Baht depreciation expected

[HAKAPALITA]

On 6/18/2018 at 8:23 AM, Peterw42 said:

Thats the internal domestic economy, often not much to do with the external currency value, inside Thailand one baht is worth one baht.

Dont you go talking sence. it confuses people these days.!!.

[SheungWan]

On 6/18/2018 at 8:23 AM, Peterw42 said:

Thats the internal domestic economy, often not much to do with the external currency value, inside Thailand one baht is worth one baht.

"inside Thailand one baht is worth one baht." I am reminded of Harold Wilson's famous speech where he referred to the Pound In Your Pocket being still worth a pound. Nobody was fooled by this statement during a period of inflation. The real question is whether the baht will buy the same basket of groceries as it did one year ago. If the answer is no and imported goods cost more as a result of currency decline against other currencies, then the suggestion that 'one baht is worth one baht' just appears asinine.

[simoh1490]

Everything I read on the subject suggests the Baht is going to fall against USD this year, 34/35 seems realistic they say. Sadly, for holders of GBP a different fate awaits since the falling Pound is offsetting any potential gain. But it's still good news for anyone with income in USD and for GBP holders wanting to convert Baht into Pounds, fixed income expat Pound holders may have to wait a while, however. 

[jerry921]

I read something today that reoriented my thinking a bit, which admittedly is more from the perspective of the USD than the THB.

 

I had been thinking that the recent FX weakness of various EM currencies was due to Argentina & Turkey events plus some general US trade war anxiety. I had also heard the Governor of the Bank of India complaining about US dollar liquidity, but I didn't think it was that big a deal.

 

But what I read today makes me think that Argentina/Turkey and trade wars are secondary to the issue of the Fed unwinding their Quantitative Easing. (Aka Quantitative Tightening or QT), which is drying up US dollar liquidity world-wide. The 10 years of US QE made getting dollar-denominated loans easy, and I hadn't thought about the extent to which that easy money would find its way overseas as dollar-denominated loans taken out by non-US corporations. Apparently the QT is really starting to bite (I didn't think there had been that much of it yet), and that plus the rising US interest rates has caused a lot of foreign corporations with US dollar debt obligations to start scrambling around looking for a way to pay off those loans ASAP (refinance them as non-dollar debt). That in turn has caused a further dry up of dollar liquidity, and it's caused something of a squeeze, which, so the stuff I read goes, explains why the dollar is suddenly strengthening more than the higher US interest rates would warrant.

 

The implication for the Baht would be the same as EM currencies, unless this time around there hadn't been as much dollar-denominated borrowing by Thai corporations. With the Baht having been strong for a long time, maybe it would have encouraged paying off such loans?

 

So all this blather is a long way to say maybe the Baht won't get hit as hard as a lot of other currencies, and won't weaken as much as 34-35 to the dollar but more like only 33-33.5. Still, the direction of change seems to be a weaker Baht, it's a matter of how much weaker. But I'm sure everyone else's crystal ball is better than my cracked plastic one.

[simoh1490]

As I recall USD loans represent less than 3% of foreign debt in Thailand.

[The manic]

Wishful thinking

[simoh1490]

1 hour ago, The manic said:

Wishful thinking

http://www.pdmo.go.th/en/popup_money_data.php?m=money&ts2_id=1

 

See 2.1, external or foreign debt.