The Baht At 6-year High Against The Us Dollar

[chechoie]

The Baht will be 41 to the US Dollar by Mid Feb 07.

[Maestro]

The baht has appreciated to touch 37.10 to the US dollar on Wednesday’s trading, the strongest in six years

The baht has strengthened too quickly in the past couple of days

It all depends on the time-frame you look at. So as to remain on topic, I have made the following charts based on the same time-frames mentioned in the news articles. Because comparison with some currencies other than USD have been made in this thread, I added also EUR and GBP.

The US DOLLAR REALLY HAS NOT DROPPED AGAINST OTHER CURRENCIES.

1$ = NOW about 119Yen ..........1$= NOW about 1.26 Euro 1$ = ...........37BAHT

...

Ever since the CHINESE YUAN took the Thai Baht into it basket

the Thai Bath has been moving with the CHINESE YUAN

ALL OTHER EXPLANITIONS ARE HOG WASH

Contrary to Hardy’s statement, USD did in fact weaken also against other currencies, over the past six years as well as over the past couple of days.

The mention of CNY being included in the Chinese currency basket is nevertheless interesting. For years, the US government put pressure on China to revalue the Yuan and China finally did so in a fashion. But did the Baht really move step-in-step with the Yuan?

In the above graph, the sudden drop of CNY against USD on 23 July 2005 indicates the date when CNY was untied from USD. THB did not follow the pattern of CNY at all since that date. Only in the last four days has the cumulative drop against USD been practically identical, compared to 22 July 2005.

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Maestro

[Naam]

"In the above graph, the sudden drop of CNY against USD on 23 July 2005 indicates the date when CNY was untied from USD."

*****

i humbly beg to differ Maestro and state that your graph is misleading (because inverted). that goes for CNY and THB which did not drop against USD but appreciated.

take a look at this graph:

[Naam]

and here the graph of the last 12 months for THB which clearly shows a correlation of THB > CNY:

Edited October 29, 2006 by Dr. Naam

[lannarebirth]

"Only problem is that the USA doesn't make anything other than Harleys and fat people."

*****

what about Boeings, F14/16s, cruise missiles, smart bombs?

I think they make a few other things. Like the chips, operasting system and networks you're communicating on. A lot of agriculture too as I recall.

[george]

A few off-topic posts removed. No politics here, thanks.

/Admin

[Maestro]

i humbly beg to differ Maestro and state that your graph is misleading (because inverted). that goes for CNY and THB which did not drop against USD but appreciated.

Thank you for pointing that out, Naam. I feel embarrassed for having got things wrong, upside down, so to speak.

Seeing it the correct way now is highly interesting. When China changed from an exclusive tie of the Yuan to the US dollar to a currency basket, the Yuan strengthened against the dollar, which was the exact opposite of what the US government had hoped for. This, I take it, is further proof of the dollar’s current weakness.

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Maestro

[lannarebirth]

i humbly beg to differ Maestro and state that your graph is misleading (because inverted). that goes for CNY and THB which did not drop against USD but appreciated.

Thank you for pointing that out, Naam. I feel embarrassed for having got things wrong, upside down, so to speak.

Seeing it the correct way now is highly interesting. When China changed from an exclusive tie of the Yuan to the US dollar to a currency basket, the Yuan strengthened against the dollar, which was the exact opposite of what the US government had hoped for. This, I take it, is further proof of the dollar’s current weakness.

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Maestro

]

No, that's not correct. The US government felt that the Yuan was being kept artificially low and the US wanted the YUAN to strengthen against the $USD.

[DFCarlson]

The Baht will be 41 to the US Dollar by Mid Feb 07.

Why do you think that?

[Firefan]

Lanna got it right...again... Cheers!

[whopper]

who needs M-3 anyway!......let's make some greenbacks!

[johnwills]

The Baht will be 41 to the US Dollar by Mid Feb 07.

Why do you think that?

With the US economy slowing, its looking like the the next interest rate movement is going to be downwards, thus reducing the value of the dollar. Is that not so? As for the Thai baht I expect we will see a correction downwards in the next 6 months, the slowing US economy will reduce the demand for exports also.

As I said 6 months ago, buy sterling, it is relatively stable and many countries are now starting to swap some of the their national reserves from dollar holdings to sterling (Italy I believe recently increased the holding of sterling to 25% of total reserves whilst selling dollars).

[Naam]

"As I said 6 months ago, buy sterling, it is relatively stable and many countries are now starting to swap some of the their national reserves from dollar holdings to sterling (Italy I believe recently increased the holding of sterling to 25% of total reserves whilst selling dollars)."

