Stop Press ! Baht Drops, Sudden Depreciation

[topfield]

10PM WEDNESDAY 20 DECEMBER.

In the last hour or so the baht has fallen from 35.60 to 36.20 to the dollar . That is almost 2 percent drop in

value 60 minutes .

Checked the Nation breaking news columna nd no mention of any new government measures.

Great news for expats in dollars or pounds. Will probably have to wait until tomorrow for a full explanation.

[britmaveric]

Seems like you already reported this, is another post warranted??

[topfield]

Seems like you already reported this, is another post warranted??

Yes totally warranted . This is stop press news. Happened in the last hour. Will effect all expats holding currency.

This is a larger fall that that of yesterday when the stock market collapsed.

[britmaveric]

Well all seriousness I expect it to get back over 40bht for $.

[Tywais]

Seems like you already reported this, is another post warranted??

Yes totally warranted . This is stop press news. Happened in the last hour. Will effect all expats holding currency.

This is a larger fall that that of yesterday when the stock market collapsed.

Since double posting is not allowed and this is the more appropriate forum for this, the other one is going to disappear now.

[bkkandrew]

Yes. NY about to close and its GBP-THB 71.52. Excellent...

Source:

http://newsvote.bbc.co.uk/1/shared/fds/hi/...78/intraday.stm

I think that actually the 30% witholding is beginning to bite in the intended manner (lowering the THB) now. The unintended (earlier) consequence of affecting Thai equities has now been dealt with by way of exclusion of SET trades.

This does, however, leave the continued consequences of inbound foreign currency transactions for spending or real estate purposes, which will surely result in depression of foreign capital spending in the Kingdom and, specifically, a decline (possible dramatic) of the residential property sector...

[Jingthing]

Another post is saying there will indeed be a 30 percent hold for condo purchases (in foreign name). That is shocking. How can anyone sell a condo with that restriction?

[kokothemonkey]

Another post is saying there will indeed be a 30 percent hold for condo purchases (in foreign name). That is shocking. How can anyone sell a condo with that restriction?

thats just it, you wont be able to (dont forget about the massive amount of condo inventory coming online also)

the game is over

[bkkandrew]

Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse.

There are none so blind as those that do not wish to see...

As the thai py will say, up to you!

[LaoPo]

10PM WEDNESDAY 20 DECEMBER.

In the last hour or so the baht has fallen from 35.60 to 36.20 to the dollar . That is almost 2 percent drop in

value 60 minutes .

Checked the Nation breaking news columna nd no mention of any new government measures.

Great news for expats in dollars or pounds. Will probably have to wait until tomorrow for a full explanation.

Maybe some people at the BoT (or higher up) know something that we don't (yet); we'll know in a few hours if the interest rate is going down...

GBP-Baht is below 71.00 now:

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

This chart shows a strange and hefty fluctuation between 18.00 and 21.00 GMT hours.....

LaoPo

Edited December 20, 2006 by LaoPo

[Mighty Mouse]

Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse.

There are none so blind as those that do not wish to see...

As the thai py will say, up to you!

They said the same thing recently about the Australian property market.....it didn't happen and now prices are beginning to rise.

They are saying the same thing about the US property market, so far so good.

They have been saying the same thing about the Thailand property market...for years and years....it hasn't happened.

Bubbles burst, balloons deflate.

These days property markets around the world deflate in line with the 8 - 10 year property cycle. Property market collapses usually result from a market oversupply, coupled with rising interest rates.

Available land is becoming very scarce and that creates demand. There will never be a property crash as long as there is demand.

Further interest rate rises are also doubtful as the world is experiencing stagflation/deflation. The next move for interest rates may well be down.

You are not the only voice in the wilderness, but you are quickly running out of company.

[kokothemonkey]

Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse.

There are none so blind as those that do not wish to see...

As the thai py will say, up to you!

They said the same thing recently about the Australian property market.....it didn't happen and now prices are beginning to rise.

They are saying the same thing about the US property market, so far so good.

They have been saying the same thing about the Thailand property market...for years and years....it hasn't happened.

Bubbles burst, balloons deflate.

These days property markets around the world deflate in line with the 8 - 10 year property cycle. Property market collapses usually result from a market oversupply, coupled with rising interest rates.

Available land is becoming very scarce and that creates demand. There will never be a property crash as long as there is demand.

Further interest rate rises are also doubtful as the world is experiencing stagflation/deflation. The next move for interest rates may well be down.

You are not the only voice in the wilderness, but you are quickly running out of company.

you are kidding mighty mouse? thailand housing market is already starting to suffer, and by the way, the bubble is bursting in the US.....check it...

http://housing-watch.com/home.aspx?d=90

http://thehousingbubbleblog.com/

little less time with the bargirls and maybe you wont be poorer

Edited December 20, 2006 by kokothemonkey

[bkkandrew]

Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse.

