Baht What up with Dat?????

Post by **JimboPSM** » February 27, 2015, 9:15 pm

Amazingly the latest USD/THB TT buy rate of 32.21 is actually below where it was immediately before the coup on the 22nd May 2014 (32.24)

NB: The USD/THB rate in the above chart is the TT buy rate.

What makes this utterly bizarre is just how disconnected that it is from the movement in the US Dollar Index (DTWEXM) which has risen from 76.5 to 89.1 over the same period of time – an increase of some 16%.

NB: The USD/THB rate in the above chart is the average buy/sell rate.

The movements of the Baht when compared to the economic performance of the Thai economy should be well towards the top of the agendas of the NCPO and the NACC

Post by **bumper** » February 28, 2015, 5:45 pm

I recently read an article Thai Gold basically saying it would not follow international standards. They are basically saying the will call the value whatever they want. Maybe the same for the baht.

Post by **parrot** » February 28, 2015, 7:12 pm

Here's how other area currencies stack up against the dollar.
I learned long ago that I don't understand what affects the rise and fall of currencies. But, my gut tells me the longer the military is in control of the government here the more risk there is to the Baht. Like I said, I don't understand.....

Post by **JimboPSM** » February 28, 2015, 9:28 pm

Below is a modified chart of mine tracking the movements in percentage terms of the GBP, USD, EUR & AUD against the THB where the value of the THB is 100%; I’ve added the US Dollar Index (DTWEXM) on to it rebased to 1st January 2012 = 100%.

The two periods where there is a very substantial disconnect between the value of the USD/THB rate with the US Dollar Index can be seen in the shaded red areas.

This disconnect is not restricted to the USD, it also flows straight through to the value of other currencies against the Baht and hence impacts very directly on exports, tourism and expats; also it should not be overlooked how all of that impacts on GDP

Although the evidence is only circumstantial, so far I have not seen any satisfactory explanations that would actually cause the man on the Clapham omnibus to believe that major currency manipulation has not been happening both before and after the coup.

As I have said previously, given the impact that the value of the Baht has on exports, tourism and GDP in the Thai economy, an overvalued Baht sabotages the Thai economy and is a matter that should be well towards the top of the agendas of the NCPO and NACC for investigation.

Note: the clarity of the chart is limited by the size of image that can be uploaded and also that the data is on a daily basis.

Post by **Jing Jing** » February 28, 2015, 9:53 pm

Here is some evidence of manipulation
"With revenue of almost $400 billion last year and operations in about 80 countries, BP trades large quantities of currency each day. Traders at the company regularly received valuable information from counterparts at some of the world’s biggest banks -- including tips about forthcoming trades, details of confidential client business and discussions of stop-losses, the trigger points for a flurry of buying or selling -- according to four traders with direct knowledge of the practice."
This is only BP who are the other players?

Post by **bumper** » March 2, 2015, 6:46 pm

I believe we decided long ago currency can and is manipulated. Now we see not only Thialand. But, western banks getting o in trouble for manipulating the price of Gold. I won't go any further then to say I don't think we will see an election in the next year.

Post by **bumper** » March 3, 2015, 5:56 pm

You know I thought I had caught on to one aspect. The market gets stronger and the baht gets stronger. Hey guess what Markets down Bahts up,

Jimbo what do you expect the3 effect of deflation here will be on the baht?

Post by **bumper** » March 4, 2015, 12:11 pm

Household debt nears crisis level. From the locals I know they are in trouble already. Makes me wonder if raising the minimum wage really helped the poorer Thai's the free flow of Credit. My bite back. What effect thos will haqve on the economy and eventually the baht no clue.

http://www.bangkokpost.com/business/new ... isis-point

Post by **Twixies** » March 4, 2015, 1:07 pm

bumper wrote:Household debt nears crisis level. From the locals I know they are in trouble already. Makes me wonder if raising the minimum wage really helped the poorer Thai's the free flow of Credit. My bite back. What effect thos will haqve on the economy and eventually the baht no clue.

http://www.bangkokpost.com/business/new ... isis-point

I has been talking about this for long time. But again it seems like the investors don't care about it.