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source = the british rainbow press?

[johnwills]

"As I said 6 months ago, buy sterling, it is relatively stable and many countries are now starting to swap some of the their national reserves from dollar holdings to sterling (Italy I believe recently increased the holding of sterling to 25% of total reserves whilst selling dollars)."

-------

source = the british rainbow press?

No, I think it was Bloomberg.com

[Naam]

GBP vs EUR no appreciation but a minus of 10% during the last five years:

[johnwills]

GBP vs EUR no appreciation but a minus of 10% during the last five years:

Sorry I thought we were doing comparisons against the dollar?

[Naam]

GBP > THB zero appreciation in three years:

[johnwills]

GBP > THB zero appreciation in three years:

Yes, but look how much it has declined compared to the USD THB. And the chart for USD GBP?

Edited October 29, 2006 by johnwills

[Naam]

GBP vs EUR no appreciation but a minus of 10% during the last five years:

Sorry I thought we were doing comparisons against the dollar?

and i was under the impression that we talked about GBP in general John. that the dollar is weak and might be weaken even more is quite likely. however, an allround investor cannot bypass USD denominated assets as they are the ones which provide by far the biggest selection for diversification in sovereign and corporate debtors. i can not provide any statistics but i dare say that the ratio USD / GBP opportunities is more than 500:1 -perhaps 1000:1- in favour of USD. moreover, GBP has an inverted yield curve (short term interest higher than long term) and is therefore only for those of interest who mainly hold cash.

i am getting daily [nearly] all international new debt issues on my desk and i don't remember having seen a single GBP issue in the last three years. en vogue since a couple of years are debt issues of high yielding but for the average investor rather exotic currencies like TRY, BRL, MXN, ISK, HUF just to name a few.

[johnwills]

GBP vs EUR no appreciation but a minus of 10% during the last five years:

Sorry I thought we were doing comparisons against the dollar?

and i was under the impression that we talked about GBP in general John. that the dollar is weak and might be weaken even more is quite likely. however, an allround investor cannot bypass USD denominated assets as they are the ones which provide by far the biggest selection for diversification in sovereign and corporate debtors. i can not provide any statistics but i dare say that the ratio USD / GBP opportunities is more than 500:1 -perhaps 1000:1- in favour of USD. moreover, GBP has an inverted yield curve (short term interest higher than long term) and is therefore only for those of interest who mainly hold cash.

i am getting daily [nearly] all international new debt issues on my desk and i don't remember having seen a single GBP issue in the last three years. en vogue since a couple of years are debt issues of high yielding but for the average investor rather exotic currencies like TRY, BRL, MXN, ISK, HUF just to name a few.

Interesting, I was just trying to point out that sterling has been a stable currency and has gained against the dollar in recent years. Obviously, the US has the largest economy and cannot be ignored, but economic factors in the US will start to affect the interest rates, which in turn will affect the value of the US dollar against other currencies.

[Firefan]

He,he - this must be the remark of the day! Cheers!

Highest in 6 years? Is this correct? I thought it was over 40 just a year or two ago?

Why are they saying the baht is the 'strongest' in 6 years? I thought it took a dump. In my experience I never saw it go under 38.

They walk among us.

[cwilliam]

37 is a low number; the baht is very strong. Those of us whose pensions are in US$ will have to start drinking fewer Pepsi Max or whatever.

I have a US pension with a full cola,hope the US inflation goes to 20%40% 100%

[Naam]

"but economic factors in the US will start to affect the interest rates, which in turn will affect the value of the US dollar against other currencies"

*****

i agree that this might happen. but interest rates of the dollars main 'competitor' the €UR too show signs of flattening out. as an investor it is mandatory to weigh all pros and cons of an investment in certain assets which is denominated in a certain currency. if one can get a return of 10% in currency X versus a return of 6% in currency Y then one still breaks even should currency X lose 4% each and every year.

of course it is a matter of risk appetite to invest in Turkish Lira (TRY) with a yield of 20% and not being able to estimate what this currency does tomorrow, in one month or in five years. but the same goes for any major non-exotic currency. banking and investing is not my background but in nearly 30 years (since i made my first 'real' money) i have seen currency fluctuations among and between the major currencies of 50-100%. example:

dollar/deutsche mark 1978 = 1.75, 1985 = 3.48, 1993 = 1.33, 1999 = 2.21, presently = 1.53

the british pound and japanese yen behaved similarly versus other major currencies during the last 15 years and if you go back much further you see even more discrepancies. the problem is that nobody can forecast the future of a currency although many claim they are able to.

