Why doesn't the Thai baht move?

[jesimps]

7 hours ago, chiang mai said:

THB is not always at 35, if you look at the near history you'll see that against USD, it trades in a range of 29 to 36 in recent times.

 

BOT operates a managed float which means they intervene in the markets to smooth out any volatility in the exchange rate so as to protect export. Having said that BOT holds extremely large amounts of foreign currency reserves hence that, plus comparatively low levels of public debt etc etc means the baht remains naturally strong. 

 

Now queue the conspiracy theorists who will tell us the Bangkok elite are managing the exchange rate for their own self interests, when they do, ask they how they do and to provide proof.

I was quite enjoying your post until I got to the last para when you reverted back to your "Mr know it all" personna.

Doesn't take a lot of effort to be nice.

[Suradit69]

1 hour ago, elgordo38 said:

Hmm not so long as the world remains their piggy bank. Buy any commodity you must pay the US piper. Nothing moves at present unless you pay in US dollars. Guess I am just jealous my country is a much more stable progressive country yet we are taking a beating at the hands of the greenback. The change will come slowly but sadly I will not be around to see it. 

 

If/when the shift in economic power takes place, the countries most likely to wrest the title from the US won't be some tiny stable & self-proclaimed progressive country.  People sometimes confuse stability with stagnation and heaven knows what meaning can be given to "progressive" in any context let alone economics.

[chiang mai]

8 minutes ago, jesimps said:

I was quite enjoying your post until I got to the last para when you reverted back to your "Mr know it all" personna.

Doesn't take a lot of effort to be nice.

 

There's nothing particularly not nice about what I wrote, I merely wanted to avert the inevitable comments about how Thailands' elite classes are really running the bank of Thailand etc, it's not constructive in any way. So rather than have engage later on a silly and needless subject, I'm simply providing the ammunition for other to close it down. Proving yet again that you satisfy some of the people all of the time but......!

[Naam]

1 hour ago, hobobo said:

Dream on! Next you'll insist on 94 to the Pound as it was briefly in the early 90s (maybe mid-90s, I forgot)

end 97 beginning 98

[Naam]

6 hours ago, Henryford said:

When the USA's National Debt reaches 40 trillion and the annual deficit is 3 trillion watch the dollar crumble.

the "Dollar crumbling" fairy tale i hear since 40+ years when Nixon abolished "gold cover".

[elgordo38]

1 hour ago, chiang mai said:

 

My statement referred solely to public debt.

 

Yes, but Thailand is nowhere near that point!

 

google bangkok post thailand consumer debt ratio and read the article there.

 

Remind what the UK ratio is!

You cannot separate the two. If consumer spending dries up its goodbye economy. As Thailands reserves are mostly in US dollars (and no currency is invincible) and if the chickens ever come home to roast its goodbye greenback. 

[Stevemercer]

A currency doesn't stay 'naturally strong'. Governments have their hands on the policy levers and will dictate the margins within limits. The Thai government has said that it does not intend to fiddle with interest rates and is inclined to leave the Baht relatively high.

 

While its true that the Thai economy has strong fundamentals, exports remain weak and uncompetitive against other Asian countries. I guess the government wants to tough it out rather than talk down the currency or lower interest rates. Perhaps the PM really believes that Thailand will become a developed country if they can keep a lid on 'populist' schemes and other drains on the budget for the next 10 - 20 years.

[chiang mai]

4 minutes ago, elgordo38 said:

You cannot separate the two. If consumer spending dries up its goodbye economy. As Thailands reserves are mostly in US dollars (and no currency is invincible) and if the chickens ever come home to roast its goodbye greenback. 

 

First of all, BOT foreign currency reserves are reported in USD but are actually held in a range of different currencies which match the larger trading partners and Asean countries, included in there also is the bullion account which again is reported .in USD but is actually in gold. 

 

Secondly, public and consumer debt are two totally different things which have totally different impacts and are regarded in almost opposite lights.

 

Public debt eventually becomes a private burden in the form of higher taxes and reduced services and reduced spending on infrastructure. Private or consumer debt is actually very desirable, within reasonable parameters, since it aids GDP and is in itself a stimulous to the economy, case in point UK where consumer led economic recoveries have become the norm and the fall back when everything else fails.

[elgordo38]

1 hour ago, Suradit69 said:

" With the Feds rumored to jack up the interest rate in the coming month or so, "

 

Despite all the hoopla, it's the markets that set the rates. This past summer the 10 year was at about 1.3% and now it's at about 2.4%. That wasn't the Fed moving rates, that was the market and the dollar index rose along with it.

