Baht unlikely to slide below 35/$

[Lite Beer]

Baht unlikely to slide below 35/$
ERICH PARPART
THE NATION

BANGKOK: -- ECONOMISTS believe the country's status as net creditor and the current account surplus will strengthen the baht after it had hit a six-year low to the US dollar on Thursday, however the global price of gold is expected to continue to drop due to the strengthening of the US dollar.

Usara Wilaipich, senior economist at Standard Chartered Bank, expects the baht that is currently weakening because of overseas factors and the drop in the gold price, to strengthen after the short-term psychological effect dies down due to its strong backup.

"It is like trying to kick a football up the hill; it will eventually roll down since you are kicking it up the slope without anything to provide upward momentum," she said.

Maybank Kim Eng Securities (Thailand) expects the baht to be at 34.5 by the end of the third quarter.

The baht has slid from Bt32.835 to the greenback on April 29 (the day of the second consecutive cut of the policy interest rate this year) to trade at Bt34.936 as of 4pm yesterday. The global gold price has also continued to drop to $1,084 per ounce at the same time yesterday compared with $1,160 per ounce on July 12 (the day that the value of the precious metal started to decline amid the strengthening of the US dollar).

She explained that the reason why the baht had outperformed other currencies before the consecutive cuts in the policy interest rate in March and April was because Thailand was a net creditor: The country's current lending in US dollars is around $190 billion while its foreign debts stand at around $140 billion, which means the Kingdom is a net lender of around US$50 billion.

Somchai Amornthum, executive vice president at Krung Thai Asset Management (KTAM) said the baht was unlikely to slide that much further than Bt35 to the US dollar, as the country's current account surplus is expected to continue to expand. Imports normally increased in July and August every year but oil price has dropped 50 per cent. "Although exports have continued to contract since the beginning of the year, in the overall scenario the surplus in the current account will be even bigger," he said.

"The global oil price is also expected to be in the region of $50 per barrel for quite some time due to the increase in supply and that is another support for surplus in the current account, as Thailand is a net importer of oil," he added.

Thailand currently carries a current account surplus of $2.127 billion as of May 2015.

Kamolthun Pornphaisarnvichit, director of the Gold Research Centre, said the global gold price is expected to drop by about $30 to around $1,050 per ounce during the period of expectation of an expected Fed rate hike around September this year. If the US interest rate is hiked in September, then gold is expected to trade around $1,050-$1,150 per ounce in September and October.

"The gold price in Thailand has dropped less than the global gold price because of the weakening baht. The price in Thailand has dropped by 3.2 per cent to around Bt18,000 per gold bar since the beginning of the month until now while the global gold price has dropped by 4.5 per cent in the same period of time," he said.

Source: http://www.nationmultimedia.com/business/Baht-unlikely-to-slide-below-35$-30265187.html

-- The Nation 2015-07-25

[2fishin2]

You slide down not up.

[whatawonderfulday]

Nice for it to be where it belong, same as 7/8 years ago. 43-45 US/64-66 GBP to the baht

[Toscano]

I'm happy to see the baht slide , the further the better . When I first came it was 70baht to the pound stirling , but every little counts .

[stoli]

I always believed that the gold price was set by the world market. Interesting it has gone down 3.2% in Thailand, and 4.5% everywhere else. Would this not be called "price-fixing"? Why would you buy gold here, if it is above the market in the rest of the world?

[crazykopite]

If the baht was in the region of 60 to the £ I would be happy when I first came over it was 74 to the £ and my living standard was really good over time it got as low as 43 to the £ and I did contemplate going back to the UK as my retirement income for my extension of stay was very borderline. In my humble opinion I feel that Government has propped up the baht what country in the world who is taken over by a coup and has many domestic and financial issues shows a continuos strong currency as the baht has shown I believe that before long it will hit 60 to the £ .......... ,!!

[Fullstop]

You slide down not up.

Rubbish.

[alanrchase]

I'm happy to see the baht slide , the further the better . When I first came it was 70baht to the pound stirling , but every little counts .

When I first came over it was 35 to the pound Stirling, only went up after the Asian crash.

