Why the Euro and British pound so strong against Thai Baht?

[nontabury]

I read an article last week from the MPC saying that Brexit will cause Sterling to crash, hence making imports more expensive and inflation to rocket making the BOE to increase interest rates upto 5% causing all sorts of problems for buy to letters and families with mortgages. I remember in 2009, Sterling lost 30% almost overnight, yet interest rates were kept at 0.5% and inflation supposedly was below 2%......

no fairy tales please!

All economists are predicting a falling GBP. So probably not only tales. Maybe not 30% but expected 20%. That's the price for stupidity and ignorance.

Says an Irishman about the Brits. One good thing if we do depart the EU, the next time the R.I. Get into financial trouble,as in 2008, we will not have to bail them out,"OH" but second thoughts,we Brits are a soft touch.

[sawadee1947]

I read an article last week from the MPC saying that Brexit will cause Sterling to crash, hence making imports more expensive and inflation to rocket making the BOE to increase interest rates upto 5% causing all sorts of problems for buy to letters and families with mortgages. I remember in 2009, Sterling lost 30% almost overnight, yet interest rates were kept at 0.5% and inflation supposedly was below 2%......

no fairy tales please!

All economists are predicting a falling GBP. So probably not only tales. Maybe not 30% but expected 20%. That's the price for stupidity and ignorance.

Says an Irishman about the Brits. One good thing if we do depart the EU, the next time the R.I. Get into financial trouble,as in 2008, we will not have to bail them out,"OH" but second thoughts,we Brits are a soft touch.

After economical downturn you are welcome to ask R.I for help. Friends are always welcome....

[dhream]

Why worry, Aussie is terrible still !!

Yup. The Aussie is a joke of a currency.

Insane prices down under (buys bugger all) but none of the international supporting strength you find in the GBP or USD (and look at the trillion dollar deficit!)

What is it now? THB25 = $1 give or take, and it's likely 'take'.

And the post China boom pain hasn't even really started yet, back home.

The lucky country moniker seems to have hit the 'use by date'.

[johnatong]

The £ has just this minute hit a "high" of 1 to 51.7 Bht. (BBC - DigitalLook.com.)

Am I now wealthy ?

[Linesy]

GBP edging up slowly on anticipated remain result, post result will see a sharp knee jerk reaction down for exit and a moderate up for remain then settle out. Long term no one knows. That's my uneducated assessment of the GBP. I would also expect problems for the Euro in the medium to long term following an exit result which will push the US dollar and yen up.

I do an annual bulk transfer for my extension so may look at the knee jerk up if a remain result and hold off if leave is decided.

Edited May 18, 2016 by Linesy

[Jonmarleesco]

Hardly strong, unless you consider a realistic rate to be somewhere in the region of 45 - 48 for the Pound, something which would be ridiculous. If it starts heading towards 55 - 58, then you might consider it as strengthening; likewise, the Euro.

[bazza40]

GBP is reckoned to be weak against all currencies at the moment, a product of the uncertainties of the EU referendum. Most commentators expect it to rise if the Brits vote to remain and fall in the immediate aftermath of an exit. Same with UK shares (/stocks)

My money is where my mouth is - I believe the UK will remain but it will be marginal, due to inertia (most Brits are generally conservative with a small c and do not risk major change; it's also difficult to get 30% of that type out to vote)*. Therefore:

* I have not made any cash transfers to Thailand (part of my deposits are invested in Thailand due to still relatively favourable interest rates and tax position) and nor will I until around the time of the vote

* I have sold down 10% of my UK portfolio and will reinvest after the vote (or in October - I am generally (but only on the margin a "sell in May ...." follower anyway)

*Personally I'm in favour of remaining and against the anti-immigration hype, but that's a qualified remain vote and a whole different issue to the purpose of this thread.

I've read a number of your knowledgeable comments on finance and tax which I've found helpful. I'm in total agreement with your Brexit predictions although puzzled as to why you've sold 10% of your portfolio with the intention of reinvesting in October if you believe stocks will increase after a remain vote. I've recently sold off some long held BT shares to crystallise my 2015/16 CGT allowance (I still have a chunk) but haven't reinvested,mainly because I'm not sure what to replace them with,but concerned I've got £15k doing nothing sitting in the investment account (I'm up to my limit on my Santander 123 account for the amount I can enjoy 3% interest on.). Rules forbid me from putting it into my managed ISA or pension fund now I'm abroad.Any overall suggestions?

Try RateSetter.com

[bazza40]

Why worry, Aussie is terrible still !!

Yup. The Aussie is a joke of a currency.

Insane prices down under (buys bugger all) but none of the international supporting strength you find in the GBP or USD (and look at the trillion dollar deficit!)

What is it now? THB25 = $1 give or take, and it's likely 'take'.

And the post China boom pain hasn't even really started yet, back home.

The lucky country moniker seems to have hit the 'use by date'.

