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Thai central bank chief says 'very worried' about strength of baht


snoop1130

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Personally, I have read TV for years—but never posted, since things seemed normal for a retiree in LOS.

But by the end of May, when the USD dipped under 31 on the Baht—I just had to sign on and start posting.

Something is very wrong with the Baht.  Some entity is dumping USD into Thai bonds.  And there are only two countries with enough USD to do this—whether from their reserves or as a main currency.

So glad we now have Central Bank’s attention. 

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When I settled down in Thailand I got 54 Baht for 1 Euro, today I'll get 33,4x Baht. The prices for food and things of daily need increase. All in all, Thailand has become a much more expensive place. I don't suspect that this situation will change any time soon.

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Reasonable remarks. He doesn't really have many bullets to use, nor can he control the entire Thai economy. I think the real danger in his eyes would be a baht crash coinciding with an economic downturn. I've thought about this one alot, and the solution is to bring up the ability of Thai's to buy more imports I guess, but how do you do that? Certainly not overnight. Should the Government buy building materials from abroad? Take on some debt In a building program? Pay for Thai students to study abroad to increase the national brain power? I suppose the answer to all of that could be yes yes and yes. But none of that would have immediate affect, but in the long term that is the solution. I don't see much expansion in the ability of ordinary Thai to buy from abroad. I never have looked at anything like wages rise or fall in Thailand, or income distribution or things like that, maybe some here have. I just wonder how high the baht can go?

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51 minutes ago, legend49 said:

He just finished economics 101 module yesterday, give him a break. LOL.

He actually graduated from Thammasat at age 18 (he had turned down a scholarship in California to stay closer to home) and got his PhD in Economics from Harvard at age 24, but sure, let's make the usual "Thais are so uneducated" jokes, why not.

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   Just the usual lip service with the equally usual no action.   I (fill in the blank with the name of a top official) am VERY WORRIED about (fill in the blank with any of the usual suspects:  pollution in Bangkok, pollution in the North, road safety, the strength of the baht, income inequity, failing education system, corruption, unfair justice system, plight of the poor, etc., etc.), and I pledge to do (fill in blah blah blah) which will result in (nothing of any consequence being done). 

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37 minutes ago, Isaan sailor said:

Personally, I have read TV for years—but never posted, since things seemed normal for a retiree in LOS.

But by the end of May, when the USD dipped under 31 on the Baht—I just had to sign on and start posting.

Something is very wrong with the Baht.  Some entity is dumping USD into Thai bonds.  And there are only two countries with enough USD to do this—whether from their reserves or as a main currency.

So glad we now have Central Bank’s attention. 

can you please elaborate why you think somebody is buying Thai bonds? Would really be interested to hear.

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Normally, when a currency rises significantly, imports flood in and the current account surplus shrinks. This reduces the attractivity of the currency and the exchange rate falls. Industrial and agricultural exports become more competitive and tourist numbers and spend per head (in Baht) would increase.

 

It would be simple to slash import duties to achieve this.

 

Unfortunately in LOS the importers, wholesalers and retailers earn mind blowing profits at the current level of the Baht AND belong to the 260 Families who control this country.....so it's not going to happen

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12 hours ago, smedly said:

why didn't you take action 3 years ago ???

 

oh that's right - the corrupt powers that were running the country wouldn't let you because they put their own interests above the Thailand economy 

And still are, busy buying assets overseas, having extra vacations for all the family, providing international schooling for their off-spring, while the workers of the country are stuck here in limbo... 

The best idea the PM has had so far is to subsidise some businesses that would otherwise disappear which wouldn't look good for Thailand,  and offer a cheap shop/package tour for the locals to try to generate some domestic money!

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2 minutes ago, huberthammer said:

how are they out of ammo? How does this relate to 1997?  rather confused about your statements

It might be better if you lay out your reasoning as to why you disagree with what I had to say. I am not professing to be right by any means.  I am only giving my thoughts on the matter and not claiming to be an expert on economics. What Ammo does he have? How different is this from 1997? I won't argue with you I will just listen. IF you were talking about my Post I don't think that this was the same as 1997, I said that perhaps he is worried about a Baht crash. 

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I think the value of the baht has been purposely strengthened by those nasty thais with the sole purpose of disrupting all those expats who give so much and ask so little in return

How dare they strengthen their economy in the wake of the last global financial collapse. How dare they not consider the financial well being of relatively well off retired expats who have never paid a red cent of thai tax before VOLUNTARILY moving to thailand because the cost of living is so cheap compared to good old back home.

It's a disgrace. They are all out to get us and discriminate against us. It's not fair.I want my mummy

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I am surprised he is still in his job he said the same thing a couple of months ago and he said he was going to slow it down, that did not happen but he still has his job, now he is still saying he is worried, so he is telling the people to save what they can

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If you stand in a still elavator, mid-level of a building, and other elevators pass along yours on their way down, you might feel that you are going up. 

 

This is what is happening with the baht. 

 

All the major currencies are engaged in a race to the bottom, thus depreciating against those that are not "competing" in this dubious race. 

 

Certainly the baht seems to have "appreciated" more than others, but lately the "best performing" currency was the Russian rubble. 

 

What does it mean? Nothing much... no need to look for complicated explanations... if a country, with a relatively sound economy, doesn't join the race to the bottom, then its currency is bound to rise.

 

The Thai central bank could do like the Swiss, print money hands over fists to buy dollars, pounds and so on, then use these currencies to buy hard assets, including gold... actually one might wonder why they don't seize the opportunity... 

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1 hour ago, Beggar said:

I remember when they have been worried when the Baht moved from around 55 to 42 to the USD. Then we were given the feeling that this is enough already. Strange that the Baht is now at 30 and honestly I expect it to rise further.

I hope you're right.  there's precedent for the THB in the 20s - common before the 1997 financial crisis.  banks in much better shape than the 90s so a baht in the 20s is sustainable, especially when looking at the fundamentals in Thailand vs the US, Europe or the UK.

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41 minutes ago, khunjeff said:

He actually graduated from Thammasat at age 18 (he had turned down a scholarship in California to stay closer to home) and got his PhD in Economics from Harvard at age 24, but sure, let's make the usual "Thais are so uneducated" jokes, why not.

Well apparently he didn't grasp anything he learned at Harvard (or TU). His mismanagement of this whole situation has been so utterly predictable as to what is now happening. Keep rates high to encourage capital inflows to the country (Thailand's reserves are at all-time highs) and thus driving the Baht higher so that certain incompetent government officials could look like they were having success. Now with almost every country in a rate lowering cycle to counter the softening economy, Thailand is behind the curve and can't catch up.

There will not be a repeat of 1997, since Thailand has plenty of reserves. What's more likely is a prolonged economic slump that will be hard pressed to get out of. Tourists are already moving to other destinations, factories are closing because they are not competitive with neighboring countries, exports of commodity products are completely uncompetitive due to the high baht and Thailand is no where close to moving up the value chain in terms of becoming more service focused economy.

A Harvard or TU degree is good for lining the bottom of a birdcage if the person with it is dumb as rock (or likely in the case taking orders from people as dumb as a rock).

 

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