Baht unlikely to slide below 35/$

[pokerface1]

The Aussie continued it's downward trend against the Baht however I expect a reversal from 25.2 up to 26.3 in the short term

The RBA decided to hold interest rates that their current level of 2% to the surprise of many the AUD went off like a rocket. Last weeks earlier chart and prediction seems to be working out quite well with profits locked in and more to come.

[Time Traveller]

You guys really left me laughing at your comments.....it's like you're living in a parallel universe or something.

Anyway, not sure how they do things on Klingon - I guess by brutal force? - but here on Earth, only freely traded currencies will ever get to have "reserve currency" status....there is no way in 100 years the Chinese Communist party will ever forgo their iron grip control of their currency. So there will be ZERO chance that the RMB will become a reserve currency. And what's the point anyway, it's basically fixed to the Dollar. They can't unfix it either because their exporters won't be able to cope with fluctuating exchange rates. Also, China facing a growth slowdown will never allow it's currency to appreciate. So appreciation is more far fetched thed than a devaluation.

Naam, just stick to being the "muscle" and leave the thinking to the humans

i suggest you look for your reading glasses and then find out that i absolutely agree with your "zero chance to become a reserve currency"

wrong is your statement "...will never allow to appreciate" because CNY was allowed to appreciate. reading glasses are not required to read this chart which clearly shows a 24.90% appreciation vs. USD without the "fix" you claim to exist.

you should also inform yourself that SDR currencies are not reserve currencies.

next intelligent eggsburt remark please

USD CNY.jpg

My comment was a forward the looking statement.....

the chart you show is the appreciation of the RMB from 2006 to 2014.....

ie the time the Fed were cutting interest rates and engaging in QE. So leading to carry trade inflows into China where there were higher rates of return. If the Chinese central bank did not let the RMB strengthen they would have needed to print RMB against the inflows in order to maintain the fixed rate which would have added to the inflation pressure that China experienced in that period.

Coincidentally as you can see in your chart since the Fed stopped QE in 2014 and has stopped lower rates, the RMB has stopped it's tendency to appreciate. Not only that but Chinese FX reserves have actually been falling over the last year, despite their trade surpluses.

As long as

1. Chinese exporters are under pressure, AND

2. Chinese authorities continue engaging in QE policies to prop up their stock market, AND

3. Chinese capital outflows continue, AND

4. US remains in rate hiking mode

then China is more likely to devalue the RMB than they are to fix it higher.

And News just released : the IMF have delayed any decision on SDR inclusion for RMB until sep 2016. (They obviously know the RMB is not all it seems.)

So Naam, you can continue to bilindly beleive whatever the Chinese authorities say and think that they are going to let the RMB appreciate if you want too. But that would be a mistake

Edited August 5, 2015 by Time Traveller

[sandyf]

And News just released : the IMF have delayed any decision on SDR inclusion for RMB until sep 2016. (They obviously know the RMB is not all it seems.)

The staff report appears to pave the way for a compromise by proposing to extend the current SDR basket only until September 2016, rather than the next mandatory review in 2020. But the IMF noted that its proposal “does not prejudge the timing and outcome of the review”.

[sandyf]

From a press release by Ms Lagarde on 29th July 2015.

And will this stock market event of recent times, earlier this month, will it affect the IMF's review of the renminbi's inclusion in the Special Drawing Right currency, the SDR?

MS. LAGARDE: Hello, Yujuan Jiang. That’s quite a question I have to say. Okay, let me backtrack a little bit. First of all I think there had been a lot of noise and a lot of coverage of significant market variations, but I think we need to keep in mind a bit of a medium-term approach.

And if we look at the Chinese market, particularly the Shanghai market, we are still up -- they are still up more than 80 percent relative to a year ago.

So it's a market that has gone up extraordinary, and which is through a down mechanism at the moment, which is also very rapid, but we are still more than 80 percent from last year. That's point number one.

Point number two, we have concluded our China Article IV, and that was actually reviewed a couple of days ago and we believe that the Chinese economy is resilient and, you know, strong enough to withstand that kind of significant variation in the markets.

I think the third point is that it's not a very, sort of, well established longstanding markets that has been around for decades and decades, as has been the case in either the United States or some of the European Union countries.

It's a relatively young market and there is an element of a learning curve, both by the market players, by those who invest, by those who raise capital and of course by the authorities as well.

And no one should be surprised by the fact that they want to maintain an orderly movement, and try to avoid disorderly functioning of those markets. That's after all, the duties of such authorities.

And the fact that they want to maintain a level of liquidity as well, that is commensurate with an orderly process, is also quite good.

Now, is that going to impact significantly? I think on the economy as a whole, I've mentioned the point that we believe that the Chinese economy is resilient. Is that going to impact our assessment of the Special Drawing Right basket? I don’t think so.

