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Jonathan Fairfield

Bank of Thailand explains sudden appreciation of Baht

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17 hours ago, Traubert said:

I don't actually know him so he's hardly a mate.

 

Google is a shining beacon of truth is it? I'll pass thanks.

For you, of course, it's Baidu.

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33 minutes ago, saengd said:

To be brutally honest Steve, people who say that simply don't understand the problem, it's an easy way out of explaining things without having to think too much about what the solution might be, plus it's the populist answer! If you look at the problem objectively you'll see that there is no easy answer, if there was the problem would be have been solved, in fact it's very complex and not all the components are under the direct control of Thailand or BOT.

I agree with what you say. However there absolutely are measures which a country can undertake in order to control a harmful exchange rate, it's just that the people in charge of Thailand are not willing to use them.

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On 12/31/2019 at 3:52 AM, chowny77 said:

I am just waiting for the baht to explode as too many people are already in debt and the housing building boom is out of control. Possibly a re-occurrence of 1997. No way the banks can talk their way out of obviously making the baht strong with no financial backing.

Been hoping that bit o history repeat itself since 2005, only harder and longer and worser! :vampire:

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7 minutes ago, Skeptic7 said:

Been hoping that bit o history repeat itself since 2005, only harder and longer and worser! :vampire:

During the 1997 crash over 30,000 white collar workers lost their jobs, millions of people lost their savings and inflation went through the roof. The downstream effect of those things is that tens of thousands of smaller business folded and literally millions of people were laid off...non-performing loans shot up to 50%!

 

And you want to see that repeated! 

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9 minutes ago, saengd said:

During the 1997 crash over 30,000 white collar workers lost their jobs, millions of people lost their savings and inflation went through the roof. The downstream effect of those things is that tens of thousands of smaller business folded and literally millions of people were laid off...non-performing loans shot up to 50%!

 

And you want to see that repeated! 

Hmmm...let's see. Good for them or good for me? In a word...Yup! 

 

Relax...not like my wishing for anything is gonna make it happen, much as I WISH it could! :vampire:

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Posted (edited)

It Is not unnormal, the last day in the month, the day many foreigners transfer their pension, is also the day were Thai Baht raise. 

Edited by Misab
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Posted (edited)

Looking forward......

 

Markets are now saying that since the trade war is nearly over the safe haven effect of USD will come to an end. In times of uncertainty, as in the case of the China/USA trade war, funds go into dollars because it's a considered a safe currency.

 

Analysts are now saying that USD is on a path of long term weakness, this is made more certain because the Federal Reserve Bank halted its interest rate rises, markets now think USD is overvalued. As the value of USD falls, equity and commodity markets rise, there is an inverse relationship between the two.......the S&P has just hit new highs!

 

If correct and true, that means the value of USD will fall which will put further pressure on an overly strong THB, remember there are two sides to any currency pair and movement on either side will affect the value. 

 

I hope I'm wrong but that seems to be the direction.

Edited by saengd

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On 12/31/2019 at 4:14 PM, Maverell said:

It certainly looks that way, its the same of course with the THB/GBP rate. Perhaps some one who knows about these things can enlighten us?

Yeah,  The universe is out to screw with you

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On 12/31/2019 at 3:52 PM, chowny77 said:

I am just waiting for the baht to explode as too many people are already in debt and the housing building boom is out of control. Possibly a re-occurrence of 1997. No way the banks can talk their way out of obviously making the baht strong with no financial backing.

No, this is not gonna happen.

They are very different situations.

First of all, back in the 1990s Thailand had very little international reserves, today Thailand swims in international reserves. This is one of the main reasons why a currency is strong.

Secondly, inflation rate in Thailand is very low and this is another factor which keeps the currency strong.

Than, Thailand has very low public debt and a trade balance under control.

Than, there are several reasons why the Baht has been THE STRONGEST CURRENCY IN THE WORLD in the past 15 years (study by The Economist).

The first of them is that 15 years ago the Baht was one of the world's most undervalues currencies and the Big Mac index was clearly showing that.

Than, we already mentioned that the financial elements which make a currency strong are all present in Thailand now. (weak growth is not as important as the ones i mentioned above).

Than, let's look into EXAGGERATE rising of the THB in the past couple of years.

I have few reasons for that as well:

Big changes happened, specially one, and you know what i am talking about, many people was wondering what it could happen after that big change, somebody feared a chaos, etc...nothing happened and i think lots of money on hold came to Thailand after that.

Than, speculators don't care about democracy and human rights, they care about stability either under a rule of law or a dictatorship as long as the financial fundamentals are strong.

That happened in Thailand. I am not happy to see Thailand with a joke of democracy, but speculators don't care about it.

More money into Thailand when they perceived the generalissimo was going to stay.

Than,let's look at the past few months further rise of the baht :

i have few reasons for that as well

 

Despite the weak growth the Bank of Thailand rose the interest rate after few years, while the FED lowered that in US.

Than, Hong Kong chaos caused an outflow of money from Hong Kong to other destinations. I am sure a chunk of that money came to Thailand. another spoonful of sugar....

 

Finally, the tourist season kicked off and most of the times THB rises in December ahead of the influx of millions of people.

 

So....we had several factors, some of them of long, others medium and others short term combining together.

The all over result was in a THB which definitely rose too much.

I think (i have been  a currency expert for about 20 years), THB could sit in a comfortable area with a value of around 33 for USD which implies it's currently 10% overvalued.

 

I think only a part of the money and hot money ,so the strong THB is here to stay but possibly not as strong as it has been now. It was too much and Thailand can no longer afford a further appreciation without feeling the pain.

Profit margins in Asia are generally low, such a sharp rise can't pass painless.

 

 

 

 

 

 

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On 12/31/2019 at 8:27 AM, zydeco said:

29.75 now. Happy New Year! Donald is getting the cheap dollar he wanted. And Americans in Thailand are getting fried.

 

Well boo hoo I am almost in tears think of the great losses of those Americans brave enough to live in a place to take advantage of economic disparities. Think of this as God's way of evening things out and if you are lucky to have even 40,000 a month you are in the top percentages. 

 

 

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Forget the weak Dollar aspect now that Iran has kicked off, the game just changed and the exchange rate against the Baht will reflect that on Monday.

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On 1/2/2020 at 5:01 AM, Roy Baht said:

In the meantime, a global event--a stock market crash, a war in the Middle East, the bursting of China's housing bubble--might send people running to BUY dollars,

 

What? A war in the Middle East? Who knew?

 


 

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