Check back in a few months

You will be lucky to get 20/21 Baht

[micmichd]

Tourism depends on exchange rates, yes it's true.

Unfortunately, some kinds of people that never worked in their life and live on welfare only come to Thailand as tourists, too. They are not really welcome in Europe, so they send them to Pattaya or other places before they make trouble. I am not willing to pay for the export of Farang trash to Thailand anymore.

Take away their passports, or send them to collect landmines in the "Third World" if they need adventures so urgently.

[Sirbergan]

Don't worry. Take a look at the Thai foreign exchange reserves. They are almost out of money so will not be buying much anymore. Unless they get a loan. China and Russia don't look like a good choice to ask for money nor does the ECB and America is still miffed.

Laos picked beer and we all know what Colorado picked. Maybe casino gambling in Pattaya? I don't see any other quick source of money to buy all the necessities.

Macau last year in baht 1,485,000,000,000

Foreign currency reserves of the BoT are at about $148bn. I think they have a lot of fire power left if needed. Not sure where you get the idea the BoT is out of ammunition in terms of foreign currency reserves.

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

I see what you are saying. Is the chart below in error?

http://www.tradingeconomics.com/thailand/foreign-exchange-reserves

Look closer – the chart is in USD million, and April shows approx. $156bn. Don't let the size of the bar fool you, look at the numbers instead.

Edited April 17, 2015 by Sirbergan

[lostoday]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

Taking the same starting point of July 2014 the exchange rates as of today of the baht against the US$ it is unchanged while the GBP is down 12.6% and the Euro is down 21.3%. That does not make it particularly easy to weaken the baht with anywhere near even results. If the BOT are watching the $/baht exchange rate as their main guide then the US$ needs a to weaken by a significant amount. It would therefore appear the US$ is the main cause of everyone else having to suffer.However, the euro is affecting the GBP, causing it to weaken and that is unlikely to change in the foreseeable future.

The Thai baht is valued against the USD because the bills are paid in USD. It is like an international currency of trade and has been since that status was lost by the British pound in the 1950's or around there.

If you an Italian and want to buy a product from Thailand you are quoted the price in USD and pay the bills in USD. USD is the world's reserve currency.

Thailand does not care a fig about the USD. It is only a way of writing how much the baht is worth relative to other currencies, goods and services.

You can get more information by googling, "reserve currency."

Edited April 17, 2015 by lostoday

[issanaus]

Don't worry. Take a look at the Thai foreign exchange reserves. They are almost out of money so will not be buying much anymore. Unless they get a loan. China and Russia don't look like a good choice to ask for money nor does the ECB and America is still miffed.

Laos picked beer and we all know what Colorado picked. Maybe casino gambling in Pattaya? I don't see any other quick source of money to buy all the necessities.

Macau last year in baht 1,485,000,000,000

Foreign currency reserves of the BoT are at about $148bn. I think they have a lot of fire power left if needed. Not sure where you get the idea the BoT is out of ammunition in terms of foreign currency reserves.

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

I see what you are saying. Is the chart below in error?

http://www.tradingeconomics.com/thailand/foreign-exchange-reserves

Look closer – the chart is in USD million, and April shows approx. $156bn. Don't let the size of the bar fool you, look at the numbers instead.

Its not only the numbers - it is also being expressed in an appreciating currency - so unless all the reserves were being held in US$ the value of the reserves in US$ would decline

[Robert24]

It has not been pegged to the US dollar since 1997 so you are off target on that one.

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

There is No peg to a basket of currencies or any single currency.