I'm quite happy with 25 -26 baht for my dollar. And at least the RBA still has some wriggle room on interest rates,unlike most other central banks.

If you really want to bitch, try going back to Australia for a few months.Everything costs an arm and a leg.

[uptheos]

Definitely not strong for those of us that remember 90+

But happy I took my money over then.

[alguma]

Nothing to worry about, and here is the rationale: soon the UK will probably exit the EU (Brexit) plunging the pound to new lows and probably causing the Euro to tank amid worries of EU disintegration. But there is much more to come for the pound. Scotland can't miss the opportunity to secede from the UK, and doubts mount for Northern Ireland too, with a double whammy for the (once) glorious pound. Sleep peaceful nights with your savings in baht, your only chance to have a very, very small loss is that UK chooses to stay. There is a slim chance...

[somo]

Replying to nchuckle.

I'm ready to reinvest if it becomes clearer that there will be a remain vote. Still not 100% on that - a lot can change quickly in matters politic. Also looking back at the sales I made in late April they were actually more geared to the US and Europe part of my portfolio.

I hesitate to offer advice on individual's plans as they so much depend on personal factors and individual circumstances. A financial planner would explore all of these in depth*.

I have reasonably significant pension income above my state pension and that means that investing through the UK (the most regulated and safest economy in the world IMO) is and remains tax-advantaged. The excluded income rules applying to savings and investment income seem not to have been adversely impacted by the UK dividend and savings tax changes at 5th April this year. Whether excluded income rules apply to a non-resident investor through the UK depends on the level of your income (both non-investment and investment income). For many it is better to be taxed on your savings and investment income and claim the standard UK personal tax allowance of £11,000 (that allowance now applies to all ages).

If, by dint of the excluded income rules or by dint of having sufficient personal allowances to cover your taxable income, you get dividend income at no (or very low) rates of tax then it is even more incentive to invest a good proportion of long term money through high income products or high income/equity income shares (/stocks). I tend to favour the latter - I suppose I don't trust high income managers to do the right thing if their income rates are dropping - ie I fear they will go up the risk scale and expose me to capital loss.

My knowledge base from 4 decades of investing has been all about equities and I admit a blindness towards bonds - that's why now in my retirement years I am beginning to take on paid advice for one-third of my overall net worth (with a view to reflecting on that for the whole of my portfolio). I observe that these advisers are going down an equity-rich path at this stage of the cycle but I don't discount that bonds may start to offer a good balance again in the relatively short term.

It is widely reported that dividend income returns in the UK have plateaud and are slowing elsewhere. I'm an optimist for a recovery from this global mini-slowdown so personally I am sticking with equity income investing and will be benefiting from a widening discount in some such investment trusts if I can get my timing right on the next tranche of investment/reinvestment. Normally I would never buy in the period May 1st to September 30th unless I thought there was a major recovery from a significant recessionary period in the short to medium term future (medium can quickly become short!). We have not been in a significant recessionary period recently - a 5% Jan-March retrenchment doesn't count as that. However, the Euro referendum is a special circumstance and I remain ready to reinvest at a moments notice (well, within 24 hours anyway) if I judge sentiment to be turning re the vote and the market in general. You can rarely get it just right and I would expect to miss the first few percent of a bounce but that is never an excuse for waiting for the market to drop and give you the same opportunity. If markets remain subdued I will wait until early October to reinvest the 10% cash (that sits on my broker deposit accounts earning not much - 0.5% at best).

Don't stick solely to the UK. Europe is demonstrating the same features as the UK and I have thankfully ignored the general weight of advice to de-emphasise the US this year. Nobody got rich by ignoring the power of US markets to be the first out of a slowdown.

*EG - I like to maintain a relatively high dividend income. It allows me to demonstrate a healthy level of unspent income which can then be transferred to my family as an IHT-exempt transfer (which will become unnecessary when I have the confidence that I can claim non-domicile UK. So my own portfolio is probably skewed more to maintaining income than ideal.

Do you ever get time to enjoy your retirement?

[nontabury]

Nothing to worry about, and here is the rationale: soon the UK will probably exit the EU (Brexit) plunging the pound to new lows and probably causing the Euro to tank amid worries of EU disintegration. But there is much more to come for the pound. Scotland can't miss the opportunity to secede from the UK, and doubts mount for Northern Ireland too, with a double whammy for the (once) glorious pound. Sleep peaceful nights with your savings in baht, your only chance to have a very, very small loss is that UK chooses to stay. There is a slim chance...

I'm now completely bored with all these scare stories. I just wonder where the British backbone went.

[George FmplesdaCosteedback]

It is nonsense to tie the fluctuations of the Thai Baht to the UK Referendum on the EU.

The GBP has held to within 2% of where it was before the announcement.

The Euro is doomed however and I expect it will drop like a brick once the UK votes Leave. It is artificially held up by printing more euros and massive loans to the southern European economies that are bankrupt.