 

 

 

Yes the market will move rates and the Fed will be in trouble. A increase in December and 2 more next year and the US debt interest rate will triple and that spells trouble. The Japanese will be happy as then the yen will get weaker which is what they want. The Chinese yuan has also fallen to new lows to boost exports and I think this is fertile ground for Trump to raise a beef. As Draghi is buying up all the bonds in sight as well as corporate bonds to keep profiteers from shorting them If the US rates go up it will be a money magnet and will vaccum up all the currencies in sight. 

[elgordo38]

5 minutes ago, chiang mai said:

 

First of all, BOT foreign currency reserves are reported in USD but are actually held in a range of different currencies which match the larger trading partners and Asean countries, included in there also is the bullion account which again is reported .in USD but is actually in gold. 

 

Secondly, public and consumer debt are two totally different things which have totally different impacts and are regarded in almost opposite lights.

 

Public debt eventually becomes a private burden in the form of higher taxes and reduced services and reduced spending on infrastructure. Private or consumer debt is actually very desirable, within reasonable parameters, since it aids GDP and is in itself a stimulous to the economy, case in point UK where consumer led economic recoveries have become the norm and the fall back when everything else fails.

Thanks.  I now know who to contact for world statistics. Wow you sure are a stickler for facts I am truly in awe. May you get your fair allotment of virgins in the next life. 

[chiang mai]

2 minutes ago, elgordo38 said:

Thanks.  I now know who to contact for world statistics. Wow you sure are a stickler for facts I am truly in awe. May you get your fair allotment of virgins in the next life. 

 

I'm not sure where you're coming from with those remarks but look, if we're going to debate the subject let's at least have accurate facts and as many of them as possible otherwise it's a pointless debate.

[1FinickyOne]

To the OP - - -  Would you prefer a lot more volatility? 

18 minutes ago, elgordo38 said:

Thanks.  I now know who to contact for world statistics. Wow you sure are a stickler for facts I am truly in awe. May you get your fair allotment of virgins in the next life. 

 

Rather than virgins, can I put in a request for a few talented professionals? 

[IMA_FARANG]

According to a report I just read the Thais have a large Baht foriegn currency surplus (in Dollars) they can use to keep the Baht stable againdt the Dollar.

Not sure about that, but that is what the report said.

 

 

[Muhendis]

9 hours ago, Cook my sock said:

The country is considered stable ATM so the baht is strong. But Trump has def helped, it was up to 44 to the £ a few days back. Give it a couple of years, maybe Brexit won't happen and we'll be back to 55

55 Bht/£ is still pretty poor. It was 72Bht/£ when I first came here.   

[Retiredandhappyhere]

Just a few months ago  the pound stood at 52 and then plummeted to 42 after the Brexit vote, a drop of 19.2%.   Fortunately, it recently recovered to around 44, which is very welcome for those of us expats whose total income is derived from the UK, but that is still a drop of 15.4%. So, a few months ago, a Brit with an income of £19230 or one million Thai Bahts (at 52) would have barely met the 800,000 Visa requirement (at 808,000) whereas at an exchange rate of 44, he would have a slightly bigger margin at 846000, but still a bit precarious, particularly if he has a wife and kid(s) over here and has to go back home. A serious situation for single guys too of course, but at least they would not lose their wife and kids. 

 

So, the value of the Thai Baht is very important to many ex-pats living in Thailand.

[chilli42]

3 hours ago, Naam said:

you are thoroughly mistaken. just because some commodities are quoted in US-Dollars doesn't mean they can't be bought and paid for by any other freely fungible currency. but you are excused because this misleading fairy tale is floating around since decades.

 

You can pay for a commodity in almost any freely convertible currency, that is true.  It's just that the price quoted/the underlying price will be in US$. That is no fairy tale. 

[Dustdevil]

3 hours ago, DSJPC said:

the baht has fluctuated between 34.5 and 36.5 per US Dollar for past year or so...presently at 35.5...perhaps it is not moving in the direction u wish it would, but it does move!!!

I've been visiting Thailand for about 30 years. It used to be about 31 per dollar for a long time, but since around--if memory serves--2005 or so it's been 34 and more recently 35. I call that practically zero movement in the last decade. Some here have said the dollar isn't getting stronger but only the peripheral currencies are getting weaker. I'd suggest watching/reading Bloomberg for a while. The Euro, Yen, Sterling and Swiss franc are all down against the dollar. But it really doesn't mean much. It's cyclical. In 1994 or so the dollar was at 80 yen at its lowest. Up and down--that's why people make money on currency trades.

