Thread: Offshore Baht hits new 11-year high

[quote=Driventowin;569967]
stands to reason that corrections were going to happen and the fact that the other financial factors came into play just exacerbated the issue, but it's not the end of the financial world as you predict..

quote]

A bit of "poetic licence" there with your choice of words.
Probably a bit harsh to call it an outright lie, but you have misrepresented my words.

Nevertheless, we do agree that a correction is in order. Nobody in their right mind would disagree.
The future collapse of the $US hegemony is a separate issue and will unfold more slowly than the current financial crisis. Although the two are linked in a way.
Don't go patting yourself on the back too much just yet.

Originally Posted by Driventowin

^Well...Funny how the stock market has actually gained over 3% in volume for the week

Interest rate cut, short covering and possibly misplaced optimism from those buying financial stocks. Lets see how things look at the end of next week. I can only see it moving in one direction, personally.

Originally Posted by Spin

Originally Posted by Driventowin

^Well...Funny how the stock market has actually gained over 3% in volume for the week

Interest rate cut, short covering and possibly misplaced optimism from those buying financial stocks. Lets see how things look at the end of next week. I can only see it moving in one direction, personally.

If we knew where the bottom was we could all be rich. Buy low and sell high.

We always hear from the "EXPERTS" who struck it lucky, but rarely from those who lost their shirt. A lot of good time share market experts out there.

I hope it turns the corner soon as my retirement fund is losing money at the moment.

Originally Posted by Spin

Originally Posted by Driventowin

^Well...Funny how the stock market has actually gained over 3% in volume for the week

Interest rate cut, short covering and possibly misplaced optimism from those buying financial stocks. Lets see how things look at the end of next week. I can only see it moving in one direction, personally.

I agree UP is the only direction I forsee in the long term.

[quote=Panda;570120]

Originally Posted by Spin

Buy low and sell high

Which does not mean the lowest point and the highest point, which nobody can predict.
But being good at riding the trend and getting out of it far before it is too late.
Actually Rockfeller said I got rich by buying too late and selling too early...

Originally Posted by Bluecat

Which does not mean the lowest point and the highest point, which nobody can predict.

Absolutley, the bottom is totally unknown and the market right now is akin to a casino, its a 50/50 bet. The other day I was 100,000 baht down on a position and the next day is bounced to 20K profit. It aint for the faint hearted, thats for sure.

Dollars tough to sell on streets of Amsterdam

Dollars tough to sell on streets of Amsterdam - Yahoo! News

AMSTERDAM (Reuters) - The U.S. dollar's value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.

"Our dollar is worth maybe zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in front of the Anne Frank house. "It's hard to find a place to exchange. We have to go downtown, to the central station or post office."

That's because the smaller currency exchanges -- despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency -- don't want to be caught holding dollars that could be worth less by the time they can sell them.

The dollar hovered near record lows on Monday, with one euro worth around $1.58 versus $1.47 a month ago.

Originally Posted by bkkandrew

Dollars tough to sell on streets of Amsterdam

Dollars tough to sell on streets of Amsterdam - Yahoo! News

AMSTERDAM (Reuters) - The U.S. dollar's value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.

"Our dollar is worth maybe zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in front of the Anne Frank house. "It's hard to find a place to exchange. We have to go downtown, to the central station or post office."

That's because the smaller currency exchanges -- despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency -- don't want to be caught holding dollars that could be worth less by the time they can sell them.

The dollar hovered near record lows on Monday, with one euro worth around $1.58 versus $1.47 a month ago.

Old news....heard about this a month ago already..

Asian currencies now under pressure due to rice shortages and general inflation concerns:

http://www.bloomberg.com/apps/news?pid=20601109&sid=afqtc5CAJd80&refer=home

Rupiah Weakens With Peso as Rice Feeds Asia Inflation

April 14 (Bloomberg) -- At the end of last year, rice was selling at $13.865 per 100 pounds, the Philippine central bank had met its inflation target for the first time since 2003 and the peso was the world's second best-performing currency.
By April 1, rice was surging toward a record $21.60, the inflation rate had almost doubled, and the peso suffered its biggest monthly decline in seven years.

Record prices for rice, wheat, milk and cooking oil are wreaking havoc with currencies in Southeast Asia, causing a slump in the peso and Indonesia's rupiah. Investors from Deutsche Asset Management to Fortis Investments are dumping their bondholdings on concern inflation will erode returns, putting further pressure on exchange rates. The region has come to depend on strong currencies to contain the rising cost of food and fuel imports.

``You can't just rely on currencies to fight inflation, as there comes a time when they have no potential to appreciate further,'' said Nicolas Schlotthauer, a money manager who helps oversee $5 billion at Deutsche Asset Management, part of Germany's largest bank, in Frankfurt. ``Everyone is so complacent about the fact that if there's inflationary pressure, they will let their currencies appreciate. No one thought of potential currency weakness.''

Currency Reversal

The Philippine peso tumbled 3.2 percent in March, the most since June 2001. It fell 0.3 percent to 41.710 as of 1:05 p.m. in Manila. That's a reversal for a currency that gained 9 percent in the fourth quarter, second only to the Armenian dram. In Indonesia, the central bank probably bought more than $2 billion of rupiah, limiting its decline since March 1 to 1.1 percent, according to Oversea-Chinese Banking Corp., Singapore's third-biggest bank. The rupiah slid 0.1 percent to 9,180 per dollar in Jakarta.