[Naam]

I always believed that the gold price was set by the world market. Interesting it has gone down 3.2% in Thailand, and 4.5% everywhere else. Would this not be called "price-fixing"? Why would you buy gold here, if it is above the market in the rest of the world?

gold in Thailand is sold at exactly the world market price (see below) with the advantage that bid/ask (buy/sell) difference is lower in Thailand.

some people arrive at wrong assumptions, respectively calculations because they compare apples with oranges by not taking the different currencies in which gold is quoted into consideration.

example:

-the selling price of 1 Baht weight is today THB 18,200

-world market price of gold per Troy ounce USD 1,099.50

-one Troy ounce of gold is the equivalent of ~2.0438 Baht weights

-the mid exchange rate US-Dollar/Thai Baht today is 34.89

18200 : 34.89 = $521.64 x 2.0438 = $1,066.12 x 1.0363 (Thai gold purity only 96.5%) = $1,105 minus goldshop margin = $1,099.50 = difference zero!

this lesson is free of charge although i have wasted at least 5 minutes of my precious time.

Edited July 25, 2015 by Naam

[Naam]

If the baht was in the region of 60 to the £ I would be happy when I first came over it was 74 to the £ and my living standard was really good over time it got as low as 43 to the £ and I did contemplate going back to the UK as my retirement income for my extension of stay was very borderline. In my humble opinion I feel that Government has propped up the baht what country in the world who is taken over by a coup and has many domestic and financial issues shows a continuos strong currency as the baht has shown I believe that before long it will hit 60 to the £ .......... ,!!

why not 95 or 118....... before long?

[tonypace02]

As it is trading internationally this morning at 34.90 (Reuters) and paying 34.80 at Bank of Bangkok, That slide had better start braking soon, say by noon today.

[Tidybeard]

We all knock Thailand occasionally, but just think of how many governments around the "civilized" world that would kill to have a current account surplus. That is something they have right .... live within your means.

[marcusd]

If the baht was in the region of 60 to the £ I would be happy when I first came over it was 74 to the £ and my living standard was really good over time it got as low as 43 to the £ and I did contemplate going back to the UK as my retirement income for my extension of stay was very borderline. In my humble opinion I feel that Government has propped up the baht what country in the world who is taken over by a coup and has many domestic and financial issues shows a continuos strong currency as the baht has shown I believe that before long it will hit 60 to the £ .......... ,!!

I always believed that the gold price was set by the world market. Interesting it has gone down 3.2% in Thailand, and 4.5% everywhere else. Would this not be called "price-fixing"? Why would you buy gold here, if it is above the market in the rest of the world?

I'm happy to see the baht slide , the further the better . When I first came it was 70baht to the pound stirling , but every little counts .

No I am no economist because I have a brain and use my LEARNED knowledge. These guys are yup one minute and down the next on nothing more than what someone else says..

HOWEVER, you people are speaking of UK pound and this is speaking of US$$$$$$

the baht is ONLY WEAK against the US$$$ no other currency.

Now for Thailand I can only see making the baht STRONGER against the US$$$ in time is only going to finish off what expats are ledt here and what export trade they will have left in 2 years.

Toyota = 60% going to Philippines - Fortuna and Altis and Corolla, Nissan closing and moving to Hanoi.

Exports sliding as its cheaper to buy elsewhere.

Australia which too 35% of all cars made in Thailand now dropped to under 15%.

THAT MUST be hurting. The USa is not a mjor trading partner of Thaialnd so all I can assume is a strong baht is great for loan repaymnets and interest repayments.

BUT for the economy in the few years to come it will be a disaster.

Many people are leaving or seriously contemplating leaving as their home currencies are slammed.

The baht not depreciating against the REST of the world currencies will only increase the flight of foreign capital and then we will see topsy turvy.

Remember there are supposedly 1million foreigners living here. They supposedly bring in about 60,000 baht per month to qualify yet I would say many spend a lot more. If they are slammed with even higher losses then other places will become more attractive and that will be a lot of foreign reserves flying out the airports. Exports will diminish as business is usually done in US$ for trade, and Thailand will become less affordable as a destination for tourists. This is already happening. Just look around. As demand for Chinese products worldwide slide so will Chinese tourist fortunes and it flows don the line. Banks and economists forget this. I saw it in Australia and we are now suffering because we did well for at least another 2 year period after everyone else dropped.

i am relocating my business because of the bad exchange rate differential and higher expenses here. The gloss on doing business here is waning.