Her is about the strong baht

http://www.bangkokpost.com/business/new ... baht-rally

Post by **bumper** » March 4, 2015, 5:59 pm

Excellent article thanks for posting it. May depend on if they continue on to invest in he domestic economy or if they want to export.

Post by **Twixies** » March 5, 2015, 11:04 am

bumper wrote:Excellent article thanks for posting it. May depend on if they continue on to invest in he domestic economy or if they want to export.

Bumper what do you think about this. For me it seems like dreamland. Mostly all figure for thailand is negative , but still talking about grow.

http://www.bangkokpost.com/business/new ... gdp-growth

Post by **Jing Jing** » March 5, 2015, 12:01 pm

When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me.The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency” Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant. It means that China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it. They know that the future belongs to them and they’re flaunting it.

by Simon Black on March 4, 2015 thesovereignman

Once the Thais ink the rail deal with China the Thais will be the serfs of the BOC. Good bye baht hello renminbi. Colonization was never so easy!

Post by **bumper** » March 5, 2015, 4:16 pm

Twixies wrote:
bumper wrote:Excellent article thanks for posting it. May depend on if they continue on to invest in he domestic economy or if they want to export.
Bumper what do you think about this. For me it seems like dreamland. Mostly all figure for Thailand is negative , but still talking about grow.

http://www.bangkokpost.com/business/new ... gdp-growth

Thailand says it was in Deflation first of the year how do you get 4% growth from that.

China wants to high of an interest for the loans the last I heard.

Problem is you can not believe what you see here. Especially in the news. When I was investing I made it point to confirm things from sources outside of Thailand. It can be done. But, it is lot of work, worth it if you have money on the line. Right now I don't, I would consider going back in if were to back to the low 1400's where I believe it really should be.

In theory there was a dollar rally this morning Thailand baht moved two satang

My thought they don't produce things will get worse.

Both the article you posted and this one are from the same day, you never know for sure here. But, I;m leaning toward deflation. What I don't know is what is that going to to the baht. I You have to keep in mind that gas prices are way down right now. So they should have extra money in budget.

http://www.bangkokpost.com/business/new ... cond-month

Post by **bumper** » March 5, 2015, 4:29 pm

Another piece of the puzzle, what happened in the States effected things here, this is the other big player saying it is going to slow down. So I don't think we will see growth as we have in the past year. What say Ye Jimbo we got the making of a perfect storm

Post by **JimboPSM** » March 6, 2015, 9:41 pm

While I do not have the data to be certain, it is my opinion that much of the “technical deflation” that has occurred is in no small part due to the degree that the Baht has been increasingly overvalued since July 2014 – while there may technically be deflation (especially for those whose day to day needs includes buying Ferraris, Lamborghinis and overseas assets) that does not appear to be the case for those who needs are a little more mundane such as buying household items like food.

http://www.bangkokpost.com/business/new ... n-february

What is worrying for the future of the Thai economy is that far too many of those in financial positions of power appear to suffer from basic economic illiteracy, a seriously blinkered view of what is actually happening on the ground or perhaps got their keen grasp of economics from St Reagan or Bush 43

An overvalued Baht has a marked impact both on direct exports and indirect exports (tourism) on which so much of the economy depends and their not inconsiderable impact on the Thailand GDP (especially so with the enhanced economic multiplier effect that tourism generates) - yet when there are comments about problems in the Thai economy pretty well anything and everything is blamed apart from the elephant in the room (the exchange rate).

This chart shows what the rapidly growing disconnection in percentage terms that has occurred since the 1st July 2014 between the USD/THB rate and the US Dollar Index DTWEXM (which to enable a valid comparison I have rebased to 1st July 2014).

Note the US Dollar Index data is up to 27th February 2015 (the latest data available, as it is only updated on the Fed website weekly).

