The British Pound Soars

[topfield]

The BBC and Skynews are today reporting the pound at a 13 year high of $1.956...the highest since the ERM crisis of 1992 when we lost three billion pounds to George Soros et al.

You folks in Thailand...dont be misled ! Against the baht the pound is far lower than even two years ago when it hit 76 to the baht (it's now 70)

The reason ? The baht now appears linked to the pound matching it on every rise . In fact against the dollar the baht is at its highest since the baht crisis of '97/'98 when starting out at 23.5 it reached a low of 55 to the dollar.

The big question is whether when sterling starts to fall as it must , the baht will accompany it down or .........will the baht remain strong leaving sterling far behind ? If you believe this possible scenario. it may be safest to buy cable (sterling) now at 70 baht.

[londonthai]

on each exchange you pay several percent commission and generally you use the currency of the coutry you live in. Changing baht into pounds and than pounds into baht might be just not sensible. If you have any spare cash the best bet is invest it in property

[topfield]

on each exchange you pay several percent commission and generally you use the currency of the coutry you live in. Changing baht into pounds and than pounds into baht might be just not sensible. If you have any spare cash the best bet is invest it in property

YES YES UK, especially London property is the best investment one could have at the moment but for those wanting to buy in Thailand the big question must be at what exchange rate do I buy my baht. This depends on factors too numerous to mention, the main one being one's base currency...,dollars euro sterling or even yen

[mosquitoman]

The dollars finished and sterling is not far behind, long live the euro.

MM

[churchill]

I would rather buy property in Thailand than London , the potential appreceation must be greater ( as aways for the right property in the right location ) . And the thai baht must rise further against dollar , pound etc over the next years - Gold is a good hedge as can be seen in its recent rise .

[Meerkat]

I don't understand. You suggest that GBP has to go down, yet you say that London property is the best investment one could have. Surely it's not much use investing in a sinking currency's asset?

[britmaveric]

Euro?

Yanks are pushing weak monetary policy - once they decide to go the other way - there will be heaps of disappointed doom/gloom experts.

[The Dan Sai Kid]

on each exchange you pay several percent commission and generally you use the currency of the coutry you live in. Changing baht into pounds and than pounds into baht might be just not sensible. If you have any spare cash the best bet is invest it in property

YES YES UK, especially London property is the best investment one could have at the moment but for those wanting to buy in Thailand the big question must be at what exchange rate do I buy my baht. This depends on factors too numerous to mention, the main one being one's base currency...,dollars euro sterling or even yen

You are talking serious amounts of cash for property in London though. And do you think that if the pound drops then property prices might follow suit?

[churchill]

therefore investing in thai property gain plus baht gain - better to invest in thailand rathr than london !

[topfield]

I don't understand. You suggest that GBP has to go down, yet you say that London property is the best investment one could have. Surely it's not much use investing in a sinking currency's asset?

Think you are confusing two issues. Currency exchange and medium term investment !

By the way I did not forcast the pound WILL drop versus the baht. My comment was that should the pound fall back (against the dollar ) after its recent steep rise, then it is not certain the baht will follow the dollar in a downward direction....the baht could remain high in which case the pound will depreciate to below its current value of 70.

To sum up the baht is following the pound upward...but may not follow it downwards.

[besth]

I'm no expert, but from what I have seen, the Baht seems to float quite linked to de dollar, which is what at the moment is weak against the pound and the euro.

A few years back when the euro was at 0.85 to the dollar, it was around 44 baht to the dollar, 38 to the euro, now things have changed, but it all seems to be linked to the dollar-baht value.

I wish I could understand the currency market!

[Nikkijah]

I don't really know anything about any of this but why is the Baht expected to rise further?

Is the Thai economy doing that well?

Isn't China impacting on the Thai economy?

Hasn't the Coup had an impact on the Baht? Will that change soon or not until after elections are held next year?