[Old Man River]

"I seem to remember the dollor going down to just over 35 baht"

*****

correct!

The average monthly onshore THB/USD buying rate was 35.9857 in December, 1998, but the average onshore monthly reference rate never got below 36.

In any event, it really doesn't matter and I think we can all agree it didn't stay in this range long. It is very interesting that it has come back to these levels. I didn't expect to see this.

[Jai Dee]

Baht currency strengthened most in 7 years

The baht currency hit the highest point in seven years due to the influences from the slow down of the United States economy.

A Bank Thai financial executive said that the baht currency in the market this morning opened at around 36.7 to 37.76 baht per one US dollar, and it has continued to soar since last Friday (Oct 27). The baht closed at around 36.89 to 36.91 baht per dollar on Friday, and the currency climbed to the highest point in seven years at 36.86 baht.

The incident was affected by the weakening of the US economy. Recently, the GDP figure in the third quarter for this year showed that the US economy has decelerated. As a result, the financial market has expected that the US may reduce its interest rate early next year.

Meanwhile, the yuan and yen currencies have continued to strengthen, causing other currencies in the region to increase in value.

Today, the baht currency is anticipated to stand between 36.70 and 36.85 baht per dollar.

Source: Thai National News Bureau Public Relations Department - 30 October 2006

[Firefan]

Here is my post from 1.5 years ago. My stand has not changed. In the same thread I state that the THB will see 35 before it sees 40 again (I think it was at around 38-39 when I did that brave guess)

Here is a post I posted 22/7/05 (Topic: "China devalues the Yuan" but you can find many many more like it:

Quote

My view is that the THB will strengthen on this news. I fully agree with Thaiquilla that China is smart enough to make it a slow process to not kill their main markets.

It is actually a funny case of USA finally getting what it asked for and later realizing that they did not want it at all! Carefull what you wish for!

To believe that US production would EVER be able to compeed with low cost(wages Etc.) production in China - just through an adjustment of the Yuan was naive at best - instead the US and EU will now see rapid increases in costs/prices as the "Walmart effect" is being killed - as that was the main reason for the artificially low inflation nos we have seen in the Western world lately.

As for the THB it will surely strengthen - it has been kept artificially low for a loooong time in order to be able to compeed with China.

Where to put your money now? Anything based in Asian currencies really - emerging market bond funds, cash and naturally also commodities and metals. Emerging market equities are also interesting but as their main markets feel the punch of inflation they could take a hit.

I am personally overweight in Asia and underweight EU/US.

Meanwhile the inter asia markets are growing and can ensure demand continues even with a US/EU drop.

Disclaimer: I have been wrong before!

Cheers!

UNQUOTE

[PeaceBlondie]

37 is a low number; the baht is very strong. Those of us whose pensions are in US$ will have to start drinking fewer Pepsi Max or whatever.

I have a US pension with a full cola,hope the US inflation goes to 20%40% 100%

All my monthly pension income is US treasury-based and entitled to COLA's, but that isn't good enough. The formula for COLA's depends on the formula for the CPI, which Congress manipulates. The devil IS in the details. Further, we are living in another economy. When I lived in Mexico and now in Thailand, the inflation of prices was much higher than the COLA's, and the currency exchange robbed me of 8% to 10%.

IS THE USA TOO BIG TO FAIL? Will the world continue to prop up America, even if the emperor is naked?

[Naam]

"IS THE USA TOO BIG TO FAIL? Will the world continue to prop up America, even if the emperor is naked?"

most probably the answer for both of your questions is "yes". countries who having continuously a big trade surplus with the Greatest Nation on Earth and therefore holding trillions of dollars reserves are riding a tiger. it's just too dangerous for them to get off!

no matter what experts, gurus and @n@lysts are propagating.

[konangrit]

The Baht may seem strong against the dollar, but it's basically that the dollar is weak. The Baht is well off highs V the GBP and EUR. The dollar has corrected a lot over the last couple of years, but personally I don't think it has finished yet. I'm from the UK, but not biased, as I get paid in US$. I can still see the xrate going above $2/£1 within the not too distant future, which would probably mean a similar decline V the THB. Is it even possible for the BOT to intervene to a significant extant anymore after what happened last time?

I'm no expert, just a barstool economist who still feels the $ is overvalued, please feel free to comment, criticise, or correct me.

[Naam]

"The Baht is well off highs V the GBP and EUR"

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it all depends on the time frame one is referring to.