USD:THB where is it headed and why?

[spambot]

massive drop to 34.9 right now

Yup same with the GBP - Probably traders protecting end of week positions - It always seems to happen every Friday after a currency rally for the week - Not sure what / why a stop sell wouldn't protect their position, but it always makes me wonder what is happening. one of the issues is that after 7pm Fridays there are few buyers to make the market - even though the markets for Fx remain stay open till early sat morning (Thai Time).

Watch out now for very early trading Monday before the US wakes up - There is always a wild swing / bias at around 5am (Thai time when Australia opens first for FX), but then this bias corrects when the currency paring of the THB wakes for business.

[CMBob]

........just as soon as all the Thai's with large cash reserves held overseas, do the loyal thing and return their funds to Thailand to help the Thai economy...

That's actually pretty funny. Thai's who are lucky and smart enough to have cash reserves overseas have it there for various reasons and none of them have to do with patriotism or wanting to lose money. With the Thai baht steadily sinking under the weight of a lousy economy and lousier political mess, pigs will sooner fly than anybody with half a brain will invest anywhere in Thailand.

[Jonmarleesco]

'... the THB like many other currencies is losing value.' You think? Couldn't be that it's heading towards a more realistic level than has been seen for some years?

[Jonmarleesco]

........just as soon as all the Thai's with large cash reserves held overseas, do the loyal thing and return their funds to Thailand to help the Thai economy...

That's actually pretty funny. Thai's who are lucky and smart enough to have cash reserves overseas have it there for various reasons and none of them have to do with patriotism or wanting to lose money. With the Thai baht steadily sinking under the weight of a lousy economy and lousier political mess, pigs will sooner fly than anybody with half a brain will invest anywhere in Thailand.

Interesting observation, if you think of the various messes/crises Thailand has witnessed over the last several years, with none having the impact on the baht that they would have had on any other country's currency.

[ericthai]

The stronger dollar should help to increase exports to the states, a very big market. Toyota has moved all car production out of Thailand to Vietnam. That really put a dent into the Thai export numbers. Now they import them.

I agree with a weaker baht Thailand's exports should increase.

However were are your getting your information? Last I read Toyota is actually thinking of closing the only plant they have in Vietnam. With AEAN agreements coming into place which would drop import taxes on cars into Vietnam to 0% by 2018 there is no reason to open any additional plants and Toyota is uncertain of the plant they do have in Vietnam. Car sales are increasing in Vietnam but still low

Thailand is the top manufacture of automobiles in SouthEast Asia and is list as the 12th biggest manufacture in the world. Thailand has the complete info-structure in place for automobile manufacturing, from logistics to subcontractors manufacturing and supplying anything from tires, bearings, batteries to car mats.Thailand produces almost 2 million automobiles a year.

Vietnam is having a big industrial boom, but I don't see Toyota moving their plants from Thailand to Vietnam. It takes allot of money and time to move then training. The info-structure is not in place in Vietnam to support the auto industry, they have no experienced workers to work in the factories. So again I don't see Toyota going to Vietnam, if they were to move it would be most likely to Indonesia.

Sorry to get off-topic.

[stament]

$ will go stronger vs Thai baht. Main reason: divergent monetary policy. BoT likely to further cut interest rates, FED likely to start raising interest rates.

....and then what happens, four, eight, twelve, twenty four months hence, that's the question really being asked?

The same answer applies to all of the time frame referenced. The USD will continue to get stronger against the THB for the next 24 months at a minimum.If you trade forex and don't mind the huge spread and can hold on through pullbacks buy USD/THB. In fact, buy USD/Anything (except possibly GBP).

Are you expecting the pound to strengthen against the dollar then? If so why?

[spaceman79]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

[chiang mai]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

The base rate in NZ is 3%`hence NZ Dollars attract a higher rate of return, that's all it says, it doesn't say anything about expectations.