The EU is an undemocratic bureaucracy with expansionist plans.

And the British have a habit of not doing what the French and Germans tell them to do...

[IAMHERE]

The pound is predicted to go down after the vote whatever the outcome. Goes down immediately if vote is 'yes' and down a couple months later if 'no'.

[GAZZPA]

I read an article last week from the MPC saying that Brexit will cause Sterling to crash, hence making imports more expensive and inflation to rocket making the BOE to increase interest rates upto 5% causing all sorts of problems for buy to letters and families with mortgages. I remember in 2009, Sterling lost 30% almost overnight, yet interest rates were kept at 0.5% and inflation supposedly was below 2%......

Hope so, if it does I will buy in for sure. Whatever happens sentiment will cause a shift, albeit a temporary one. The UK will likely stay in and this will all be over soon, so maybe no quick money to make.

[JAS21]

Interesting article in Today's Daily Telegraph http://www.telegraph.co.uk/business/2016/05/17/global-funds-fear-summer-of-shocks-despite-boom-in-money-growth/ if the link disappears then PM me if you want it ... sent today from my son who is Market Risk manager for a UK Company and he is hedging his bets................at present

Edited May 18, 2016 by JAS21

[johnatong]

Interesting article in Today's Daily Telegraph http://www.telegraph.co.uk/business/2016/05/17/global-funds-fear-summer-of-shocks-despite-boom-in-money-growth/ if the link disappears then PM me if you want it ... sent today from my son who is Market Risk manager for a UK Company and he is hedging his bets................at present

That load of B-locks ends by saying..............................

"Bank of America’s fund survey is often used a contrary indicator, a sign that investors are clustering in over-crowded positions. They are not always right. Indeed, they are often wrong.

On that interpretation we may be on the cusp of a powerful global rally."

[Farmer1956]

The pound has been weak against the Baht for several years now. Down to around 45baht to the pound at one time.

Before the crash, during August I got over 70 Baht. 51 baht to the pound is a good rate at the moment.

[ozyjon]

The greater London has been bought by many Chinese, as per Russians,

the Chinese are pulling out of the UK as per Russians, the money stream

will dry up, the instability in the financial world will put downward pressure

on all currencies, Brexit + Trumpxit = great television viewing

[laislica]

[chiang mai]

A strange an clearly manipulated currency situation exists over here. Much talk about the UK pound loosing value because they are merely talking about leaving the EU. By comparison the Baht stays relatively strong even through everything that's happened since the economically crippling BKK floods up to the current day political fiasco and economical crisis. Clearly the BoT uses tourist origin foreign currency to buy Baht on the international money market, nothing wrong with that. I would think that for a considerable time now the BoT spending is far exceeding its income, nothing wrong with that. Digging into its once massive foreign currency reserve must one day stop or slow down noticeably, then watch the fun begin.

Please show us where (clearly) BOT took USD and bought THB thus causing the foreign currency reserves to dip. http://www2.bot.or.th/statistics/BOTWEBSTAT.aspx?reportID=80&language=ENG

[nontabury]

The pound has been weak against the Baht for several years now. Down to around 45baht to the pound at one time.

Before the crash, during August I got over 70 Baht. 51 baht to the pound is a good rate at the moment.

It depends how far you want to go back. When I first came to Thailand it was 34bht, peaked at 96 bht in the late 90's, then stuck around 70 for a few years.

As a buying comparison,when the rate was at 34bht,you could go into a top restaurant and buy, for instance one plate of food for 40Bht, now you are more likely to be charged 180bht for that same plate of food.

[stament]

The pound has been weak against the Baht for several years now. Down to around 45baht to the pound at one time.

Before the crash, during August I got over 70 Baht. 51 baht to the pound is a good rate at the moment.

It depends how far you want to go back. When I first came to Thailand it was 34bht, peaked at 96 bht in the late 90's, then stuck around 70 for a few years.

As a buying comparison,when the rate was at 34bht,you could go into a top restaurant and buy, for instance one plate of food for 40Bht, now you are more likely to be charged 180bht for that same plate of food.

Did you factor inflation into that comparison as the years in question are poles apart. Are you comparing apples with apples?

[nontabury]

The pound has been weak against the Baht for several years now. Down to around 45baht to the pound at one time.

Before the crash, during August I got over 70 Baht. 51 baht to the pound is a good rate at the moment.

It depends how far you want to go back. When I first came to Thailand it was 34bht, peaked at 96 bht in the late 90's, then stuck around 70 for a few years.

As a buying comparison,when the rate was at 34bht,you could go into a top restaurant and buy, for instance one plate of food for 40Bht, now you are more likely to be charged 180bht for that same plate of food.

Did you factor inflation into that comparison as the years in question are poles apart. Are you comparing apples with apples?

Of course. The point I was trying to make was the volatility of the market,especial in regards to the Bht. In the earlier days the Bht was tied to the US$, less so today.