The Pounds Recovery?

by **cookie** » July 4, 2010, 10:33 am

this could be an interesting link for our members:
on this you can find the up to the minute exchange rate.
What is interesting about this website;
you can compare the Thai banks and check which bank will give you the best exchange rate on that moment of the day!!!!!!!!!

http://bankexchangerates.daytodaydata.net/default.aspx

=D>

by **arjay** » July 4, 2010, 12:31 pm

Cookie, As the Thai banks close before the UK banks, the Bangkok Bank rates inevitably lag behind the movements of UK bank and BBC website rates - i.e. they are less up to date. I felt it should be sufficient to use one source to show the currency movement and prove my point

However, for your indulgence, this is the Bangkok Bank rate, at their close on friday, up from previously:

£ = 48.76 baht (per the TT figure I previously used).

http://www.bangkokbank.com/Bangkok%20Ba ... Rates.aspx

....which ever way you want to spin it, sterling is slowly moving up (recovering), albeit with slight day to day variations.

Feel free to admit that at any point in time.

by **lepidoptra** » July 5, 2010, 11:28 am

Have just transferred money from UK to SCB in Udon. Transfer rate 48.4 :cry:

by **lepidoptra** » July 5, 2010, 2:06 pm

Hi Arjay
You know I have the greatest respect for you posts but what you are more or less saying is walk 36inches forward and then 35inches back . Eventually you will walk 100 yards

by **arjay** » July 5, 2010, 2:41 pm

Hi Arjay
You know I have the greatest respect for you posts but what you are more or less saying is walk 36inches forward and then 35inches back . Eventually you will walk 100 yards

Lepi, no, all I am saying is walk slowly.

It won't happen overnight, or this week or this month. We are looking at a period of 9 -12 months.

As with most markets things will move up and down (in the immediate short term), but it's the medium term trend that I think will be up, and indeed has been thus far since May.

by **JimboPSM** » July 9, 2010, 2:22 am

A couple of pictorial perspectives on the recovery of the pound:

Looks good here (from 19th May 2010)

: 2010.07.08 daily GBP-THB.jpg (90.71 KiB) Viewed 381 times

Doesn’t look quite as good here

the recovery is in the small blue rectangle on the right :-k

: 2010.07.08 2001 daily GBP-THB.jpg (85.02 KiB) Viewed 381 times

There is a saying that “the trend is your friend” – however, as with most things statistical it all depends on how the data is presented.

Both the above charts contain data from 19th May 2010 to date but show quite different trends - always think about the motives of the person presenting statistical information before accepting it for what it appears to be.

There are lies, damn lies and statistics

by **KHONDAHM** » July 9, 2010, 10:33 pm

Now you've posted the right chart. The longer term chart/trend is the one I look at when posting. The trend is quite clear and there is no catalyst to be found anywhere which could reverse the trend beyond the short-term and temporary trader trend period (a few months or less).

The chart highs were made on the back of an unsustainable bubble fueled by financial products and policies which will never make a comeback given the austerity measures, policy changes, and other structural changes to the financial and fiscal environment which made such highs possible.

The new reality is one in which the printing presses continue to create more money supply. As long as that is happening all fiat currency will continue to plunge. Measuring one against another is akin to dropping a brick and a biscuit out the same window.

by **arjay** » July 9, 2010, 11:36 pm

Khondam,

The longer term chart/trend is the one I look at when posting.

Please take the time to read the points I made in my OP and subsequent posts, before going off at a tangent, or about past long term trends.

1. My OP, my brief, my observations/assessment and my forecasts were and are ALL specifically looking at the sterling's FUTURE prospects, looking forwards from May this year, (6 weeks ago). Thus it's performance in 2008 -2009 and in the past is pretty much irrelevant. And thus the very last part of Jimbo's graph (covering late May and June to todate) is indeed the only relevant part!

Also:

The chart highs were made on the back of an unsustainable bubble fueled by financial products and policies which will never make a comeback given the austerity measures, policy changes, and other structural changes to the financial and fiscal environment which made such highs possible.

2. Again "unsustainable bubbles and chart highs" are irrelevant when looking at FUTURE performance. Indeed sterling's exchange rates HAD fallen back in part because of the exceptionally low interest rates and the "fiscal stimulus/"quantitative easing. Those measures have now ceased in the UK, a period of "austerity" has arrived, and the future prospect for interest rates is UP.

...All of which is why I am suggesting that sterling will recover (over the next 9 -12 months) from it's lows of May.

Please also note, I forecast some recovery, not that sterling would achieve "past highs"!!

by **JimboPSM** » July 10, 2010, 12:52 am

This is a chart of the average annual buy/sell rate for GBP/THB from 1981 (my earliest data) to 2009 – personally I find charts using longer-term average data a useful tool as they tend to smooth out and remove most of the distractions of the peaks and troughs of shorter-term data.

: 2010.07.09 1981 annual GBP-THB.jpg (110.7 KiB) Viewed 309 times

To try and give some indication as to how 2010 compares with prior years I added two columns (in the red dotted rectangle on the right) these are firstly the average for the first half of 2010 and secondly today’s closing rate in Thailand.