Nikkijah(clueless)

Edited November 30, 2006 by Nikkijah

[libya 115]

I know I have mentioned this before, but CHF is the way to go for safety, with a flutter on YEN to reach Y260=GBP 1

[tornado40]

I think that the pound is strong because interest rates are on the way up - should level out at the current rate most of next year - according to a comentator on Bloomberg

Perhaps the dollar is suffering due to the amount of debt the US has

No idea about the Baht though

[topfield]

I think that the pound is strong because interest rates are on the way up - should level out at the current rate most of next year - according to a comentator on Bloomberg

Perhaps the dollar is suffering due to the amount of debt the US has

No idea about the Baht though

You are not the only one astonished by the huge rise in the baht. There appears no logical reason. Looking at Bloomberg just now I noticed the Indian rupee in contrast has hardly moved.

Last December the baht stood at 41 to the dollar. Currently its trading at 35.80. That means you got 15 percent more baht last year.

Can Thai industry compete at this rate ! Very doubtful.

One has to wonder what Tevakun (Devakula)is up to at the Bank of Thailand/Finance Ministry. Foreign goods , now a lot cheaper are now bound to pour in to Thailand and it will not be long before the trade balance goes askew and recession sets in. Very few counties can prosper with a rock hard currency , the main exception being Switzerland .

[wasabi]

I am not currency expert but am an unfortunate holder of the USD so I've taken an interest in what's going on and tried to make sense of it. I think the leading reason for the decline is the deficit which is tied to us importing way more than we export and spending more than we make, all the way up to the President, funding expensive wars. I'm not going to turn this into a political diatribe so I'll leave it at that. Other factors like possible recession stemming from an emerging housing slump and loss of competitiveness in just about every US industry. US citizens seem to love Walmart yet they are only a conduit to further monetary decline as they are the country's largest importer of foreign goods.

Just on an instinctual level I've felt for a few years now that the USA has lost it's edge, too much focus on morality and religious issues instead of how to run a financially solvent country. I think we have acted arrogantly and thought, we are #1 what are you going to do about. It seems like the attitude was China will always buy US treasuries, the USD will always be the world currency and we can spend as much as we want without need for restraint of any sort.

I'm personally rather pissed off. Holding the USD is like having a losing stock that you can't sell. I've actually thought of packing up and finding work overseas but I think I somewhat missed the boat on that one so may ride the USD to the bottom whenever that may come. I really don't see any quick fix nor any reason why the USD should have a significant rally other than a dead cat bounce. Basically it sucks.

Edited November 30, 2006 by wasabi

[binnsy]

for those of you who have adoubt i suggest that you buy good old GOLD when markets as they are buy GOLD

[bendix]

for those of you who have adoubt i suggest that you buy good old GOLD when markets as they are buy GOLD

Try telling that to someone who bought gold earlier this year when all the goldophiles were wetting themselves over the prospect of it hitting $1000 an ounce by this Christmas.

[bendix]

The bottom line in all this is that it's all puff. Noone knows where the markets (metals, currencies, shares etc) will go, particularly in the short-term. All of it is theory theory theory.

I'm symapathetic to britvaric's view that the weak dollar is a deliberate US policy, and anyone thinking the US economy is in terminal decline is kidding themselves.

The US dollar will come back. I don't know by how much or by when, but 15% annual falls tend to have a habit of correcting themselves sooner or later.

[samran]

One has to wonder what Tevakun (Devakula)is up to at the Bank of Thailand/Finance Ministry. Foreign goods , now a lot cheaper are now bound to pour in to Thailand and it will not be long before the trade balance goes askew and recession sets in. Very few counties can prosper with a rock hard currency , the main exception being Switzerland .

Why should he try to do anything. He has left BOT by the way, and his now Finance Minister.

I'm not sure what you 'expect' from him. The last think Thailand needs is another ego-manical finance team who think they can tame the currency markets. Let the baht do what it pleases for crying out loud (and I'm a USD earner here BTW).

What we are talking about is precedent here. Precedent to let politicians and civil servants know that they can't control everything in the economic universe, and to try and apply measures to ward off change are ultimately counter productive.