We have to be mindful, we have to be vigilant, and we always are, but equally we cognizant of the very significant reforms that the Chinese authorities are implementing.

I mean, a few days ago implementing, I mean a few days ago and it went quite unnoticed. In mid-July the Chinese authorities moved forward with significant reforms of their financial markets.

And we are very confident by their determination to deliver on the reforms, which will be conducive one day when the time comes once all the signals are checked positively to the renminbi included in the Special Drawing Right basket. So we are doing the work. We will continue to do the work.

And I don’t think that we will be derailed by some market variations that we’ve seen recently.

[sandyf]

At the end of the day, who has the biggest stick.

"European powers such as Germany, France and the UK have expressed support for adding the renminbi this year, but the US, which holds the largest voting share of any member, has expressed reservations."

[Naam]

Time Traveller

So Naam, you can continue to bilindly beleive whatever the Chinese authorities say and think that they are going to let the RMB appreciate if you want too. But that would be a mistake

-i don't believe in anything what the Chinese are saying,

-neither do i make forecasts as far as CNY exchange rate is concerned,

-what i did was stating facts and delivering evidence that your statement

"...will never allow to appreciate"

is absolutely wrong. all bla-bla from your side and personal attacks can't

hide that you posted bullshit assumptions drawn out of thin air.

talking about muscle and brains?

[sandyf]

From the horses mouth.

METHOD OF SDR VALUATION—INITIAL CONSIDERATIONS

5. Under the current framework, since China continues to meet the export criterion, a key focus of the review will be the determination on whether the RMB is a freely usable currency. If the RMB were determined to be a freely usable currency, it would play a more central role in the Fund’s financial operations going forward, and it would qualify for inclusion in the SDR basket. As background, the paper describes the broad principles that have guided past SDR valuation reviews; outlines the legal framework and interpretation of the freely usable concept; updates the Board-endorsed freely usable indicators; discusses potential new indicators and complementary data sources; and considers potential operational issues that would arise if the RMB was included in the SDR basket. The paper also proposes extending the current valuation basket until September 30, 2016.

[Naam]

it seems that the IMF is considering the inclusion of the Chineses currency (internationally known by the currency code CNY) in the SDR basket even though there is no free usage, neither presently nor (most probably) in the near future.

[topt]

it seems that the IMF is considering the inclusion of the Chineses currency (internationally known by the currency code CNY) in the SDR basket even though there is no free usage, neither presently nor (most probably) in the near future.

This from a FT news mailer yesterday -

IMF's renminbi doubts, Iron Maiden airlines and the fountain of youth

China has made progress on financial reform but the renminbi still lags behind rivals on key metrics that determine whether the fund will formally endorse the redback as a reserve currency , according to an IMF report.

The fund's executive board will make a final decision on the renminbi late this year as part of its regular five-yearly review of the currency composition of its special drawing rights, a global reserve asset comprising the dollar, euro, pound and yen. "Across a range of indicators, the renminbi is now exhibiting a significant degree of international use and trading. At the same time, the four freely usable currencies (already in the SDR) generally rank ahead of the renminbi," the IMF report said.

Eswar Prasad, former IMF country head for China, said the report signalled "that the decision about the renminbi's inclusion in the basket hinges on financial market development, further opening of the capital account, and greater exchange rate flexibility". In particular, it calls on China to increase foreign access to its onshore stock and bond markets, especially government bonds. (FT)

[2fishin2]

This pretty much sums it all up. Good review

http://www.bloombergview.com/articles/2015-08-04/thailand-s-generals-don-t-have-an-economic-plan

[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.

But not an entirely unreasonable thing to do at a time when interest rates are at historical lows.

Aha yes... But what goes DOWN will sooner or later go up and moving these debts means they borrow more at LOW interest because they are not showing TRUE debt

If I ran a business this way I would be placed in gaol for fraud

[Naam]

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.

But not an entirely unreasonable thing to do at a time when interest rates are at historical lows.

Aha yes... But what goes DOWN will sooner or later go up and moving these debts means they borrow more at LOW interest because they are not showing TRUE debt

If I ran a business this way I would be placed in gaol for fraud

typical negative assumptions of a frustrated Farang without any proof

[lostoday]

But not an entirely unreasonable thing to do at a time when interest rates are at historical lows.

Aha yes... But what goes DOWN will sooner or later go up and moving these debts means they borrow more at LOW interest because they are not showing TRUE debt

If I ran a business this way I would be placed in gaol for fraud

That is nonsense as the American Indians holding sea shells for currency now realize as do those folks who have Confederate Dollars under the mattress. The British Empire went down and never came up as did the Roman Empire.

