Thai central bank worried about strong baht, ready to use necessary measures

[digger70]

7 hours ago, sanuk711 said:

weaken the baht, make Thailand cheaper to visit---Gosh --what a good idea ----why didn't anyone else think of that...................

Should've bin done yrs ago. Don't hold you're breath won't happen soon.

[Traubert]

1 hour ago, Trillian said:

I believe the Yuan is pegged to the value of a basket of foreign currencies since 2006.

 

Since 2006, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. 

 

https://en.wikipedia.org/wiki/Renminbi

Central Bank always quoted the dollar since America threatened currency manipulation.

[Nong Khai Man]

5 hours ago, Brer said:

And how do they crash the baht, oh yeh lets move to negative interest rates like our cousins in Japan, let’s print more money

 

oh gawd my 800,000baht in Kbank no interest and it’s basically got to stay there, what a bummer, they will probably charge me now to keep it there, just when the stock markets are going bull.

so easy right now to turn my 800000baht into a million and it probably next year is going to be worth 792000 when I probably pay a 1% fee to keep it in bank.

Oh ! Stop Thinking it's ALL About YOU.......Me...Me....Me....

[Mavideol]

the US Dollar is influencing the bath's appreciation, somebody said the strong currencies are getting weak and that's correct mainly to the USD. My economist friend told me that almost all country leaders tend to print more money near voting time, because excess money in the system will help to boost the economy temporarily (not in the long run), and give impression that the economy is healing/booming

[Brunolem]

1 hour ago, Scouse123 said:

 

Some guys on here don't realize it's not always Thai baht appreciating, it's their home currencies depreciating against market conditions and record borrowing, quantitative easing, vast money printing etc

 

 

That sums it up...

[Brunolem]

50 minutes ago, earlinclaifornia said:

USD weakness is partially resulting as they spend money (trillions) they are borrowing. trump has weaken the world standing ever since elected. This will all change when President Biden is elected. Americans in Thailand will be rich again.

Trump is not the one weakening the USD, even though he supports its depreciation.

 

It is the Federal Reserve that is creating trillions of dollars out of thin air in order to support its multiple rescue programs, and finance the massive budget deficits.

 

No president will change anything to that.

 

The US has embarked on a road with no way back...

Edited June 1, 2020 by Brunolem

[DrTuner]

Print the 1.9 trillion they're looking for, that ought to make it plummet. Hell, print 10000000000 gazillion while at it, Zimbabwe here we come, I always wanted to have a 1000 trillion baht note. 

[Mavideol]

3 minutes ago, Brunolem said:

Trump is not the one weakening the USD, even though he supports its depreciation.

 

It is the Federal Reserve that is creating trillions of dollars out of thin air in order to support its multiple rescue programs, and finance the massive budget deficits.

 

No president will change anything to that.

 

The US has embarked on a road with no way back...

almost all country leaders tend to print more money near voting time, because excess money in the system will help to boost the economy temporarily (not in the long run), and give impression that the economy is healing/booming, Trump is no exception, Federal reserve follows Trump's orders

[Isaan sailor]

So how to explain the rapid ascent of the Baht?  Or, as some would prefer, the rapid descent of the USD (and related western currencies)?  From 33.08 on April 2 to 31,67 today?  That’s over 4% in just under one month.

[Trillian]

1 hour ago, Traubert said:

Central Bank always quoted the dollar since America threatened currency manipulation.

OK, I hadn't seen that but there again I don't follow anything to to do with China's central bank, thanks for telling me.

[Trillian]

11 minutes ago, Isaan sailor said:

So how to explain the rapid ascent of the Baht?  Or, as some would prefer, the rapid descent of the USD (and related western currencies)?  From 33.08 on April 2 to 31,67 today?  That’s over 4% in just under one month.

3 April, USD = 100.58.....today, USD = 98.15.

 

The FOREX market thinks THB is fair value and the underlying fundamentals support that rate, BOT agrees by virtue of the fact they have not intervened, perhaps that's about to change.

[newnative]

Talk, talk, talk, nothing but talk.

[Trillian]

Don't forget that Thai exporters have seen the ex. rate go as low as 29.x and whilst they complained at the time, it didn't hurt exports that much at the time. Today we're at 31.x, I suspect BOT thinks there's still plenty of headroom. Plus government is now signing a contract for the high speed rail link and that is payable in USD, a strong baht will help defray the cost of that so there could be a timing issue here, ditto the borrowings for a part of the 1.9 trillion Baht bail out fund.

[Brunolem]

19 minutes ago, Trillian said:

ditto the borrowings for a part of the 1.9 trillion Baht bail out fund.

Any idea where this money is going to come from?

