Thailand's Rallying Currency Proves a Headache for Its Central Bank

[webfact]

Thailand's Rallying Currency Proves a Headache for Its Central Bank

by Yumi Teso and Lilian Karunungan

 

- Baht supported by $2.2 billion of bond inflows this year

- Currency’s resilience could hurt exports: AllianceBernstein

 

BANGKOK: -- Thailand’s popularity among bond investors is creating a headache for policy makers counting on exports and tourism to drive growth.

 

Some $2.2 billion of foreign money has flowed into the nation’s debt this year, making it the top destination among Southeast Asia’s emerging markets. That’s buoying the baht, the region’s best developing-nation performer in 2017, and spurring speculation the currency will cope with rising U.S. interest rates better than its peers.

 

It’s also causing problems for policy makers that are trying to revive an economy where growth has slowed for the last two quarters. Bank of Thailand Governor Veerathai Santiprabhob said Feb. 23 that foreigners saw the country as a “safe haven” and the baht’s strength wasn’t helping the economy.

 

Full story: https://www.bloomberg.com/news/articles/2017-03-05/thailand-s-asean-haven-status-giving-central-bank-baht-headache

 

-- Bloomberg 2017-03-06

[PatOngo]

BANGKOK: -- Thailand’s popularity among bond investors is creating a headache for policy makers counting on exports and tourism to drive growth.

 

The answer is clear......increase tourist prices 10 fold......there, problem solved!

[bangkokorbust]

That's interesting investors see "thailand as a safe Haven"

Oh dear the TV bar stool analysts won't like that at all lpl

[ezzra]

1 hour ago, PatOngo said:

BANGKOK: -- Thailand’s popularity among bond investors is creating a headache for policy makers counting on exports and tourism to drive growth.

 

The answer is clear......increase tourist prices 10 fold......there, problem solved!

 

Or, as export, send 10,000 'massage ' ladies to all over the world to remit their

earning back to Thailand...

[gamini]

2 hours ago, bangkokorbust said:

That's interesting investors see "thailand as a safe Haven"

Oh dear the TV bar stool analysts won't like that at all lpl

 And the TV Thai bashers will claim the reports are false!

[Stargeezr]

The Thailand currency has been propped up for too long now, and tbeir economy is 

relying a lot on tourism and high rice prices. The high baht actually hurts the regular people of Thailand, as they cannot afford to buy the imported goods that cost more than they used to. It is too bad that the

people in power do not see this. No wonder the Central bank has a head ache, because they see the

Truth.

Geezer

[BEVUP]

Easily fixed, just follow Australia's example & tax ( Budget repair levy ) the high income earners an extra 2 perc above a certain limit to gain an ever increasing spiraling Deficit 

[StefanBBK]

With the baht gaining strenght, imported goods should become cheaper. Why am I not seeing this happen?

[hhinhh]

1 hour ago, Stargrazer9889 said:

The Thailand currency has been propped up for too long now, and tbeir economy is 

relying a lot on tourism and high rice prices. The high baht actually hurts the regular people of Thailand, as they cannot afford to buy the imported goods that cost more than they used to. It is too bad that the

people in power do not see this. No wonder the Central bank has a head ache, because they see the

Truth.

Geezer

I cannot see it either. If the THB gains value imported good become cheaper and not more expensive!

[inzman]

Thai baht gets stronger, Gbp loosing value, beer doubling in taxes. Visit Thailand, the most expensive place on earth with the dirtiest beaches on earth!!

[Srikcir]

8 hours ago, webfact said:

It’s also causing problems for policy makers that are trying to revive an economy where growth has slowed for the last two quarters.

Just recently a top academic has cautioned about the ballooning budget deficit which could become a burden for successive governments. 

http://www.nationmultimedia.com/news/business/EconomyAndTourism/30305918

As long as the military keeps getting its annual 5% funding increases and "toys," it probably could care less of any financial burdens on successive governments.

[KhunBENQ]

5 hours ago, Stargrazer9889 said:

The high baht actually hurts the regular people of Thailand, as they cannot afford to buy the imported goods that cost more than they used to.

As @StefanBBK write the opposite should happen and that hurts ME.

Crazy increases in imported stuff.

[BuaBS]

Thailand's Rallying Currency

 

Really ? Who writes this ?

[siam2007]

14 minutes ago, BuaBS said:

Thailand's Rallying Currency

 

Really ? Who writes this ?

 

The Baht is not only overvalued, it is GROSSLY overvalued !

It gained more than 20% against the Malaysian Ringgit over 2 or 3 years, for example.

It is at its highest against the Euro as well

 

[Allstars]

23 minutes ago, BuaBS said:

Thailand's Rallying Currency

 

Really ? Who writes this ?

 

On 15 February yahoo finance published an article which quoted that the USD has risen against a basket of 22 foreign currencies for the 11th straight day.

 

During those same 11 days the USD had fallen against the Thai Baht for 11 straight days.

[HHTel]

The answer is to devalue as most economists would recommend..... but that is seen as 'losing face'

[BuaBS]

5 hours ago, siam2007 said:

The Baht is not only overvalued, it is GROSSLY overvalued !

It gained more than 20% against the Malaysian Ringgit over 2 or 3 years, for example.

It is at its highest against the Euro as well

If other currencies go down the toilet doesn't mean the THB is overvalued.

The THB is undervalued , should be back to <30THB to USD .

[siam2007]

10 hours ago, BuaBS said:

If other currencies go down the toilet doesn't mean the THB is overvalued.

The THB is undervalued , should be back to <30THB to USD .

 

 

What a nonsense, it is by far the best performing currency of SEA in 2017 and the gov is worried because of its high valuation

[Berkshire]

20 hours ago, BuaBS said:

Thailand's Rallying Currency

 

Really ? Who writes this ?

Your chart indicates that the THB has been strengthening against the USD since the beginning of 2017.  Just saying...

[BuaBS]

17 minutes ago, Berkshire said:

Your chart indicates that the THB has been strengthening against the USD since the beginning of 2017.  Just saying...

That small blip from the beginning of 2017 is meaningless. Fact : in 2013 only 28-29 THB bought you a dollar , now you pay around 35 B from that same dollar.

[Berkshire]

36 minutes ago, BuaBS said:

That small blip from the beginning of 2017 is meaningless. Fact : in 2013 only 28-29 THB bought you a dollar , now you pay around 35 B from that same dollar.

Regardless, I do see the USD getting stronger after the US Feds rate interest rates later this month.  But it's hard to predict the capital inflows from foreign funds, which is what seems to be keeping the THB relatively strong according to the OP.  

[Berkshire]

USD back over 35.  I think the short term trend is stronger dollar....maybe even in the 36-37 range.