[carib102]

massive drop to 34.9 right now

The drop came because the U.S. Employment Cost Index came in much weaker than expected. This shows weak wage growth in the U.S., one of the metrics that the Fed is watching to help determine the timing of rate hikes. The weak wage growth led to a perception that there is decreased likelihood for a September rate hike. You'll notice that the pair pretty much recovered 75 minutes later when the Chicago PMI number was much stronger than expected, indicating increasing inflation, another metric the Fed is watching. The increased inflation data offset the weak wage growth and the USD recovered a good part of the early losses. Looks like we finished the day with the USD/THB above 35 at 35.13 and it's a good bet that 35 will continue to hold as a support level for the pair now.

[retarius]

My over generalized Answer:

When a central bank increases its central rate the value of its currency goes up (and vice versa)

Since Fed Chair Janet Yellen is on record as saying Fed rates will increase this year (possibility at Sept Fed meeting or November) from the current 0% rate the FX trade is now reflecting this in the anticipated of the hike in September.

The reason why specifically EM's like Thailand suffer is that currency will normally flow away from most EM currencies and into the developed markets that is hiking their central bank rate - In this case it is the USD.

In short it is a simple supply and demand effect on the THB - There are more sellers than buying for THB and more buyers than sellers for the USD (within the USD/THB currency pair)

for more detail watch this video since it describes the effect on equities and Bonds as well as FX - On EM's

http://video.cnbc.com/gallery/?video=3000401850

On top of this exports are down....nations exporting a lot tend to have strong currencies again because of supply and demand.

[Naam]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

The base rate in NZ is 3%`hence NZ Dollars attract a higher rate of return, that's all it says, it doesn't say anything about expectations.

worthwhile to mention that inspite of higher interest rates (across the whole curve) NZD lost 18.9% vs. Thai Baht during the last 13 months slightly more than the 16.7% loss of AUD/THB.

[Naam]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

this "chart" and the interest rates mentioned must be ages old. please let us know what "foreign bank".

[Naam]

........just as soon as all the Thai's with large cash reserves held overseas, do the loyal thing and return their funds to Thailand to help the Thai economy...

That's actually pretty funny. Thai's who are lucky and smart enough to have cash reserves overseas have it there for various reasons and none of them have to do with patriotism or wanting to lose money. With the Thai baht steadily sinking under the weight of a lousy economy and lousier political mess, pigs will sooner fly than anybody with half a brain will invest anywhere in Thailand.

it's not only the shaky exchange rate but if Thais move money or yield producing assets to Thailand they are liable to pay income tax. keeping their money abroad means any proceeds are tax free.

[spaceman79]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

this "chart" and the interest rates mentioned must be ages old. please let us know what "foreign bank".

this is very current. its from the standard chartered bank website. you can check it yourself.

[Naam]

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

this "chart" and the interest rates mentioned must be ages old. please let us know what "foreign bank".

this is very current. its from the standard chartered bank website. you can check it yourself.

i checked and i am disappointed:

https://www.sc.com/th/interest-fees/_documents/e_int_20150703_2.1.pdf

[spaceman79]

check this page... https://www.sc.com/th/en/promotion/save/fcd/ in fact i visited their sathorn branch and spoke to the manager about it.. the minimum deposit is 10000 usd or similar in value for the currencies offered.

attached is a foreign currency deposit rate chart offered in thailand by a foreign bank. pls note that for the nzd time deposits have a higher rate of return then the same deposit rates offered for thai baht. do this rates say anything abt banks' expectations about the fx movements?

this "chart" and the interest rates mentioned must be ages old. please let us know what "foreign bank".

this is very current. its from the standard chartered bank website. you can check it yourself.

i checked and i am disappointed:

https://www.sc.com/th/interest-fees/_documents/e_int_20150703_2.1.pdf

[Naam]

check this page... https://www.sc.com/th/en/promotion/save/fcd/ in fact i visited their sathorn branch and spoke to the manager about it.. the minimum deposit is 10000 usd or similar in value for the currencies offered.

After TD account reach its maturity and roll over, normal interest per bank announce will apply.