So no. If Thailand is mismanaged the value of the baht will never come up. Still holding on to those ZWD's?

[huawei]

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.

But not an entirely unreasonable thing to do at a time when interest rates are at historical lows.

Aha yes... But what goes DOWN will sooner or later go up and moving these debts means they borrow more at LOW interest because they are not showing TRUE debt

If I ran a business this way I would be placed in gaol for fraud

Off balance sheet financing..

[stament]

Off topic slightly but relevant to discussion.

If as expected the FED raised interest rates at Septembers meeting, how much do you think they would raise it by and what would be the impact on the USD/THB rate if for arguments sake pre meeting it was 35.00?

I expect some of you experts out there probably already have a rough idea, and I wonder if you would mind sharing with us mere mortals ;-)

Thanks

[watcharacters]

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?

Maybe it's best to bring gold here and sell it..

[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?

Maybe it's best to bring gold here and sell it..

maybe you should read an explanation why there is no difference between Thai and world market prices?

http://www.thaivisa.com/forum/topic/843156-baht-unlikely-to-slide-below-35/page-3#entry9661269

[professor21]

is there a good textbook on currency trading? I'm curious though wouldn't the volatility of the market make it difficult to make a profit?

[watcharacters]

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?

Maybe it's best to bring gold here and sell it..

maybe you should read an explanation why there is no difference between Thai and world market prices?

http://www.thaivisa.com/forum/topic/843156-baht-unlikely-to-slide-below-35/page-3#entry9661269

I'll pass. I merely pointed out the obvious which i gather you missed. I am not now and have never been a gold bug and only marvel at those who continue to be obsessed with the gold colored natural material.

[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?

Maybe it's best to bring gold here and sell it..

maybe you should read an explanation why there is no difference between Thai and world market prices?

http://www.thaivisa.com/forum/topic/843156-baht-unlikely-to-slide-below-35/page-3#entry9661269

I'll pass. I merely pointed out the obvious which i gather you missed. I am not now and have never been a gold bug and only marvel at those who continue to be obsessed with the gold colored natural material.

unfortunately your posting shows clearly that you missed the obvious

[Time Traveller]

Time Traveller

So Naam, you can continue to bilindly beleive whatever the Chinese authorities say and think that they are going to let the RMB appreciate if you want too. But that would be a mistake

-i don't believe in anything what the Chinese are saying,

-neither do i make forecasts as far as CNY exchange rate is concerned,

-what i did was stating facts and delivering evidence that your statement

"...will never allow to appreciate"

is absolutely wrong. all bla-bla from your side and personal attacks can't

hide that you posted bullshit assumptions drawn out of thin air.

talking about muscle and brains?

http://www.bloomberg.com/news/articles/2015-08-08/china-s-exports-drop-as-external-demand-fails-to-offer-relief

Today's Chinese official figures for July stated their Exports have fallen 8.3% in $ terms from a year ago.......What China did 5 or 8 years ago is little consolation for their exporters right now.

So let me repeat: China will never allow the Yuan to appreciate in such environment. A devaluation is the most likely path for the RMB.

I realize Klingons can never admit defeat, so I hope your investment decisions don't resemble your Klingon death wish approach to life.

Edited August 8, 2015 by Time Traveller

[Naam]

Time Traveller

So Naam, you can continue to bilindly beleive whatever the Chinese authorities say and think that they are going to let the RMB appreciate if you want too. But that would be a mistake

-i don't believe in anything what the Chinese are saying,

-neither do i make forecasts as far as CNY exchange rate is concerned,

-what i did was stating facts and delivering evidence that your statement

"...will never allow to appreciate"

is absolutely wrong. all bla-bla from your side and personal attacks can't

hide that you posted bullshit assumptions drawn out of thin air.

talking about muscle and brains?

http://www.bloomberg.com/news/articles/2015-08-08/china-s-exports-drop-as-external-demand-fails-to-offer-relief

Today's Chinese official figures for July stated their Exports have fallen 8.3% in $ terms from a year ago.......What China did 5 or 8 years ago is little consolation for their exporters right now.

So let me repeat: China will never allow the Yuan to appreciate in such environment. A devaluation is the most likely path for the RMB.

I realize Klingons can never admit defeat, so I hope your investment decisions don't resemble your Klingon death wish approach to life.

-sidestepping to divert from facts does not work with me.

-fact: China did not something "5 or 8 years ago"! the chart i posted shows clearly an appreciation of CNY vs. USD continously over a period of ~10 years.

not to forget that CNY also appreciated this year vs. virtually all Asian currencies as well as AUD, NZD and a bunch of more than a dozen other currencies of countries China is exporting to.

do these facts look like "defeat"?

to refresh your memory:

[professor21]

I read that Buffet only started trading in currencies later in life, maybe it is difficult? I'm not sure if binomial modeling would be a good approach. but it does seem like gambling to try to predict short term fluctuations in currency pairs

[Time Traveller]

Sinking ship? Or maybe its the market anticipating an RMB devaluation?