There are none so blind as those that do not wish to see...

As the thai py will say, up to you!

They said the same thing recently about the Australian property market.....it didn't happen and now prices are beginning to rise.

They are saying the same thing about the US property market, so far so good.

They have been saying the same thing about the Thailand property market...for years and years....it hasn't happened.

Bubbles burst, balloons deflate.

These days property markets around the world deflate in line with the 8 - 10 year property cycle. Property market collapses usually result from a market oversupply, coupled with rising interest rates.

Available land is becoming very scarce and that creates demand. There will never be a property crash as long as there is demand.

Further interest rate rises are also doubtful as the world is experiencing stagflation/deflation. The next move for interest rates may well be down.

You are not the only voice in the wilderness, but you are quickly running out of company.

Are you unaware of the property-let slide in US that is a large contributor to the current slide in USD?

Are you even aware of basic economic principles? "These days" were the excuse for explaining why the Dotcom boom in 1998-2000 was sustainable, er.. by people like you

Yes - sustainable - your arguments are not that, certainly.

[LaoPo]

10PM WEDNESDAY 20 DECEMBER.

In the last hour or so the baht has fallen from 35.60 to 36.20 to the dollar . That is almost 2 percent drop in

value 60 minutes .

Checked the Nation breaking news columna nd no mention of any new government measures.

Great news for expats in dollars or pounds. Will probably have to wait until tomorrow for a full explanation.

Maybe some people at the BoT (or higher up) know something that we don't (yet); we'll know in a few hours if the interest rate is going down...

GBP-Baht is below 71.00 now:

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

This chart shows a strange and hefty fluctuation between 18.00 and 21.00 GMT hours.....

LaoPo

It's getting weird now, look for yourself:

GBP-Baht is now 71.56750....and that happened in just about 30 minutes...

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

Looks like heavy speculation to me.

LaoPo

[Meerkat]

It's getting weird now, look for yourself:

GBP-Baht is now 71.56750....and that happened in just about 30 minutes...

http://newsvote.bbc.co.uk/2/shared/fds/hi/...78/intraday.stm

Looks like heavy speculation to me.

LaoPo

Bear in mind that whilst the FX market is open 24 hours in theory, in practice there is a dead-zone between NY's closing and Asia's opening (in fact for minor Asian currencies, liquidity even falls off after Asia's close). During these hours, liquidity drops off, spreads widen, and it's possible to push the market around with only a couple of small trades (the BBC charts don't show volume - those trades that make the graphs look so odd would have probably been in only a couple of million. Also, the fact that the graphs are moving in long straight lines give a clue as to the lack of trades).

Of course, this is a prime example of why speculators are a good thing for markets - they provide liquidity which, contrary to some people's opinions (including those at the BOT it would seem), actually helps to smooth prices and reduce volatility. Make it difficult for speculators to get in and out of the market easily, and you get the kind of wild price fluctuations seen of late.

Edited to add: This doesn't mean there isn't anything underlying going on, just that you can't always trust the numbers you see during the night-time.

Edited December 21, 2006 by Meerkat

[Mighty Mouse]

you are kidding mighty mouse? thailand housing market is already starting to suffer, and by the way, the bubble is bursting in the US.....check it...

OK, I checked both sites and I see US house prices deflating, not bursting.

Real estate (RE) prices over any ten year period usually double. Look at some graphs for confirmation.

Australia is about to come out of a RE slump. Despite all the predictions of a doom and gloom price crash, it didn't happen and now prices in the luxury end of the market are starting to rise. Price activity in the luxury end of the market is always a good indication as to what to expect in the near future for the overall market.

I don't live in America so can't make an expert judgement on RE prices, but from what I have read on the subject, the US housing market is in for a soft landing....NO BUBBLE BURST!!!!

Thailand market may be suffering slightly due to Govt. policies regarding ex-pats, but still no bubble burst.

I have heard the CRASH argument so many times re Pattaya property prices, yet prices remain fairly stable.

Japan is an exception. Their property prices did burst but are now on the recovery road.

Are you unaware of the property-let slide in US that is a large contributor to the current slide in USD?

Don't you think that US debt is the main contributor to the greenback woes? Low interest rates are also a factor as is the amount of US debt held by China and Russia. Falling RE prices don't help and when Americans start saving rather than spend their earnings, you will then see the greenback tumble substantially.

The big question is "how much longer will the greenback be the worlds reserve currency?"

Housing has very little to do with that question.