Note: the trend lines on my charts should not be interpreted as anything other than a pictorial representation of historical mathematical data – it is not any statement of under-value or over-value.

Please note that, because I have included both a half year average and latest rate for 2010, the excel calculation of the upward trend in the above chart is actually understated - the actual trend to 2009 would show a value of 69 in 2009.

The next chart gives another representation looking at the most recent years of 2001 to 2009 – as above the downward trend is actually understated - the actual trend to 2009 would show a value of 62.6 in 2009 (a figure which almost certainly this year will be somewhat lower).

: 2010.07.09 2001 annual GBP-THB.jpg (107.9 KiB) Viewed 309 times

While I’m not generally in the habit of crystal ball gazing, when I take ALL the comparative economic and financial data (that I’m aware of) from the major currency zones my view (currently) is that:

Additionally, from the way that the THB is currently controlled, I believe that the THB will continue its rise against the USD (although having said that, I believe that the THB is actually already over-valued – but I don’t control the market).

Now that I've made some predictions I expect that some stupid simple thing that I've not considered will occur to prove me wrong

by **JimboPSM** » July 11, 2010, 8:59 pm

For most of last week the chattering classes in the finance world were going on (and on and on) about the stress tests on European banks and the possible failures of various individual banks – this weighed quite heavily on the performance of the EUR and the GBP towards the end of last week.

Direct comparisons of UK, European and US banks are not as easy as the media pundits make out as the regional banking structures and operations are markedly different, judging the operations of another areas banks (by your own areas standards) is not anything like as easy as it may seem.

Although I don’t know the full details of the European stress tests, I believe that numerous lessons were learnt from the US tests and consequently the European tests are actually rather more rigorous and extensive (that is not a criticism of the US tests, they were a first and a very valuable part of the learning curve).

With regard to the possible results, from various chats that I have had over the last year or so I am of the opinion, but cannot prove, that a number of European banks may not have fully cleaned up their balance sheets of their toxic assets, non-performing loans, gambling debts etc – banks have been extremely creative in the ways that they have managed to evade both banking laws and central bank regulations.

Until the spin surrounding the stress tests and its results is over (and hopefully we return to movements based on economic fundamentals instead of spin, speculation and misinformation) you can expect to see the GBP and EUR yoyo around.

It will be a while yet before I can say “sound as a pound” without being more than a little tongue-in-cheek :lol:

by **KHONDAHM** » July 12, 2010, 5:31 am

Arjay,

I reread the OP as suggested (hey, it was a constructive suggestion). What is often left out of discussions about future trends is perhaps the most important and fundamental issue: Money supply. Before making a "prediction" we need to also consider: "Will more fiat money be created out of thin air and who is creating more of it in relative terms?".

Given the UK's staggering debts, there is no question that the UK will be injecting more money supply than Thailand on a relative basis. That said, and without considering the unknown, long-term the baht should rise against the pound. It's Econ 101 supply and demand at work here more than anything else.

Sure there will be the yo-yo thing going on short-term; but the overall trend is clear and should remain the trend well into the future. In other words, until the UK corrects it's fiscal problems (which will require creating more fiat money). Will other factors play a part (Thailand's political stability, etc.)? Of course, but what I am saying is that as we discuss things like this currency will go up versus that currency, what is happening with the money supply of this or that country needs to be considered and given more weight in the conversation than what I've read here so far.

by **arjay** » July 13, 2010, 10:09 pm

http://news.bbc.co.uk/2/hi/business/10611668.stm

UK inflation falls again in June

UK inflation fell to 3.2% in June from 3.4% in May, its second monthly fall.

But the year-on-year rise in the Consumer Prices Index (CPI) is still well above the Bank of England's 2% target, the Office for National Statistics said.

The CPI figure was slightly above expectations of 3.1%, and the pound rose 0.6% to above $1.50 on the news.

Meanwhile, the Retail Prices Index (RPI) inflation also fell to 5% from 5.1% May.

The RPI measure includes housing costs and used to be used for the Bank's inflation target, and is widely used in pay talks.

However, core inflation - which ignores volatile energy and food prices - rose from 2.9% to 3.1%, equalling its highest level since records began in 1997.

The accelerating core inflation suggests that the longer term trend direction of inflation may in fact still be upwards.

A major factor behind this was the rising cost of services, which accelerated to 3.9% from 3.4% in May.

These numbers will fuel the argument of economists who are more hawkish about inflation risks.

The way I read the above is that inflation is down a fraction, though not as much as expected, there are still concerns about inflation and thus if inflation doesn't abate that could result in rising interest rates, which would cause the £ to rise.

