Thailand is in crisis...why is the baht not?

Thailand is in crisis. The business sector is hurting, the SET is closed due to attacks and retail trade in the capital is literally at a standstill. Yet, the baht holds. If the civil disturbances were happening in the EU, the USA or Japan, the currencies would be taking a hit. Why is it not happening in Thailand? Is it that artificially propped up by the government?

dont know where you are, but the thai baht has been dropping slowly for days now, according to my computer exchange rate thingy, which I monitor everyday..

The past two days, the rate on Yahoo-Finance was 32.4 for the baht to dollar and today it is stronger baht at 32.3 per dollar and as low as 31.9 per dollar (US). The rate-table for Bangkok Bank, Ltd., shows 31.85 baht per dollar (US).

Thailand is fiscally still ok.....that is why the baht is still strong. People are assuming that this will be over soon, and things will return to normal.

When an economy as small as Thailand's loses hundreds of billion-baht, it cannot be status-quo. Their GDP is no greater than some states in the USA. So, for them to lose business of this magnitude it has to have an impact and why is it not reflected in the exchange-rate?

luangtom wrote:When an economy as small as Thailand's loses hundreds of billion-baht, it cannot be status-quo. Their GDP is no greater than some states in the USA. So, for them to lose business of this magnitude it has to have an impact and why is it not reflected in the exchange-rate?

I believe the BOT has been keeping the baht at an artificial weaker level than it would be if allowed to strengthen without interference!So as some foreign investment and loss of foreign tourist currency from this fiasco occurs,instead of seeing the baht weaken,the BOT probably has taken the opportunity to recoup some of their resources while keeping the baht within its present range with still supports imports.This would,IMO,give them more resources to stmie the strengthening pressure on the baht for the near future during economic recovery and reconstruction when foreign investment starts pouring in again!

The continuing pressure on the baht to strengthen is intense because of the strong banking system in Thailand relative to the Western banking system at the moment which is very weak and being held together with very strong inflationary policies of those countries,specifically the printing of new money and the increased National debts!All this in relative comparison to Thailand!

The currency will only be effected when the banks run into trouble.
At the moment people are still paying their debts and the banks are still doing okay in Thailand.
Nothing will happen dramatically with the Thai Baht until there is pressure on the banking system.
It could happen, but at the end of the day the Thai economy is still performing better than Europe and America.
We will see!

Thailand is an island of fiscal stability in a sea of sinking economies. Thailand has one of the strongest currencies in Asia and works hard to keep the THB from becoming even stronger. The USD fluctuates in the forex market depending upon which way the wind blows. When confidence in the US is strong so is the USD, and the opposite is true.

Thailand doesn't suffer from such fluctuations, as it's not important enough to swing global markets. It's interesting that the domestic situation is unimportant in the value of the THB.

The THB remains strong against the USD and will probably continue to become stronger regardless of The BOT's efforts to mitigate it strength.

Thai currency opens at 32.20-22 THB/USD
BANGKOK, 27 July 2010 (NNT) — Financial experts from the Bank of Ayudhya have reported that the Thai currency this morning opened at 32.30-22 THB against the greenback, appreciating from last week's closing.

Last Friday, the Baht closed at 32.24-26 THB/USD.

The appreciation is in line with other regional currencies and the Euro, experts said. They also indicated that the recent US economic reports looked promising. The sales of property in the US last month have boosted overall investor's confidence, leading to their decision to invest more in the Asian currency markets.

Meanwhile, the Japanese Yen is set at 86.92/96 JPY/USD, and the Euro is at 1.3007/3009 per USD. Experts say the movements of the Thai Baht are mainly influenced by global factors, including the US economic and consumer confidence index reports, as well the central bank (FED)'s reports on the production index in the Midwest region. Domestic factors have no bearing on the Thai currency at the moment, experts say.

Financial experts expect the Thai currency to move in the range of 32.15-32.25 against the greenback.

http://thainews.prd.go.th/en/news.php?id=255307270018

Thailand has significant reserves in comparison to its GDP.