"devaluation"... is this a joke?

Big question, The US have claimed for years that the Yuan is undervalued,any chance of them being wrong.

Quite right. My comment was rhetorical. An acceptable and fair level would on the surface rule out a movement in either direction. However I think they are odds on to be included in the SDR which would strengthen the Yuan quite significantly.

As you pointed out devaluation is a bit far fetched.

(www.theguardian.com/business/2015/aug/11/china-devalues-yuan-by-2-to-boost-flagging-economy)

Well it's not even 2 weeks and both of you are proven wrong.......my next predication: Chinese QE and more devaluation of the RMB.

The effect on the Baht will be similar. Further weakness, and longer term approaching 40 to the dollar or higher.

Edited August 11, 2015 by Time Traveller

[Chivas]

Tumbled another 20 Satang overnight,

Interbank dropped to 35.36 at time of Post. Personally as a retail trader I'm expecting it to hit 36.5 somewhat quicker than I earlier suggested. Clearly no Intervention any longer by Bank Of Thailand it woud seem

[lostoday]

I is still waiting for the Nation to call me cause it's going to 39 clear as I'm sitting here singing.

Edited August 11, 2015 by lostoday

[sandyf]

Big question, The US have claimed for years that the Yuan is undervalued,any chance of them being wrong.

Quite right. My comment was rhetorical. An acceptable and fair level would on the surface rule out a movement in either direction. However I think they are odds on to be included in the SDR which would strengthen the Yuan quite significantly.

As you pointed out devaluation is a bit far fetched.

(www.theguardian.com/business/2015/aug/11/china-devalues-yuan-by-2-to-boost-flagging-economy)

Well it's not even 2 weeks and both of you are proven wrong.......my next predication: Chinese QE and more devaluation of the RMB.

The effect on the Baht will be similar. Further weakness, and longer term approaching 40 to the dollar or higher.

I would be more than happy to be wrong. Got quite excited when I saw the headlines but a real disappointment.

A few months back we were buying yuan for less than 5.20, last week it was about 5.65 and today dropped to 5.60.

[stament]

It's well and truly over 35 now, how long before it hits 36?

[sandyf]

Not a straight devaluation, more of an adjustment in how they set the value. Another move towards the SDR.

"China won’t win any friends in Washington with its decision to devalue its yuan currency. But it was a long-running dollar rally that sowed the seeds of the surprise move that shocked global financial markets on Tuesday.

China has tightly managed the value of its currency by setting a daily rate for the yuan versus the dollar. Traders can push the yuan up or down 2% each day. Previously, China had often ignored the market when it set the daily rate, sometimes pushing it higher than would be the case were it taking its cues from the market.

That changed Tuesday, with the People’s Bank of China announcing it will now let the previous day’s trading session set the tone. That realignment was credited with the 1.9% drop in the yuan’s value versus the dollar Tuesday."

"The IMF is set to review the basket for the SDR this fall. It may have to decide whether to include China in the SDR basket without being sure China will follow through on setting up a more market-determined rate, analysts said.

“The toughest questions are unanswered,” said Joseph Gagnon, an expert at the Peterson Institute for International Economics.

China is allowing market forces to have a bigger role in determining the value of the yuan at an opportune time for the country, with market sentiment pushing for a weaker yuan, which will support a sluggish economy.

The key question, however, is whether China will allow its currency to trade freely when market forces put upward pressure on the yuan, acting as a brake on growth.

“Are they going to let it rise? I am somewhat skeptical,” Gagnon said.

The U.S. has been pressing China to move toward a flexible exchange rate before it is included in the SDR basket. But the U.S. on its own doesn’t have the votes to veto a decision to let China into the SDR.

[morrobay]

Time Traveller

So Naam, you can continue to bilindly beleive whatever the Chinese authorities say and think that they are going to let the RMB appreciate if you want too. But that would be a mistake

-i don't believe in anything what the Chinese are saying,

-neither do i make forecasts as far as CNY exchange rate is concerned,

-what i did was stating facts and delivering evidence that your statement

"...will never allow to appreciate"

is absolutely wrong. all bla-bla from your side and personal attacks can't

hide that you posted bullshit assumptions drawn out of thin air.

talking about muscle and brains?

Well its now obvious who the expert is on currencies is around here.

Some of ya all who might get by as a second rate economist should forget about trying to be a comedian and listen up to TT

Edited August 12, 2015 by morrobay