Anyway, the £ did rise today:
BBC
£ to $: = 1.51510
£ to baht: = 49.056
£ to euro: = 1.19660 (the Euro also rose today)

Thai banks won't catch up with it until tomorrow, so I'll post the Bangkok Bank rate tomorrow.

by **cookie** » July 14, 2010, 11:35 am

it all depends what will happen today:

expectations are that the will raise the interest rate in Thailand,
but these are expectations of course, TIT

Expectations are that the Monetary Policy Committee will today raise the policy rate for the first time since April 2009. Reflecting the possibility was the 20 basis points increase in yield of BOT bonds at yesterday's auction, as well as the appreciation of the baht against the US dollar.

Interest rate likely to be raised
By ACHARA DEBOONME
THE NATION
Published on July 14, 2010

A majority of bankers and economists believe the Monetary Policy Committee will today raise the policy rate for the first time since April 2009. Reflecting the possibility was the 20 basis points increase in yield of BOT bonds at yesterday's auction, as well as the appreciation of the baht against the US dollar.

"The rate will absolutely be raised, probably 25 basis points not to shock the market," said Pornthep Jubandhu, an economist of SCB Economic Intelligence Unit. "However, [while other central banks raised the rates to stem inflation), the MPC would raise the rate primarily to counter the negative interest rate."

He noted that the real interest rate has been negative for a long time, with the savings rate of 0.50 per cent against 3 per cent inflation. Such rates would affect long-term savings. Meanwhile, inflationary pressure is not so frightening. Though the economy recovers, the growth rate has slowed down. He expected the rate would be gradually raised to 2 per cent at the end of this year, as signalled by the Bank of Thailand Governor-designate Prasarn Trairatvorakul.

Pornthep and TMB Bank's research unit, TMB Analytics, expected the policy rate to be raised further next year. TMB Bank expected another 125 basis points increase next year. The baht is expected to strengthen to Bt32 per dollar at the end of this year and Bt31.5 in mid-2011.

DBS Vickers Securities (Thailand) expects further appreciation of the baht. Since the end of the US-led global crisis, foreign reserves have been surging to record highs, to US$147.8 billion for the week ending July 2, significantly above its pre-crisis high. The same was also seen in Thailand's gross domestic product, especially in current terms. It expected the baht to head back towards the low of 2008 near Bt31.

Despite higher policy rate, commercial banks still insisted the interest rates would not be raised immediately due to persistently high liquidity of over Bt1.3 trillion.

Apisak Tantivorawong, president of Krung Thai Bank, admitted there are signals that the rate would be increased in the latter half.

The rate was expected to rise in May, but the decision was put on hold due to the political turbulence.

If the rate is raised from the record low of 1.25 per cent, Thailand would join many Asian central banks which have raised interest rates this year to cope with the robust growth. During the global economic crisis, Thailand cut the policy rate by 250 basis points.

According to Thomson Reuters, some analysts see another 25 bps rise in the Korean rate in the fourth quarter. Malaysia's rate, having been raised by 75 basis points so far this year to 2.75 per cent, is expected to be on hold for the rest of 2010. Taiwan's discount rate was first raised by 12.5 basis points to 1.375 per cent, the first time since the global crisis. Taiwan's rate is expected to rise further by 25 basis points by end-2010. India has raised its main lending rate three times this year by a total of 75 basis points to 5.5 per cent.

Among Asian central banks maintaining their rates are China, Japan, Indonesia, the Philippines, Vietnam, and Thailand.

According to a Bloomberg survey, 12 out of 19 economists agreed the rate would be raised to 1.5 per cent today.

Yesterday, the baht traded near a three-week high on bets the central bank would raise the rate for the first time in almost two years. One-year onshore interest rate swaps climbed to a three-month high.

"Speculation of a rate-hike tomorrow has been growing quite sharply and the swap rates have been reacting to it," Kozo Hasegawa, a Bangkok-based foreign-exchange trader at Sumitomo Mitsui Banking Corp, told Bloomberg. "There is appreciation pressure on the baht too, but the movement in the baht is slower than the interest rates. That is partly because concern that the central bank will enter the market grows when the baht rises from here."

Hasegawa said the currency may climb as high as Bt32.25 this week.

The one-year onshore swap rate, the fixed cost needed to receive a floating payment, increased to 1.66 per cent, the highest since April 15. The move suggests investors increased bets on interest-rate increases over the next 12 months.

by **arjay** » July 14, 2010, 3:27 pm

Yes Cookie, Thailand has raised its key policy rate by 0.25% today, and guess what? ......

.....the £ has continued strengthening!

BBC website X rates:

£ to $ = 1.52450
£ to Euro: 1.19820
£ to Baht: 49.26460

Bangkok Bank haven't followed the rest of the market YET: 48.78250

To use some of your language:

It's going to happen baby, and you can't stop it!!

by **cookie** » July 14, 2010, 4:50 pm

arjay wrote:Yes Cookie, Thailand has raised its key policy rate by 0.25% today, and guess what? ......

.....the £ has continued strengthening!

BBC website X rates:

£ to $ = 1.52450
£ to Euro: 1.19820
£ to Baht: 49.26460

Bangkok Bank haven't followed the rest of the market YET: 48.78250

To use some of your language:

It's going to happen baby, and you can't stop it!!