 

I understand that the central bank will provide 900 billions, but what about the trillion baht?

[Trillian]

6 minutes ago, Brunolem said:

Any idea where this money is going to come from?

 

I understand that the central bank will provide 900 billions, but what about the trillion baht?

Last thing I read they were exploring options but I've not heard that anything is confirmed. Forward fixing a USD loan whilst the ex. rate is strong would be a good move, that's what they did with the high speed rail link, later they can let the Baht weaken and they're well ahead of the game.

[Brickbat]

Nobody is worried. Except exporters and the tourism Industry. The Central Bank folks just stool pigeons for all those benefiting from the artificially high baht. Rake in billions locally and invest overseas. It’s that’s simple. When it all crashes locally, mop up. Masses don’t get it.

[Brunolem]

1 hour ago, Trillian said:

Last thing I read they were exploring options but I've not heard that anything is confirmed. Forward fixing a USD loan whilst the ex. rate is strong would be a good move, that's what they did with the high speed rail link, later they can let the Baht weaken and they're well ahead of the game.

They just sold for 50 billions baht in bonds locally.

 

I don't know if it was part of the 1 trillion and why they didn't sell a much higher amount...the whole thing was subscribed on day one...and nothing better than borrowing in their own currency...

 

Edited June 1, 2020 by Brunolem

[DrTuner]

2 minutes ago, Brunolem said:

They just sold for 50 billions baht in bonds locally.

 

I don't know if it was part of the 1 trillion and why they didn't sell a much higher amount...the whole thing was subscribed on day one...and nothing better than borrowing in their own currency...

Is there such a thing as government junk bonds? Issue enough of them and there you go, 1.9 trillion free money. Until the bonds default.

[yourauntbob]

11 hours ago, Misterwhisper said:

Tourism industry... as good as ground to a halt

Hospitality sector... in dire straights as a result

Labor force... millions laid off

Agricultural sector... production down due to drought

Inflation... steep price rises across pretty much all products

Local businesses... closed down for months and only now slowly opening again

Exports across the board... in the cellar

Manufacturing sector... heavy losses due to flattening out exports

Government... questionable "democracy" and military-installed parliament and senate

Corruption... getting worse, with Thailand having dropped several points in the ICI

Aviation... Thai Airways bust and country's airports still in lockdown for incoming flights

Economic growth... predicted to be almost nil

 

And yet, the baht keeps strengthening. Can anyone explain to me why?

The baht is not getting stronger, if it was then the prices you list above would be going down not up.  What is happening is that the baht is weakening more slowly than the major currencies due to all the "stimulus" that many western countries are pumping out.  Most of these "stimulus" packages are financed by central banks (o.e. printing more money).  As those central banks flood the market with excess currency the value of those currencies goes down faster than the Thai Baht which gives the illusion of a strong currency.  

 

So if you want to know who to blame for the lack of value your home currency now demands, blame your home government/central bank.  Its funny to hear expats on this forum blame the Thai government for the lack of purchasing power of their home counties currency.  

 

The Thai central bank would be wise to increase the value of the baht rather than decrease.  A strong currency would lead to economic growth through foreign investment.   It would also result in a price drop on goods and services within the economy which would benefit the Thai people in the long run.  

[yourauntbob]

1 hour ago, DrTuner said:

Is there such a thing as government junk bonds? Issue enough of them and there you go, 1.9 trillion free money. Until the bonds default.

Yes, the term "junk bond" simply means a low credit rating, typically BBB or lower.  Many counties are in "junk" status.

[Banana7]

Currently, Thai exports more than it imports. Until it imports more than it exports, THB will continue to strengthen.  Additionally, BOT has lots and lots of restrictions on THB movement, especially on exporting the currency. It is far from a free market currency.

[Selatan]

15 hours ago, Misterwhisper said:

Tourism industry... as good as ground to a halt

Hospitality sector... in dire straights as a result

Labor force... millions laid off

Agricultural sector... production down due to drought

Inflation... steep price rises across pretty much all products

Local businesses... closed down for months and only now slowly opening again

Exports across the board... in the cellar

Manufacturing sector... heavy losses due to flattening out exports

Government... questionable "democracy" and military-installed parliament and senate

Corruption... getting worse, with Thailand having dropped several points in the ICI

Aviation... Thai Airways bust and country's airports still in lockdown for incoming flights

Economic growth... predicted to be almost nil

 

And yet, the baht keeps strengthening. Can anyone explain to me why?

Thailand has a very low inflation rate problem, not high inflation. That's the reason why the baht is very strong. In fact, Thailand has a negative inflation rate at the moment.