Edited November 25, 2016 by Dustdevil

[Dustdevil]

Some here people think the US is nothing but an unstable fascist exporter of dollars and nothing else. it's not. About the economy, the US is, as a country, the second-largest exporter in the world. I know that surprises many. If you count the EU as a single nation, it would be second and the US third. Technological innovation and higher education are very strong  (the top destination for Chinese students due to international rankings, faculty, etc.) My point? Yes, there is a structure behind the dollar, not just a central bank printing money. In fact under Obama the national debt has reduced, but all bets are off with Trump....BUT he has to work with the Federal Reserve. He is not a king or a dictator.

Edited November 25, 2016 by Dustdevil

[Thingamabob]

Anyone who believes that the value of the Thai Baht is not manipulated by the Thai elite needs to grow up. 

[borrfors]

A year ago the exchange rate for the swedish Krona was almost 4,8 Baht for one SEK. Now it´s 3.86. This is strange considering Swedens strong ecomomy, one of the strongest in EU. It really sucks for e pensaioner like me to lose almost 25% each month....

[chiang mai]

38 minutes ago, Thingamabob said:

Anyone who believes that the value of the Thai Baht is not manipulated by the Thai elite needs to grow up. 

 

 

Anyone who believes it is needs to consider education above fifth grade.

[chiang mai]

1 hour ago, chilli42 said:

 

You can pay for a commodity in almost any freely convertible currency, that is true.  It's just that the price quoted/the underlying price will be in US$. That is no fairy tale. 

 

Please note that THB is not fully freely convertible, per BOT regs.

[A1Str8]

Price movements are always triggered by emotions. If the ruling class wants it to go up, they just put something in motion that will make people feel safe and happy. 

If they want it to go down, they simply do something that puts fear in people. 

If it doesn't move then for the moment it stagnates because it was planned that way. Right there's not much benefit from making it move, which results in lack of movement. 

[chilli42]

9 minutes ago, chiang mai said:

 

Please note that THB is not fully freely convertible, per BOT regs.

 

That is certainly true based on my experience.  That said, you can get "permission" to use Baht to buy US$ to pay overseas suppliers. 

[chilli42]

4 hours ago, Shiver said:

I'd like to see the 'basket of currencies' weighting that the Baht is pegged to.  I have thought for many years that it must be 80-90% USD.

 

I don't think the USD is getting stronger, but all the peripheral currencies are taking the dive first and they revolve around the USD as the global currency, so may be the last one to go down the plug hole unless there are some break away actions from other countries.

 

 

Certainly the worse things get elsewhere (EU, Japan, UK, China etc) the stronger the dollar will get.  Keep an eye on the DXY.  It's the highest it has been in 3 years.  There will be profit taking at this level but think that the upward trend will continue over the foreseeable future.

[Naam]

3 hours ago, elgordo38 said:

You cannot separate the two. If consumer spending dries up its goodbye economy. As Thailands reserves are mostly in US dollars (and no currency is invincible) and if the chickens ever come home to roast its goodbye greenback. 

 

Sir! please stop, i beg of you. what crime did i commit that you torture me with these horrible theories?

[Naam]

2 hours ago, chilli42 said:

 

You can pay for a commodity in almost any freely convertible currency, that is true.  It's just that the price quoted/the underlying price will be in US$. That is no fairy tale. 

 

that is correct. but a fairy tale is that the US currency benefits if the unit price is quoted in USD but payment is done in another currency.

[Naam]

4 hours ago, Shiver said:

I don't think the USD is getting stronger, but all the peripheral currencies are taking the dive first and they revolve around the USD as the global currency, so may be the last one to go down the plug hole unless there are some break away actions from other countries.

sorry mate but your logic contains two major flaws. read again what you wrote and then take a minute or two to think. i'm sure you detect the flaws without any help.

[Naam]

3 hours ago, Stevemercer said:

While its true that the Thai economy has strong fundamentals, exports remain weak and uncompetitive against other Asian countries.

the reserves speak a different language.

[Naam]

2 hours ago, Dustdevil said:

I've been visiting Thailand for about 30 years. It used to be about 31 per dollar for a long time, but since around--if memory serves--2005 or so it's been 34 and more recently 35. I call that practically zero movement in the last decade.

the Baht was never for a long time 31 to the Dollar but a long time 1970 till 1985 the rate was 20 and after 1985 till the float in 1997 the rate was 25.

 

here's a look at USD/THB (last 26 years):

 

Edited November 25, 2016 by Naam