While in my opinion it is not realistic to expect the USD/THB to have moved to the same degree as the US Dollar Index because quite some part of the US Dollar movement has been buoyed by a shift in market sentiment, there should at the very least have been a noticeable movement in the USD/THB rate because of the contrasting movements of both economies.

However, it absolutely beggars belief that when comparing the economic news from the US and Thailand since July 2014, that the USD/THB TT buy rate today of 32.30 (6th March 2015) should be actually be a gnats whisker below that on the 1st July 2014 (TT buy rate, 32.31) when over almost the same period of time the US Dollar Index has actually increased by 18.5% (to 27th February 2015).

While the Baht is still moving within the range of (what has the appearance of being) a long term managed devaluation, at this point it is uncomfortably below the trend average when, in reality, for the Thai economy to recover and become more robust it should be above, or at least pushing, the upper limits.

The next meeting of the Monetary Policy Committee (MPC) of the Bank of Thailand is next week on Wednesday 11th March - it will be interesting to see from the interest rate decision and the minutes whether their collective heads are still firmly buried in the sand - apparently the current consensus on the interest rate is for no change

Post by **bumper** » March 7, 2015, 1:09 pm

Guess I have been here to long I'm betting on the sand

Excellent explanation a usual

Thanks

Post by **JimboPSM** » March 11, 2015, 1:13 pm

Apologies if I seem to be labouring the point but, in relative terms, the almost total lack of movement in the USD/THB rate since the beginning of July 2014 means that the Baht could be described as effectively tracking (or even being pegged) to the US Dollar

So, when you cut to the chase, this means that the Baht, like the US Dollar, has surged some 20% in value since the beginning of July 2014 – a situation which, when you consider what has actually been happening on the ground in the Thai and US economies, is utterly bizarre.

For the record, the chart above is based on the value of the Baht at midday today before the MPC has announced its interest rate decision and issued its minutes (I may need to revise my comments once they are released).

Those who know the economic history of Thailand might recall that quite some part of the cause of the 1997 crash was due to the pegged exchange rate regime that had been operated by the Bank of Thailand up to that time.

As has been said by many who are far wiser than I, those who fail to learn from history are doomed to repeat it

Post by **Twixies** » March 11, 2015, 1:20 pm

JimboPSM wrote:Apologies if I seem to be labouring the point but, in relative terms, the almost total lack of movement in the USD/THB rate since the beginning of July 2014 means that the Baht could be described as effectively tracking (or even being pegged) to the US Dollar

So, when you cut to the chase, this means that the Baht, like the US Dollar, has surged some 20% in value since the beginning of July 2014 – a situation which, when you consider what has actually been happening on the ground in the Thai and US economies, is utterly bizarre.

USD-THB Dollar Index 2015.03.11A.jpg
For the record, the chart above is based on the value of the Baht at midday today before the MPC has announced its interest rate decision and issued its minutes (I may need to revise my comments once they are released).

Those who know the economic history of Thailand might recall that quite some part of the cause of the 1997 crash was due to the pegged exchange rate regime that had been operated by the Bank of Thailand up to that time.

As has been said by many who are far wiser than I, those who fail to learn from history are doomed to repeat it

Your have so absolute right. I have been reading a book about the 1997 crach. The diffrence from this time and now iis was the big companies the crach first and the peg from BOT. This time its the SMB there has problems.

Thanks for a great post

Post by **Twixies** » March 11, 2015, 2:25 pm

interest rate decision become 1.75 down 0.25.

what will the effect become now jimbopsm

Post by **JimboPSM** » March 11, 2015, 3:06 pm

These charts from BBC Business show the kneejerk reaction on the Forex markets to the interest rate cut for the USD, GBP and EUR:

However, as it was far from a unanimous vote for the cut (only 4 : 3) and the minutes have not yet been released I’m not sure that the MPC has recognised the full extent to which tracking the USD (whether consciously or unconsciously) has been and is sabotaging the Thai economy

Note - the currency pages at the BBC Business site can be found here:

http://www.bbc.co.uk/news/business/mark ... efault.stm