SURVEY: Is the Thai gov't policy of spending Foreign Currency Reserves misguided?

[Scott]

There have been several articles about the current gov't policy of spending Foreign Currency Reserves.   In your opinion, is the Thai gov't pursuing an effective economic policy or not?

 

Please feel free to leave a comment.

 

Reference threads can be found here:

 

http://www.thaivisa.com/forum/topic/960720-growth-next-year-set-at-over-36/

http://www.thaivisa.com/forum/topic/967760-private-sector-believes-thai-economy-will-expand-by-35-4/

http://www.thaivisa.com/forum/topic/967758-pm-prayut-denies-the-government-is-broke/#comment-11600406

[Crash999]

A lot of these articles are misleading. Buying and selling of foreign reserves is normal and commonly used for controlling a currency's strength against the USD. Selling foreign reserves strengthens the Baht. Buying weakens the Baht. Neither are inherently good or bad. It depends on the objective of the government. 

[Searat7]

The article I read showed a dramatic decline in domestic currency reserves since the coup but I don't think foreign currency reserves were affected so much

[NCC1701A]

"Is the policy of spending Foreign Currency Reserves misguided?"

 

not for me. spend it all.

 

 

 

 

 

[elgordo38]

1 hour ago, Crash999 said:

It depends on the objective of the government. 

Maybe if you find out their objective you could get back to us. Apart from being like little boys playing in a bathtub who want submarines to float around and once outside they want toy soldiers tanks and planes (I remember this part well) to play with really what is their objective. They keep eyeing the 30 baht card like Jack in the Beanstalk with an ax. 

[roobaa01]

the foreign reserve currency policy executed by the thai government is reflected by the rating agencies fitch, moodys etc...saying the outlook remains STABLE at BBB + , hence what is all the fuss about ????

 

wbr roobaa01

[Deepinthailand]

The UK does it regularly so what's the hassle.

[jesimps]

First I've heard of them selling foreign currency reserves. Using up domestic currency reserves, yes, it was on here a few days ago.

[Brer Fox]

1 hour ago, jesimps said:

First I've heard of them selling foreign currency reserves. Using up domestic currency reserves, yes, it was on here a few days ago.

I am like you. All I have read before was about Treasury Reserves which is held in Thai baht currency and originates from taxes and duties and the likes. I have not read anywhere where it has been reported they are selling Foreign Reserves. Foreign reserves is money held in foreign currencies such as the USD or the Japanese Yen.and is a form of insurance against the local currency. It can be used also to manipulated the local currency as Crash999 points out.

 

In this story referred to by the author they clearly refer to Treasury Reserves rather than Foreign reserves. 

http://www.thaivisa.com/forum/topic/967758-pm-prayut-denies-the-government-is-broke/#comment-11600406

 

This story below is also the same and refers to Treasury Reserves. Perhaps author Scott might like to clarify. Is it Treasury (domestic currency THB ) Reserves he is talking about or is it Foreign (USD ) Reserves he claims the government is spending. 

 

 

[PatOngo]

Is the Thai gov't policy of spending Foreign Currency Reserves misguided?

......amongst other things.

[retarius]

Are we sure it is not Domestic Currency Reserves that are being used up as opposed to foreign currency? 75% of domestic reserves have been spent. Foreign reserves were up at the last datapoint if memory serves me correstly and are little chaged from the long term average.

[connda]

6 hours ago, Crash999 said:

A lot of these articles are misleading. Buying and selling of foreign reserves is normal and commonly used for controlling a currency's strength against the USD. Selling foreign reserves strengthens the Baht. Buying weakens the Baht. Neither are inherently good or bad. It depends on the objective of the government. 

This particular poll needs a button that says "Other" or "It depends".  Crash999 pretty much nails it.

As far as US Treasuries go, Asian countries whose long-term trading strategies are coupled with China's, the Asian Infrastructure Investment Bank (AIIB), and the One Belt One Road (OBOR) initiative will probably be decreasing their holdings of UST. 

[chainarong]

Their foreign reserves are being spent because no one will give them any foreign loans , China has  restrictions at the moment so their friends have let them down, you only spend reserves when you have nothing else...........................................

[thai3]

No not misguided, the sooner they bankrupt the place the sooner they will be gone

[elgordo38]

4 hours ago, roobaa01 said:

the foreign reserve currency policy executed by the thai government is reflected by the rating agencies fitch, moodys etc...saying the outlook remains STABLE at BBB + , hence what is all the fuss about ????

 

wbr roobaa01

Are these not the same guys that gave Lehman Bros. a passing grade in 2008.

Moody's Reaches $864 Million Subprime Ratings Settlement ...

Moody's fined: Agency admits to false credit ratings - eNCA

One study of "6,500 structured debt ratings" produced by Standard & Poor's, Moody's and Fitch, found ratings by agencies "biased in ...

[Brer Fox]

6 hours ago, jesimps said:

First I've heard of them selling foreign currency reserves. Using up domestic currency reserves, yes, it was on here a few days ago.

I am like you. All I have read before was about domestic reserves which is held in Thai baht currency and originates from taxes and duties and the likes. Foreign reserves is money held in foreign currencies such as the USD or the Japanese Yen.and is a form of insurance against the local currency. It can be used also to manipulated the local currency as Crash999 points out.

In the stories referred to by the author they clearly refer to Treasury Reserves rather than Foreign reserves. 

 

[Eric Loh]

I am positively sure that the survey question is not accurate. First the government don't manage nor have the authority to approve the use of foreign reserves. Central bank or in Thailand case, BOT manage the reserves and they are an independent institution. Only the domestic treasury reserves which was in the recent news, can be approved for use by a mere cabinet approval.