 

Thailand: Steepest price fall since the financial crisis reflects huge drop in demand

 

Thailand has been having a very low inflation rate problem for years. The main reason for this is low domestic demand, caused by low birth rates and an ageing population.

[Trillian]

6 hours ago, Brunolem said:

They just sold for 50 billions baht in bonds locally.

 

I don't know if it was part of the 1 trillion and why they didn't sell a much higher amount...the whole thing was subscribed on day one...and nothing better than borrowing in their own currency...

 

Bond sales are ongoing, bonds are sold by the government, the Ministry of Finance and by BOT, as short term issues mature they are reissued so there is nothing exciting about a 50 bill. issuance. And no, I do not believe that issuance would have been part of the 1 trill. since the precise way that loan will be financed is still unclear and may not yet have been made public - the . I read where one poster said that sovereigns could only issue bonds for debt and that other forms of borrowing are not permitted, in Thailand's case (at least) that is not true and regular loans are possible. The Public Debt Management Office (PDMO) is the place to watch out for details of that borrowing, as of now they are still showing debt as 42% of GDP https://www.pdmo.go.th/en

 

But you are correct regarding loans in THB, apparently Thailand has less than 4% of its debt in foreign currencies, the remainder is all in THB either through bond sales or local financing.

[Trillian]

1 hour ago, Selatan said:

Thailand has a very low inflation rate problem, not high inflation. That's the reason why the baht is very strong. In fact, Thailand has a negative inflation rate at the moment.

 

Thailand: Steepest price fall since the financial crisis reflects huge drop in demand

 

Thailand has been having a very low inflation rate problem for years. The main reason for this is low domestic demand, caused by low birth rates and an ageing population.

And the low levels of imports mean that imported inflation is almost non-existent.

[Trillian]

6 hours ago, DrTuner said:

Is there such a thing as government junk bonds? Issue enough of them and there you go, 1.9 trillion free money. Until the bonds default.

A sovereign default would be the end of Thailand, it would kill the economy stone dead and simply wouldn't happen. And with the money already in the bank in reserves and borrowings so low, why would they!

[finnishmen]

i hope thaibaht weak lot and ccome same old good time rate 1;50 than before has, now rate have wery poor 1;36 not newer want this again. i hope tourism drop,all fly banned, bordens closed then have good, thai can understand how important foreign and western money have many many million job. and all thailand economy, and PM understand need made thailand europe guality what him has before say him want, make too what want. first big work have end visa law and make normal human visa law new. not old stupid monkey build visa law.

[Brunolem]

8 hours ago, yourauntbob said:

Its funny to hear expats on this forum blame the Thai government for the lack of purchasing power of their home counties currency.  

 

The Thai central bank would be wise to increase the value of the baht rather than decrease.  A strong currency would lead to economic growth through foreign investment.   It would also result in a price drop on goods and services within the economy which would benefit the Thai people in the long run.  

 

Not so long ago, it was a shame to devalue a currency and a matter of pride to have a strong one. 

 

Countries like Germany or Switzerland became rich while having strong currencies, while countries like Italy or Greece constantly lost ground while having weak currencies. 

 

Today, so-called developed countries are engaged in a race to the bottom... it's about who will be the most reckless in debauching its currency (Lenin is probably laughing in his grave). 

 

In such a context, it is not such a surprise that the Thai baht is seen as a safe haven... after all there are not so many countries with a well managed stable currency. 

[Brunolem]

3 hours ago, Trillian said:

Bond sales are ongoing, bonds are sold by the government, the Ministry of Finance and by BOT, as short term issues mature they are reissued so there is nothing exciting about a 50 bill. issuance.

This 50 billion issuance didn't look like a regular rollover. 

 

It was advertised and specifically targeted the over 60 population, who were the only ones authorized to buy during the first week. 

 

And it was not short term... 25 billions in 5 years and 25 billions in 10 years bonds. 

[Trillian]

6 minutes ago, Brunolem said:

This 50 billion issuance didn't look like a regular rollover. 

 

It was advertised and specifically targeted the over 60 population, who were the only ones authorized to buy during the first week. 

 

And it was not short term... 25 billions in 5 years and 25 billions in 10 years bonds. 

These are the PDMO projects for April, there was a 50.7 bill. offering which offset budget deficit, maybe that was it, dunno.

 

https://www.pdmo.go.th/en/plan-debt/plan-debt-public-management

[DrTuner]

4 hours ago, Trillian said:

A sovereign default would be the end of Thailand, it would kill the economy stone dead and simply wouldn't happen. And with the money already in the bank in reserves and borrowings so low, why would they!

Well since it looks like the baht needs a direct nuclear strike to fall, that ought to do. Pickup sales would rise as well - until somchais default on their easily gotten loans.