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State of economy worse than initially estimated: BOT

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Posted (edited)

Since the strength of USD plays a key role in the Thai economy and there seems to be some disagreement as to whether it is strong or weak and is being bought or sold presently:

 

"with interest rates at zero, the federal deficit soaring and U.S. bond yields barely above the rest of the developed world, there’s not much incentive for investors to be parked in dollars. Washington’s dispute with Beijing won’t be helping, and neither will the civil unrest of recent days and the prospect of mass unemployment".

 

The effect of that is:

 

"The dollar’s weakness also reflects the relative strength of other currencies. Neither China nor Japan have conducted stimulus on anything like the same scale. A weaker dollar might be just what the global economy needs to sustain a proper recovery, as it prevents a skew of capital flooding into just one liquid currency".

 

https://www.bloomberg.com/opinion/articles/2020-06-03/the-mighty-u-s-dollar-is-having-a-wobble

 

The US Dollar Index (the value of USD) is at its lowest point since March and Thai gold has risen 22% in the past 6 months, it's impossible to make the case that even though it's a safe haven currency that people are buying USD in anything like a meaningful way globally, they're not, they're selling USD and have been buying gold.

 

https://goldprice.org/gold-price-thailand.html

https://www.marketwatch.com/investing/index/dxy

 

BOT's concern must be that USD weakness will make THB even stronger, those are the financial markets and exchange rate developments they are concerned about. And of course the stronger the Baht, the greater the threat to exports, tourism and FDI, potentially, all of which undermine BOT's efforts to weaken the Baht.

 

 

 

Edited by Trillian
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As if by coincidence, a further article in the Thai press this morning but the link can't be posted. It reads to the effect of, FDI inflows to THB were seen last month as people shun USD, currency traders are invited to meet with BOT to disucss related Baht strength issues. So the path was, USD to THB to Gold.

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No worries TAT will Stimulating local tourism to get back the momentum !

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12 hours ago, Brunolem said:

It will take some time for the countries to get a clear idea of their economic situation.

 

Right now, they are like in the cloud of dust after a massive explosion, or rather implosion in this case.

 

When the dust settles, maybe around September, reality will reveal itself in all its ugliness...

And it's going to get very ugly,there is a naff off depression in the post,and Thailand with its high baht,Reliance on touriam and exports is going to be badly hit,throw in the global civil unrest and you,'ve got the recipe for the perfect storm.

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14 hours ago, Misterwhisper said:

So if

and

and

and

then why would there be

?

 

Under all these above conditions PLUS the fact that millions of workers have lost their jobs while inflation soars, shouldn't the THB tank at least a little bit instead of strengthening? I just don't understand what is keeping it so high. It cannot be due to (foreign) investors parking their funds in the THB as a "safe haven currency" alone, can it?

Kept artificially high by farang "sponsors" of their Thai " girlfriends" all joking aside don,t know the amount of for ex flooding it on a weekly basis but it must be considerable.

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You think it's bad now???? Just wait when NO tourists arrive....then it will get worse! Thank god I left 7 years ago. 

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Will that mean the cancellation of 2nd hand Chinese submarines and 2nd hand armoured tanks from the Ukraine.

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15 hours ago, Misterwhisper said:

So if

and

and

and

then why would there be

?

 

Under all these above conditions PLUS the fact that millions of workers have lost their jobs while inflation soars, shouldn't the THB tank at least a little bit instead of strengthening? I just don't understand what is keeping it so high. It cannot be due to (foreign) investors parking their funds in the THB as a "safe haven currency" alone, can it?

You forget that all other economies have tanked also. So no gains no lose. Add to that Thailand had far fewer infections and deaths from Covid19 compared to other countries. 

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I dont know really, but I reckon the the rellows from the north will have a bit to do with it as far a providing money for info structure (fast train) you know things like that BELT AND ROAD that's what I'm thinking additional points to all bad news with that scenario. 

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Maybe simply buy their calculators from somewhere other than PRC

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This bad news will have a huge impact on the Thai stock market!

Let's watch the SET index when it opens today, after this news I would guess a 5 to 10% fall if not more.

 

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42 minutes ago, crazykopite said:

Will that mean the cancellation of 2nd hand Chinese submarines and 2nd hand armoured tanks from the Ukraine.

No cancellation, Thailand is surrounded by enemies, they are ready to attack if Prayut Chan-o-cha cancel submarines and tanks orders.

And more importantly for Thais "to loose face".

The new thai slogan: "We are the most powerful country in SEA"

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20 minutes ago, bander said:

This bad news will have a huge impact on the Thai stock market!

Let's watch the SET index when it opens today, after this news I would guess a 5 to 10% fall if not more.

 

Why would it, that inbound FDI is going into gold, bonds and the SET, the SET has benefited in recent days.

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