[marcusd]

If the baht was in the region of 60 to the £ I would be happy when I first came over it was 74 to the £ and my living standard was really good over time it got as low as 43 to the £ and I did contemplate going back to the UK as my retirement income for my extension of stay was very borderline. In my humble opinion I feel that Government has propped up the baht what country in the world who is taken over by a coup and has many domestic and financial issues shows a continuos strong currency as the baht has shown I believe that before long it will hit 60 to the £ .......... ,!!

why not 95 or 118....... before long?

Agreed a totally useless assumption based on no evidence and Alice In Wonderland fantasy

[marcusd]

We all knock Thailand occasionally, but just think of how many governments around the "civilized" world that would kill to have a current account surplus. That is something they have right .... live within your means.

You only have a SURPLUS here by moving DEBT off the books to BONDS or shift the debt to long term so it is removed from this fiscal session or make the BOND as an asset because you SELL a bond. Something like that is going on big time here in Thailand. All you have to do is read. It is just move the dots. Kiddies stuff to fool the people and make the next mob accountable.

[ehs818]

The exchange rate already exceeded the prediction and as of today, 25 July, 2015, is 34.91. BS. These stories are clearly meant to sway public and officials positions. But the rate is what the rate is.....

[PJ33]

This makes me laugh "....(name any financial market)...... is expected to .....(fill in the blank).... because of......(fill in the blank)".

The future direction of any financial market is completely unknowable. Everything someone can list as a possible reason why something "should" happen, is already known by the market and is already "priced in" resulting in the current price. There are billions of $, Baht whatever being traded by people whose business it is to trade currency markets. These are serious people. If they thought for one second that the current price was in some way "wrong" or that others had failed to consider a certain key piece of information or data, they would place their bets and rake in a fortune when they were proved right.

The current price is there as a result of all the people who have already placed their bets on the direction based on all known data / information / forecasts.

The only thing that will move markets one way or the other is if new news or data becomes available which differs significantly from what was expected. This data / information is by it's very definition "unknown", hence the future direction is also unknown.

But these economists will know: if you forecast the direction as "up" or "down", which ever they choose there is about a 50-50 chance of being correct. Then they can heap praise on their own shoulders for being so clever!!

Flip a coin, you have about as much chance of being right.

Edited July 25, 2015 by PJ33

[2fishin2]

You slide down not up.

Rubbish.

Give me an example of something that slides up

[flightofancy]

Thanks Naam for the post - a bit grumpy - but useful. I will copy and paste what you say and save it. Because I continually get confused about this Thai gold stuff.

I always believed that the gold price was set by the world market. Interesting it has gone down 3.2% in Thailand, and 4.5% everywhere else. Would this not be called "price-fixing"? Why would you buy gold here, if it is above the market in the rest of the world?

gold in Thailand is sold at exactly the world market price (see below) with the advantage that bid/ask (buy/sell) difference is lower in Thailand.

some people arrive at wrong assumptions, respectively calculations because they compare apples with oranges by not taking the different currencies in which gold is quoted into consideration.

example:

-the selling price of 1 Baht weight is today THB 18,200

-world market price of gold per Troy ounce USD 1,099.50

-one Troy ounce of gold is the equivalent of ~2.0438 Baht weights

-the mid exchange rate US-Dollar/Thai Baht today is 34.89

18200 : 34.89 = $521.64 x 2.0438 = $1,066.12 x 1.0363 (Thai gold purity only 96.5%) = $1,105 minus goldshop margin = $1,099.50 = difference zero!

this lesson is free of charge although i have wasted at least 5 minutes of my precious time.

[EddieBaBaBoBo]

THB recently losing ground against USD about 10 Satang per day. At this rate (pun intended), it should be THB35.00 per USD by next week... who knows what it will be by 3rd quarter.

[MichaelJohn]

The £ is doing well vs the Baht because the UK are talking of raising interest rates.

The Baht is weaker because of doubts over the Thai economy.

The $:B is also influenced by other factors

An interest rise in the UK will happen towards the end of this year or early next and talk of this is creating a stronger pound.

I personally believe it has a little further to go from its present 53.5 but don't hold me to it.

[soalbundy]

You slide down not up.

Sometimes i slide up

[Geordie59]

I'm happy to see the baht slide , the further the better . When I first came it was 70baht to the pound stirling , but every little counts .

When I first came over it was 35 to the pound Stirling, only went up after the Asian crash.

Exactly. Many people don't realise this or have forgotten.