[OnMyWay2]

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

Edited August 2, 2015 by OnMyWay2

[Linzz]

My over generalized Answer:

When a central bank increases its central rate the value of its currency goes up (and vice versa)

Since Fed Chair Janet Yellen is on record as saying Fed rates will increase this year (possibility at Sept Fed meeting or November) from the current 0% rate the FX trade is now reflecting this in the anticipated of the hike in September.

The reason why specifically EM's like Thailand suffer is that currency will normally flow away from most EM currencies and into the developed markets that is hiking their central bank rate - In this case it is the USD.

In short it is a simple supply and demand effect on the THB - There are more sellers than buying for THB and more buyers than sellers for the USD (within the USD/THB currency pair)

for more detail watch this video since it describes the effect on equities and Bonds as well as FX - On EM's

http://video.cnbc.com/gallery/?video=3000401850

I see this as a game of pea and thimble, or poker bluffing. Every time the Fed chair opens her mouth and hints at an interest rate rise " in the near future " , the US dollar as a reserve currency strengthens against most other currencies. I'll believe it when I see it happen. There is no evidence the American economy is so healthy it can sustain an interest rate rise without going into recession.

Consider the following: The USA has a debt of 17 trillion dollars, or 40 - 50 trillion if you want to count in unfunded liabilities of pensions and Medicare. Defence expenditure is ruinously expensive. Shale fracking is a Red Queen's race with the Saudis, and the Saudis will win because the depletion rates on their wells are a fraction of the capital requirements of new shale wells.

So to me, it's all smoke and mirrors, which is why I'm buying gold.

Gold has not bottomed yet

[spaceman79]

so if you hold for promotion period and dont continue you think the special rate wont apply for the period of the term deposit?

check this page... https://www.sc.com/th/en/promotion/save/fcd/ in fact i visited their sathorn branch and spoke to the manager about it.. the minimum deposit is 10000 usd or similar in value for the currencies offered.

After TD account reach its maturity and roll over, normal interest per bank announce will apply.

[spaceman79]

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

[OnMyWay2]

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

What happens after 36? Well

It's gone to 35 faster than I expected so it could overshoot on the upside before returning to the "stable at 35" level.

I just don't feel comfortable that the dollar is anywhere near stable with interest rates at zero.

I'm not in the thb so no steps needed other than not transferring large sums of cash.

If you're already in thb just spend the money in Thailand where you can still get the same amount of stuff for your baht.

[spaceman79]

heres something interest... last night i bought something from a thai website using my home country credit card. today i got an update of the transaction via email from my home country bank. the exchange rate charged on my credit card in usd is exactly 36 thb!! i thought using credit cards was always more expensive. but i had a different experience.

interestingly right before my current trip to thailand i did a little tri currency arbitrage when buying foreign currency. i bought the saudi riyal( i am not from saudi arabia) physically and encashed to thb the following day. this was on 9th july and day after 10 th july usd. now the usd thb conversion rate is the same rate that i got on that day. off course had i held onto my saudi riyals longer, i would have got more purchase power in todays terms as in thb terms they would be worth more and seems like things are not yet going up in price in thb. on 10th july 15 super rich gave 8.95 baht for every saudi riyal. today its 9.2 thb. means a further devaluation of 2.5% of thb against saudiriyal since 10th july.

If someone is targeting a real estate purchase in thailand ( a condo in cash) in the near future, should one wait? thats also something i am interested to know. my normal sense tells me that with thai interest rates being low, condos will get cheaper once the interest rate is raised vis a vis mortgage lending rates. or the other way if the fed hikes interest rates sometime from now within dec 15, i think further outflow from thb is likely. so perhaps i am better off waiting.

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

What happens after 36? Well

It's gone to 35 faster than I expected so it could overshoot on the upside before returning to the "stable at 35" level.

I just don't feel comfortable that the dollar is anywhere near stable with interest rates at zero.

I'm not in the thb so no steps needed other than not transferring large sums of cash.

If you're already in thb just spend the money in Thailand where you can still get the same amount of stuff for your baht.