Edited December 21, 2006 by Mighty Mouse

[Gary A]

I had resigned myself to getting 35 baht to a dollar so this is good news for me. A weak baht is good for Thailand the same as a weak dollar is good for the USA. Let the Chicken Littles run around saying the sky is falling. I have no control over the situation so my old saying holds very true. I don't concern myself with things I have no control over.

[backflip]

"Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse."

Get over yourself. Many posters have been predicting a "collapse" of the BKK housing market, for the past 5 years. It wasn't correct then, and it isn't correct now.

[samtam]

Well a 30% rise for foreign investors doesn't help. If indeed that's what the new exchange control regulations are. But we'll just have to keep wondering about that until the BOT decides it does need to clarify. This is of course very good for investor confidence; as we all know markets love uncertainty.

[davidbkk]

you are kidding mighty mouse? thailand housing market is already starting to suffer, and by the way, the bubble is bursting in the US.....check it...

OK, I checked both sites and I see US house prices deflating, not bursting.

Real estate (RE) prices over any ten year period usually double. Look at some graphs for confirmation.

Australia is about to come out of a RE slump. Despite all the predictions of a doom and gloom price crash, it didn't happen and now prices in the luxury end of the market are starting to rise. Price activity in the luxury end of the market is always a good indication as to what to expect in the near future for the overall market.

I don't live in America so can't make an expert judgement on RE prices, but from what I have read on the subject, the US housing market is in for a soft landing....NO BUBBLE BURST!!!!

Thailand market may be suffering slightly due to Govt. policies regarding ex-pats, but still no bubble burst.

I have heard the CRASH argument so many times re Pattaya property prices, yet prices remain fairly stable.

Japan is an exception. Their property prices did burst but are now on the recovery road.

Are you unaware of the property-let slide in US that is a large contributor to the current slide in USD?

Don't you think that US debt is the main contributor to the greenback woes? Low interest rates are also a factor as is the amount of US debt held by China and Russia. Falling RE prices don't help and when Americans start saving rather than spend their earnings, you will then see the greenback tumble substantially.

The big question is "how much longer will the greenback be the worlds reserve currency?"

Housing has very little to do with that question.

dont be too sure things are ok in the US as far as housing goes, try some of the articles on here:

US real estate news

this article summed it up nicely for me:

overpricing

i think real estate is too expensive in many countries at the moment

Edited December 21, 2006 by davidbkk

[quiksilva]

"Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse."

Get over yourself. Many posters have been predicting a "collapse" of the BKK housing market, for the past 5 years. It wasn't correct then, and it isn't correct now.

Hear hear, well said!!

I call it stopped watch economic theory. The doomsayers keep repeating this mantra and sure if they keep at it, eventually they will call the 'crash' with perfect timing, but its hardly what you would call reliable.

[topfield]

Seems like you already reported this, is another post warranted??

FROM TOPFIELD :

TO BTITMAVERIC

Yesterday my judgement was questioned by my reporting of a sudden two percent drop in the baht late last night.

Had I not reported this / or the posting deleted, people would not have got the news until too late as it was reported only the following day by the Bangkok Post ! see below :

Thailand's stock market, rocked by an historic plunge following restrictions on foreign investment, fell 2 per cent Thursday even as Prime Minister Surayud Chulanont said he fully supports the central bank's attempts to weaken the baht.

The baht weakened to 36.43 per US dollar from 35.80 late Wednesday

[ZZZ]

Tuesday a large amount of stocks were sold, mainly by foreign investors. This money is now taken out of Thailand, converted to foreign currency,

When selling such a large amount of Bath the currency will usually weaken. This weakening is most likely a very short term thing unless the government take further action.

[monty]

Basically it's exactly the result the BOT had hoped for.

Only thing is, they probably had hoped to stop people buying Thai Baht with their measures, and not really a massive sell-off on the stockmarket followed by the repatriation of those funds!

They managed to wipe out quite some Thai wealth in the process as well...

[britmaveric]

Dollar is moving up.... well I think its working.

[bkkandrew]

"Like a lone voice in the wilderness, I have been saying this for some time - the property bubble is going to burst! As demonstrated by many economic examples over hundreds of years, this inevitably leads to wider economic decline, or indeed, collapse."

Get over yourself. Many posters have been predicting a "collapse" of the BKK housing market, for the past 5 years. It wasn't correct then, and it isn't correct now.

Hear hear, well said!!

I call it stopped watch economic theory. The doomsayers keep repeating this mantra and sure if they keep at it, eventually they will call the 'crash' with perfect timing, but its hardly what you would call reliable.

You pair of nutcases!

Predicting for the last year that the BKK residential property sector is developing into bubble and pointing out that, historically, this can lead to wider economic problems does not turn me into a "doomsayer" repeating a "mantra".

I sometimes wonder if it is regrettable that that ThaiVisa do not include an IQ test as part of the sign-up process...