Cheaper imports? Good. A wake up call to Thai manufacturers to look for new markets, provide better service and become more efficient and sophisticated. Helps the thai economy diversify its manufacturing base (or if not, kill it off and let money be invested elsewhere). Helps promote more elaborately transformed product which are less prone to foriegn competition at the cheaper end of the market.

A stronger baht is from my perspective, a good kick up the buttocks of an industrial sector which has too long been advantaged but government protection.

[PREM-R]

I think that the pound is strong because interest rates are on the way up - should level out at the current rate most of next year - according to a comentator on Bloomberg

Perhaps the dollar is suffering due to the amount of debt the US has

No idea about the Baht though

The BBC is suggesting that the interest rate in UK will rise again in the new year, this being because of inflation worries caused by continuing rises in house prices. When interest rates rise then the currency usually strengthens.

Pound hits 14-year dollar high

The pound has not been this high against the dollar since 1992

The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year.

The pound rose as high as $1.9696 on the currency exchanges, its highest level against the dollar since 1992, before slipping back slightly.

Interest rate rises are now more likely in early 2007 after the Nationwide said house prices rose strongly in November.

UK interest rates are currently at 5%, after this month's quarter-point rise.

By late evening, the pound was worth $1.9657, still up more than 1% on the day.

[topfield]

I think that the pound is strong because interest rates are on the way up - should level out at the current rate most of next year - according to a comentator on Bloomberg

Perhaps the dollar is suffering due to the amount of debt the US has

No idea about the Baht though

The BBC is suggesting that the interest rate in UK will rise again in the new year, this being because of inflation worries caused by continuing rises in house prices. When interest rates rise then the currency usually strengthens.

Pound hits 14-year dollar high

The pound has not been this high against the dollar since 1992

The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year.

The pound rose as high as $1.9696 on the currency exchanges, its highest level against the dollar since 1992, before slipping back slightly.

Interest rate rises are now more likely in early 2007 after the Nationwide said house prices rose strongly in November.

UK interest rates are currently at 5%, after this month's quarter-point rise.

By late evening, the pound was worth $1.9657, still up more than 1% on the day.

All one hundred percent correct but look at THE BAHT.

It has gone up by the same or even higher percentage than the soaring pound. Net result this morning : even less baht for your pound than yesterday !!

Will Thai manufacturers / exporters really be able to compete with India , Chine, Vietnam et al ???

[The Dan Sai Kid]

therefore investing in thai property gain plus baht gain - better to invest in thailand rathr than london !

I wouldn't touch the Thai property market with a barge-pole. So many rules, stagnant market and poor valuations - to name a few things.

[englishoak]

Ok First of all the pound sterling is not gaining strength it is only holding steady and has been for a number of years. Another reason for that stability is the confidence a stable currency brings and the fact that the UK economy has also been growing slowly but also at a steady pace. The problem the UK has now is a similar property boom that happened in the US hence inflation and now raising interest rates in an attempt to cool the economy.

The dollar is going into freefall because of incredible high debts and the fact it has been bailed out a number of times over the past few years already. The fact that a housing bubble was allowed to increase to ridiculous levels and simultaniously a very low interest rate unchanged for too long added fuel to the fire.This current fall is overdue IMO and like most things the more you forestall a problem the worse it will be when the inevitable occurs.

It is a natural part of the cycle as a constant up is not healthy for long term growth in any economy. The real worry is that the next recession could in fact be a depression. If that occurs then the world economies will almost certainly be dragged in and the shit will really hit the fan.

For those who have bought Gold as a hedge it is a long term gamble and should be seen more as an insurance rather than a quick buck !. The theory is that an amount of gold will still be of equivalent worth or more in the future should the dollar weaken further, regardless of inflation. Is that true??? I wish I knew. I'd rather bet on gold than the dollar during the next decade though.

There is nothing to suggest that the Thai economy is good shape or bad. As usual it is very difficult to assess.One thing is for sure having a strong currency is not going to help Thailand's exports to the US. That in turn is not good for the economy long term. I expect that china have the Bht partly in their currency bag and this is also helping to keep the Bht stronger than it would be otherwise.

Edited December 1, 2006 by englishoak