Edited August 3, 2015 by spaceman79

[spaceman79]

China's currency devaluation: Thailand's economic nightmare?

Pornpimol Kanchanalak

Special to The Nation August 13, 2015 1:00 am

Yesterday, the People's Bank of China cut the value of its currency for the second day in a row. Analysts now estimate that the yuan has depreciated more than 3 per cent against the US dollar, having already dropped 1.8 per cent when China "threw a curveball" the day before. Most media called it a surprise move, but observant economists had seen it coming for quite some time.

Markets around the world are reacting with increasing anxiety. Yesterday, the Dow Jones Index dropped 212 points, NYEX was down 4 per cent, the S&P 500 tumbled 20 points, European stocks fell 1.6 per cent, while the price of oil and copper dropped 4 and 3 per cent respectively

Basically, what China is doing is exporting deflation. That means shrinking demand and diminishing purchasing power across the globe. In recent years, China's GDP has grown at an anaemic rate of less than 7 per cent after years of double-digit boom. Beijing has responded with all the traditional antidotes against deflation, including monetary and fiscal stimulus policies and interest rate cuts. When those measures failed to stop the slump, the devaluation of its currency was the unavoidable remedy of last resort.

Investors are now concerned that China's economy is even weaker than anyone could have guessed. As such China may start pulling back on purchases of goods and services from other countries. In the US, whose currency is strengthening in reverse proportion to the weakening yuan, manufacturers fear for their already weakening export prospects, and the stronger dollar will make the competition even tougher.

Bank of America's preliminary analysis pointed out another significant ramification of the yuan depreciation besides the worldwide deflationary pressure - a foreign exchange currency war. Traders are betting heavily that the yuan will continue to fall, and the risk premium is being built into the yuan spot market. Central banks in several countries might follow China's lead and devalue their currency too. Already, anger is being expressed in Washington, where lawmakers are accusing China of playing currency-manipulation tricks on them.

With China's growing stature as a world economic powerhouse, the yuan is now part of the global economy's fabric. In the global village in which we all live, when China sneezes, the rest of the world catches a cold. For a small developing economy like Thailand, the cold could turn into pneumonia and cause havoc.

Two years after China devalued its currency in 1994-5, Thailand suffered its nightmarish Tom Yum Kung financial crisis. In the last days of the 1997 crisis, our exports experienced zero growth despite signs to the contrary which were the result of VAT fraud. Our current account deficit at that time brought down the exchange rate regime that had been rendered unsustainable.

Are we about to suffer a repeat of the economic meltdown in 1997? Not quite, but the outlook is gloomy.

Our exports are in the red, and the colour is turning crimson. With the world experiencing deflation that China is exporting, we will see further shrinkage of demand and purchasing power from the markets for Thai products. The recovering EU markets will turn to our Asean neighbour, Vietnam, which has just concluded a free trade agreement with the Europeans. We have no new markets and no niche products to give our exports a boost.

Tourism, our No 1 foreign exchange earner, will likely suffer due to shrinking purchasing power and disposable income among the Chinese, who constitute the largest portion of our visitors.

The baht will likely fall more steeply than expected, for several reasons.

The Bank of Thailand (BOT), in its attempt to keep the baht low without lowering the interest rate, has erroneously embarked on further financial liberalisation. Today, a Thai can send out US$5 million per day as opposed to $500,000. Well-to-do Thais are now allowed to remit $50 million per year to purchase property overseas, as opposed to $5 million. With the uncertainties around the baht's future value amid the yuan's devaluation, money will flow more freely out of Thailand, bringing added pressure to devalue the Thai currency even further.

The BOT has also allowed a higher quota for short-selling the baht - up from Bt300 million to Bt600 million. This will add to the volatility and helps neither the baht nor our financial health, especially at a time when we need more stability.

Thai exports will become increasingly less competitive in the world markets under our current exchange rate regime. Further contraction in export revenues will hit our balance sheet and hence our foreign exchange rate.