16/07/2010
1 (Millions of US Dollars)
2 Gold 3,238.48
3 SDRs 1,470.11
4 Reserve position in the IMF 348.08
5 Foreign currency reserves 144,168.27
6 Total 149,224.95

8 (Millions of Baht)
9 Gold 104,405.41
10 SDRs 47,395.11
11 Reserve position in the IMF 11,221.82
12 Foreign currency reserves 4,647,840.94
13 Total 4,810,863.30

http://www2.bot.or.th/statistics/Report ... nguage=eng

The picture for Thailand is rosy. For us Americans, we're still holding the thorny stem.

Thailand’s fiscal and financial picture is solid. The fiscal deficit is modest, public debt manageable, foreign exchange reserves much higher than before the crisis, and the financial sector is sound and well regulated.

The slower-than-expected implementation of the infrastructure-focused second stimulus package should help limit the fiscal deficit to 2.2 per cent in 2010, from 4.4 per cent in 2009. Government debt is projected to decline to about 44 per cent of GDP from 45.2 per cent in September 2009.

Foreign exchange reserves, already equivalent to 13 months’ import cover, should rise further as the current account remains in surplus, the report said.

http://thailand-business-news.com/news/ ... t-in-2010/

I suspect that all the members of this forum have a better knowledge of economics than I, especially international.
I have an observation and a question,,,,,,,,,, could the value of the Baht and it's relatively stable situation noted above be because Thailand is still basically a cash economy? I mean internally. The average Thai is not invested in debt generated monthly because of credit card use. I think most Thais still buy property and houses with cash, for example, let alone shop for groceries, gas, clothing, etc like the western countries, especially the US.

LoongLee wrote:I suspect that all the members of this forum have a better knowledge of economics than I, especially international.
I have an observation and a question,,,,,,,,,, could the value of the Baht and it's relatively stable situation noted above be because Thailand is still basically a cash economy? I mean internally. The average Thai is not invested in debt generated monthly because of credit card use. I think most Thais still buy property and houses with cash, for example, let alone shop for groceries, gas, clothing, etc like the western countries, especially the US.

Actually Thais do use bunches of credit,but that aside.Thailand is a growing economy,outside of China,matbe the fastest growing at the moment.Foreign investment money is up,GNP just hit a record in June,but all though the banks have many nonperforming loans on their books,their system of fees for everything and their non investment into the derivitive market,has them head and shoulders above the West.They have trade surpluses and are beginning to move interest rates up!Therefore the baht is strong,will remain strong!

Don't forget,prior to the 1997 debacle,the baht was 20-1 USD,no reason to suspect it won't go back,slowly as not to hurt exports,back back it will go!

Business in Thailand is being taxed at an all time high.
Tourist numbers are dramatically down and have been for some time.
Except for the building boom which is being paid for with credit, most of the country is in recession.

Tourism is in the toilet, if any one doubts this I can send you a large amount of information which supports this claim.
The Governments official party line is that tourism only represents a small part of the economy, less then 10%.
According to the Bangkok Post in an article last month "Sex Tourism" not just tourism is Thailands main business.

The reality is not withstanding all the great things about Thailand and the Thai people, they are possibly the most dishonest people in the world. From the ground up and we can believe all the bullshit we like, but once people have trouble paying their bank loans all these currency speculators who are keeping the Baht so strong, will drop it quicker then you can say my Thai girlfriend took all my money.

The BOT would like you to believe that they are controlling things, but that is simply not true.
They intervene to weaken the currency, but it has no real impact except to show people they are trying.


Things could come good, but I doubt it. I suspect the Baht will have another collapse similar to the 1997.

I sincerely wish all those who are invested in this country good luck and I hope for your sake that things go from strength to strength, but I'm taken my Baht and getting out of here.

Can't understand it either. No matter what the mob is saying, I now expect it to start moving the other way, but a collapse, don't think so, but it would be fine with me if it did, living here.

Nkstan has it dialed in correctly. er69thailand - love your quips.

Repeating that the THB is a small potato in a world of long French fries would be redundant. Instead, I will offer this: when the day comes that YKW has passed on, the baht will tank - big time. Just a matter of time.

KHONDAHM wrote:Nkstan has it dialed in correctly. er69thailand - love your quips.

Repeating that the THB is a small potato in a world of long French fries would be redundant. Instead, I will offer this: when the day comes that YKW has passed on, the baht will tank - big time. Just a matter of time.

Wanta Bet!
More wishful thinking by misguided Farang.