[bendix]

I sometimes wonder if it is regrettable that that ThaiVisa do not include an IQ test as part of the sign-up process...

Hear hear!

The amount of ill-informed drivel that has been written this week makes me despair. It's not only stupid; its dangerous and irresponsible.

[quiksilva]

It is you guys who ought to be more responsible when throwing around terms like crash, and bubble.

What is exactly is the basis of your argument that a "bubble" has formed in the residential sector?

An economic bubble (sometimes referred to as a "market bubble", a "financial bubble", or a "speculative mania") refers to a market condition in which the prices of commodities or asset classes increase to absurd or unsustainable levels (that no longer reflect utility of usage and purchasing power). It occurs when speculation in the underlying asset causes the price to increase, thus encouraging even more speculation.

Source: Wikipedia

By that definition the only recent Thai property bubble (in the last few years) that I have seen is land values, on Bangna Trad near the new international airport that have been increasing purely on the back on speculation. They rose from 6m per Rai to over 19m / Rai in the space of 12 months. They buy the land, jack up the prices and sell on without making any improvements to the property. That is a bubble.

Are speculators taking over the residential market? They are there, for sure, I wont dispute that, but they are still only a minority player. Are you seriously saying that residential prices have risen beyond all sense? When you consider that most condo buyers are expats prices in the LOS are still relatively good value.

Will there be a slow down in the residential market, in light of the total amount of new supply coming in? For sure. A yield crunch? Almost definitely. But a crash? I just don't see it.

Edited December 22, 2006 by quiksilva

[Ricardo]

I sometimes wonder if it is regrettable that that ThaiVisa do not include an IQ test as part of the sign-up process...

Hear hear!

The amount of ill-informed drivel that has been written this week makes me despair. It's not only stupid; its dangerous and irresponsible.

Perhaps a test for the level of alcohol, in the blood-stream, might also be relevant ? Much the better sort of bubbles to encounter.

Cheers, chaps !

Edited December 22, 2006 by Ricardo

[xbusman]

I am not a property speculator but I know lots of folks who are. Most of my experience is in the Los Angeles market but I think the number analysis works both ways.

First, when you buy a property for investment, you start by determining the yield per square foot, how much you can rent it for adjusted to 100% occupancy over the life of the asset. So if I can rent it for say 100,000 baht per month but can only rent it for 10 years of the next 20, the actual gross yield is 50,000 per month. The asset must return between 6% and 10% yield which generally means a 10 to 15 year payoff after management expenses. Anything outside those ranges is generally considered a bubble, purely speculative money. The same definition could be used in the stock market which is why everyone watches the price to earnings ratio. When it gets too far out of line it is purely speculative money. A stock that trades at 100/1 price to earning is betting the come that something will happen to bring that company extraordinary earnings such as a drug breakthrough or other technical leap. ROI (return on investment) is ROI, no matter the language or the thought process.

The second is the amount of supply relative to the amount of demand in any particular market. In LA, you can easily find income distribution, per capita income, tax structures, etc and get a feel for the buyers. About two years ago, property there greatly exceeded the ability of "working" people to pay for it. They extended the bubble with lower interest rates and interest only loans, but eventually the price of housing outstripped the buyers ability to pay for it. When a two bedroom box on a postage stamp lawn hits $500,000 causing mortgage and taxes to be $5000/month or 60,000/year after taxes, means that the first $100,000 in income goes for the house. Since about half your income is a decent level for housing, your customers for a $500,000 house need to be making around $200,000 per year. That pretty much counts out the policeman, fireman, factory worker, nurse, and about 90% of the population working in southern california so by definition it became a bubble and was driven by pure speculation. It has begun to adjust and will continue to do so well into 2007 until the income levels get more in line with the cost of property.

Looking at Thailand, there is nowhere near enough information to know if there is a property bubble or not. It would be hard to even estimate a ROI as I do not think you can estimate the amount of time the property would actually be rented. I have seen some empty places available for rent here for years and years.

OPINION.... I think the expat/foreigner market here is greatly overestimated. In a country of 60 million people, the expat community is estimated between 50,000 and 200,000 total, with either end representing a non entity in relevance. The correct question is can the average Thai policeman, nurse, doctor, cab driver, afford reasonable living conditions given the pricing of the housing market. My guess is no but I could be well wrong. A four million baht loan would cost 32,000 baht per month to service. That would require an income of about 60,000 baht per month. That seems rather steep for general wages in Bangkok, perhaps I am wrong.

So if the market is outside ROI for rentals, and out of the reach of the general buying public, then it is driven by speculative money and by definition is in a bubble. Unfortunately there is no way to know that here because there are no hard numbers for either.