And for a double (or triple) jeopardy, Thailand will find that ignoring the Trans-Pacific Partnership (TPP) trade deal negotiations will come back to haunt us. Mexico has called for a TPP "rule of origins" that would prohibit TPP members from sourcing products from non-TPP countries. Japan, a major player in the TPP, buys lots of automobile parts from Thailand. If the TPP's rule of origins kicks in, Japan will have to look elsewhere for automobile parts suppliers and shift its investments in this sector away from Thailand.

Analysts at HSBC estimate that there is about 1 trillion yuan waiting to be sent overseas by wealthy Chinese and Chinese corporations, and it's taking place every single day. The US will be an important destination for the drain. That enormous outflow of capital will add to the deflationary trend of the Chinese currency, and hence of the baht.

While our high-net-worth individuals and large corporations will always be able to weather the financial maelstrom, it is our farmers, small and medium-sized enterprises and middle class that will be hit in the pocket. They will find their purchasing power dissipating by the day. In direct proportion, the majority of the population will become more vulnerable and disenchanted.

And the worst part of it all? There is nothing we can do to avoid the suffering. The eleventh hour has passed and we have missed the rescue trains.

http://www.nationmultimedia.com/opinion/Chinas-currency-devaluation-Thailands-economic-nig-30266475.html

[stament]

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

Stating the obvious I know but 36 is 1 baht better than 35 if converting from USD to THB and 1 baht worse off if converting the other way. I certainly prefer 36 to 35 but would prefer 36+ even more!

Sorry couldn't resist, must be my English sarcasm coming out or the accountant in me!

On a more serious note I too am in the same position as you and am wondering should I wait or cash in and change to baht. Guaranteed that whatever I do or don't do the rate will change against me, because as always my timing is awful and Murphys Law always seems to get me!

[8OA8]

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

Stating the obvious I know but 36 is 1 baht better than 35 if converting from USD to THB and 1 baht worse off if converting the other way. I certainly prefer 36 to 35 but would prefer 36+ even more!

Sorry couldn't resist, must be my English sarcasm coming out or the accountant in me!

On a more serious note I too am in the same position as you and am wondering should I wait or cash in and change to baht. Guaranteed that whatever I do or don't do the rate will change against me, because as always my timing is awful and Murphys Law always seems to get me!

Sir, Surely the English sarcasm would be if you had been leaning towards the Stg £, rather than the US $

[stament]

Well I'm an Englishman in New York to quote Gordon Sumner with USD in my back pocket!

[hhgz]

"So to me, it's all smoke and mirrors, which is why I'm buying gold."

Be sure that your ingots are not just gold-plated tungsten ; )

[chiang mai]

i think 35 is good as 36.. my question is if and when it does break 36 what follows next? how long ago were you expecting 36? may i ask what financial steps you took to take advantage/protect your self from the thb devaluation?

I don't pretend to know exactly where it will end up, but last time the US economy was firing all cylinders from 2002 - 2005 the dollar was stable around 41. From a macro perspective this is where things are headed.

Did some more digging and actually the only time the dollar has been below 35 is with the Fed funds rate at 0. So this can hardly be considered a normal equilibrium even though it's been like that for a while now.

That's where I came up with my conservative 36 price target a while back.

On a more serious note I too am in the same position as you and am wondering should I wait or cash in and change to baht. Guaranteed that whatever I do or don't do the rate will change against me, because as always my timing is awful and Murphys Law always seems to get me!

The following suggests it's near the bottom and I very much agree:

http://www.bloomberg.com/news/articles/2015-08-13/the-time-to-sell-the-dollar-is-now-as-fed-gets-real-on-liftoff

He who hesitates and all that!

[spaceman79]

• Yday THB bid/ask was at 35.32/35.37 EOD. Today its 35.47. The bombing has shaken the THB. Yday FIIs were net buyers but today SET fell over 2% touching near 1370 on large volumes. Airport Authority of Thailand is one of the biggest losers. CNY has also been gaining against the THB which should be comforting for Thailand. However this fresh lows by SET could result in further setting THB down. Seems the breaking of 36 will be a self fulfilling prophecy.