International investors cut their holdings of Indonesian government bonds 3.2 percent in March to 80.7 trillion rupiah ($8.8 billion), according to finance ministry data. Foreign funds sold a net $154 million of stocks in the Philippines this year, helping drive the Philippine Stock Exchange Index down 19.5 percent.

Deutsche Asset sold all its rupiah debt earlier this year and didn't buy peso bonds because of inflation, Schlotthauer said. Fortis Investments, a unit of Belgium's biggest financial group, expects the rupiah will weaken 3.2 percent to 9,500 per dollar within three months. The firm is ``short'' the rupiah, meaning it is betting the currency will depreciate.

`Bearish on Indonesia'

``I'm really bearish on Indonesia,'' said Didier Lambert, a London-based money manager who helps oversee $4 billion in emerging-market debt at Fortis. ``You will see investor outflows that should weaken the currency.''

The last time Indonesia's rupiah depreciated due to rising commodity costs was in August 2005, when a jump in global oil prices increased the cost of a state fuel-subsidy program. The rupiah slumped to a four-year low of 10,875.

``Subsidies can be very disruptive and expensive for a government to maintain,'' billionaire investor George Soros said in a teleconference from Washington on April 9. Rising food prices may cause ``social and political disruptions,'' he said.
Emergency Meeting

The Philippines is urging China, Japan, India and other Asian nations to convene an emergency meeting this month or next on the region's food crisis, Agriculture Secretary Arthur Yap said today. International Monetary Fund Managing Director Dominique Strauss-Kahn said April 12 that ``hundreds of thousands'' worldwide may starve as food costs jump.

Philippine President Gloria Arroyo said on April 1 she may abandon plans to balance the budget. Two days later, Indonesia widened its 2008 deficit target to 2.1 percent of gross domestic product from an earlier 1.7 percent.

Food accounts for 49 percent of the consumer price index in the Philippines, the world's biggest importer of rice, and 38 percent in Indonesia, according to Mirza Baig, an economist at Deutsche Bank AG in Singapore. In the U.S., it's 14 percent.

Indonesian inflation surged to an 18-month high of 8.2 percent in March, breaching Bank Indonesia's target of 6.5 percent. It reached a 20-month high of 6.4 percent in the Philippines, above Bangko Sentral ng Pilipinas's 5 percent target.

Asian central banks may be able to curb inflation by raising interest rates and seeking stronger currencies because of ``robust'' growth, the Washington-based IMF said on April 9. Excluding Japan, Asia will grow 7.5 percent in 2008, compared with 9.1 percent in 2007.

Balance of Payments

Currencies backed by balance of payments surpluses will keep appreciating even as inflation accelerates, said Sailesh Jha, a senior regional economist at Barclays Capital in Singapore. He recommended buying the Singapore dollar, which climbed 5.7 percent this year to S$1.3593.

In the Philippines, a widening trade deficit will cause the peso to fall beyond 42 per dollar within a month, said Wee Ming Ting, the head of Asian fixed income in Singapore for Pictet Asset Management, part of the largest privately held bank for the wealthy in Switzerland. The trade deficit was $756 million in January, compared with a surplus a year earlier.

``We are thinking of shorting the peso,'' said Ting, who helps oversee the equivalent of $136.1 billion. He also trimmed holdings of rupiah debt three weeks ago because of increased government borrowing and rising inflation.

A slowing global economy may also curb the amount of money sent home by Filipinos working overseas, said Daniel Moreno, one of the investors for Global Evolution, a hedge fund with $400 million in assets based in Kolding, Denmark.

``We have been reducing over the last three weeks,'' Moreno said. ``Currently we have close to zero. Now that prospects for growth worldwide are falling, it's difficult to anticipate that those flows will increase,'' said Moreno. The peso may fall 3 percent to 43 in six months, he said.

Thailand not mentioned, but inflation is at least as rampant here as it is regionally. I think that (at long last) the long-anticipated slide of the Baht could be commencing....

Originally Posted by bkkandrew

Thailand not mentioned, but inflation is at least as rampant here as it is regionally. I think that (at long last) the long-anticipated slide of the Baht could be commencing....

It would be nice (for me) if you were right, but I'm curious as to what draws you to that conclusion?

Originally Posted by buad hai

Originally Posted by bkkandrew

Thailand not mentioned, but inflation is at least as rampant here as it is regionally. I think that (at long last) the long-anticipated slide of the Baht could be commencing....

It would be nice (for me) if you were right, but I'm curious as to what draws you to that conclusion?

Er, the article from Bloomberg that I posted...?

^I see how it applies to countries like the Philippines and Indonesia, which are net importers of food, but I see it being less applicable to a country like Thailand and suspect that's why Thailand wasn't mentioned in the article.

A principle determiner of currency valuation is the domestic rate of inflation. High inflation is essentially a reduction of the value of the currency, ergo a drop in value in comparison to other currencies that have lower domestic inflation. That where I draw inference from in prediction of Baht decline.

As important as the inflationary food price increase (which Thailand is indeed a net exporter of and therefore can gain benefit from in balance of payments terms) is the rise in oil price that feeds throught to increases in petrol, deisel, cooking gas etc. Thailand imports the vast majority of its oil and price increases in this sector offsets the trace balance benefit from food. Another offset is the reduction of export of manufactured goods headed to the recession-bound of the West.

In short, I believe that the next phase of the economic crisis gripping the world will include a currency crisis in SE Asia. Thailand will not lead a collapse, as it did in '97, but will be surely caught up in it.

Thanks Andrew.