It was virtually fixed at 25 to the USD which made it around 35 to the Pound.

Looking historically at other Asian currencies it should probably be around 38-39 to the USD right now.

[farang000999]

It is sad how many English teahcers and retirees have missed their calling as professional forex traders for Goldman Sachs.

[professor21]

is there someway to trade currencies and make a profit for living expenses from a no fee site like maybe xe.com? I'm not sure what the mathematical equations are that might be useful in currency predictions

[stoli]

I always believed that the gold price was set by the world market. Interesting it has gone down 3.2% in Thailand, and 4.5% everywhere else. Would this not be called "price-fixing"? Why would you buy gold here, if it is above the market in the rest of the world?

gold in Thailand is sold at exactly the world market price (see below) with the advantage that bid/ask (buy/sell) difference is lower in Thailand.

some people arrive at wrong assumptions, respectively calculations because they compare apples with oranges by not taking the different currencies in which gold is quoted into consideration.

example:

-the selling price of 1 Baht weight is today THB 18,200

-world market price of gold per Troy ounce USD 1,099.50

-one Troy ounce of gold is the equivalent of ~2.0438 Baht weights

-the mid exchange rate US-Dollar/Thai Baht today is 34.89

18200 : 34.89 = $521.64 x 2.0438 = $1,066.12 x 1.0363 (Thai gold purity only 96.5%) = $1,105 minus goldshop margin = $1,099.50 = difference zero!

this lesson is free of charge although i have wasted at least 5 minutes of my precious time.

Sorry you feel that you wasted your time. Very good explanation and lesson learned. Thanks for the response. Hope you feel better now.....

[Scouse123]

Market forces always decide the strength or weakness of a currency. The USA are now faced with the problem of expensive exports which will weigh heavily on the USD both economic and currency wise.

Thailand is in a very weak spot at the moment with declining exports, falling tourism,weak demand and a military government in disarray that is making a total hash of the economy and shows no signs of stepping down for the foreseeable future.There is also a lack of projects and investment within the country.

Through its own arrogance Thailand has severely damaged it's tourist sector believing the Chinese sector will always come to the rescue, China who is doctoring its own trade figures, the government interfering directly in its own stock market and declining growth home and abroad.

Thailand,In the eyes of investors such as Japan, credibility is damaged severely and has stretched the patience of one of its biggest investors.

I believe, unless there is a dramatic turnaround, the baht has further to slide.The Thai baht's strength previously was caused not by the strengthening economic factors of their economy but by the weakness of others,particularly the West.

The USA and UK economies are strengthening due to the improving economies of both countries with the UK being Europe's best performer in terms of growth, ( pitiful as it is ) low unemployment by comparison to its neighbors and no Euro.exposure or involvement.

Turing to Gold, some analysts are predicting $800-$900 by the end of 2016.How can you possibly make these assumptions in the very uncertain world we live in? These are the same people who fall silent for months on end with no explanation whatsoever when Gold rallies.

Gold rallies and gets strong in times of uncertainty. If Gold were to fall to these levels as quoted by the analysts, they will mothball the mines and await price recovery. Smaller mines would close and the bigger players will sit on the sidelines.Gold has been manipulated by the USA for years, based on a recent audit, China has bought less than what was thought, Well, if they did an audit on the USA, they probably have a lot less than they say!

Has the ISIS threat, Greece,Iraq, Libya, Iran or Ukraine crises all evaporated? Has the world suddenly become a lot safer? Is the world economy right back on track?

I don't believe the " other shoe " has actually dropped yet in the world's economic downturn. They always say, you can't spend your way out of a recession, With all the unparalleled QE both in the US and Europe, that's what they have tried to do and it is untested waters.

Edited July 25, 2015 by Scouse123

[farang000999]

This is just another form of gambling for you guys under the guise of investing. Stop kidding yourselves. You don't have a clue what you are talking about and there is no way that you will beat the forex market long term. Whatever news article you are interpretating has already been priced into the market.

[Kees5555]

You slide down not up.

Jeeee... when first 1 dollar buys you 34 baht.

1 week later 1 dollar buys you almost 35...

Then the baht is going down.. = sliding

Edited July 25, 2015 by Kees5555

[Farang99]

Nice for it to be where it belong, same as 7/8 years ago. 43-45 US/64-66 GBP to the baht

From your mouth to God's ear (or whoever fixes the exchange rate)