Thread: Offshore Baht hits new 11-year high

Originally Posted by mrsquirrel

Originally Posted by chinthee

^If it really does get disastrous and goes down to 25, I will quit converting any dollars. I will sell something locally and live off the proceeds.

How does your wife feel about that?

We divorced last year. She already got taken care of.

yep, it is going to 30, and the BoT is unable to defend the THB against speculators because they are no smart enough and have no fucking idea how to run and defend a currency, again monkeys at the wheel, so again no surprise

That said, Thailand has been hit by a Demand shock for the last 5 years. Basically the weak THB have boosted export and created a huge migration of expats into Thailand. Since net export is part of Agreggate Demand, that curve has shifted greatly, bringing inflation, and upward pressure on the FX currency. This is basically what we are facing today.

The massive influx of money in the country also from expats living here (a lot of them, probably tripled from what they were in 1998) is also adding to this pressure. Look at Pattaya, the expat community in Pattaya was ridiculously small in 2000, since then it has boomed 4 fold, with all the puters of the world retiring there or buying a house in Phuket.

Thailand is not cheap anymore for the "early" expats, it's changing, slowly but surely. Those who moved here with the 1997 devaluation in mind are being screwed again but that devaluation has reversed now. To make things worse, prices are going up everywhere, so the situation is the same everywhere and Thailand is still cheaper compared to those places.

Now the USD. Bush little war is proving to be costly, forcing the US government to get into massive and huge budget deficit crowding out businesses with their borrowing needs. Because interest rates should go up massively to pay for that little war, the Fed has been injecting cash in the system to compensate for the mess (and rightly so) and avoid a recession. But unfortunately that doesn't come without costs, and the cost is inflation and low dollar value, but at least full employment is there and so is large exports.

Originally Posted by chinthee

We divorced last year. She already got taken care of.

Sorry, being cheeky suggesting you were going to sell her.

^No problem. I have a good attitude as it's my third failed marriage, and we are still very good friends. Can't say the same about the other two....

Originally Posted by Butterfly

yep, it is going to 30, and the BoT is unable to defend the THB against speculators because they are no smart enough and have no fucking idea how to run and defend a currency, again monkeys at the wheel, so again no surprise

Now the USD. Bush little war is proving to be costly, forcing the US government to get into massive and huge budget deficit crowding out businesses with their borrowing needs. Because interest rates should go up massively to pay for that little war, the Fed has been injecting cash in the system to compensate for the mess (and rightly so) and avoid a recession. But unfortunately that doesn't come without costs, and the cost is inflation and low dollar value, but at least full employment is there and so is large exports.

Compared to other currencies the Baht is still pretty low. The USD is simply getting worthless and no government wants to follow this with their currency I guess. In respect of the exports - great but you have to see what you get for every sold piece in value - almost nothing. Could be hard to pay for imports like oil in the future even if everyone works there like crazy. So the devaluation strategy seems to have limits. More than this - it will be very hard to get back to 'normal' currency levels again if ever possible.

Would like to sell our house, other plots of land we own, and convert it back to dollars, especially if it gets to 25 to one. But none of the Europeans around here seem to have much of a cash flow either. They like to wear nice shirts though.

MARKET WATCH: Weak dollar advances record crude prices
Sam Fletcher
Senior Writer

HOUSTON, Feb. 27 -- Crude futures prices continued climbing to new intraday and closing highs Feb. 26 as the US dollar tumbled to a record low against the euro in currency markets.
US currency also lost ground against the yen, Swiss franc, and the British pound as US officials reported a continued slide in housing prices and consumer conference, compared with better-than-expected economic indicators in Germany. That seems to signal that a US recession may not negatively affect other economies.

MARKET WATCH: Weak dollar advances record crude prices - Oil & Gas Journal

Originally Posted by chinthee

That seems to signal that a US recession may not negatively affect other economies.

Then justice does exists..

Originally Posted by Sir Burr

A devalued currency needs high interest rates to pursuade people to keep it. Since the Fed has used it's powers of changing interest rates to prop up the stock market, the interest rate is going the opposite direction than what it should.

Yes and No. The Feds is stuck and is making some hard choices. The sub-prime mess is about to get worse, I mean really worse and the only way to "stop" it, is to decrease those rates, so when they reset again for borrowers this year it won't trigger the massive default on payments we have seen last year. They are trying to stop the bleeding. Again the cost is going to be inflation and maybe stagflation as the price shock we are witnessing with oil will push all cost up (supply shock) and that always end up with a recession unless the Fed reacts accordingly.

There is also a credibility issue. If inflation picks up and the Fed lose credibility for controlling inflation, then we might go back to the 70s and early 80s.

Originally Posted by John

ALL other currencies in the world have no problems

Do you mean in terms of specific weakness against the baht?

I wonder if the AUD will go to parity against the USD?

"Aussie dollar surges to 23-year high

Australia's dollar is the best performer among the 16 most- active major currencies in the past month as the central bank this month increased borrowing costs to an 11-year high of 7%. By contrast, traders are betting the Federal Reserve will cut rates in March as reports show US home prices and consumer confidence fell.

The Australian dollar rose as high as 94.34 US cents at 7.50am in Sydney, the most since March 1984. It recently traded at 94.27 US cents."

Aussie dollar surges to 23-year high | smh.com.au

Originally Posted by Butterfly

The sub-prime mess is about to get worse, I mean really worse and the only way to "stop" it, is to decrease those rates

Agree with that, during the fed speech yesterday, Bernanke made references to credtit card companies that have been targetting borrowers with offers they couldnt resist. Reading between the lines, I suspect that the fed knows that many folks are now paying for their expensive mortgages with credit cards, which to me is madder than fighting fire with gasoline.

Originally Posted by chinthee

^I think we are near the break point for US retirees on fixed income monthly pensions. Many did the math at 40 as the exchange rate. If it goes as low as 25, I would expect to see a mass exodus of US retirees from Thailand, as they could live cheaper and better in the USA at that rate perhaps.

Wow, thats a huge statement as if they find it hard to live here, how could they possibly survive back home where things are 3 times as expensive. ?

Its the same retoric as when they changed the visa laws and the boys start saying there going to live in cambodia.

Dont think so mate.

I just had a chat with a friend today, and he knows of a couple that moved here in 2000, when the rate was 40. They retired, with a modest income, and were at the lower limit already at 40. He says they have decided to move home, as he just spoke to them this week.

Originally Posted by chinthee

They retired, with a modest income, and were at the lower limit already at 40. He says they have decided to move home, as he just spoke to them this week.

Sounds as if they have little choice as they are now unable to meet the income requirement for visa. I feel sorry for them but I can't see how they can live any cheaper in the US. If they still own a home maybe but will really have to cut back on everything else compared to Thailand.

^I think you hit the nail on the head with the monthly retirement visa income requirement. I suspect they still have their family home back in the US.

Originally Posted by chinthee

I think you hit the nail on the head with the monthly retirement visa income requirement.

SS payment @ 1700 per month. 40 baht $, 68,000 per month. 30 baht $, 51,000 per month.

My friend here (American) is trying to convince his folks to move out here. His rationale being the ludicrous cost of care he'd have to pay back in the US.

Bad timing for him. He's fairly well off so would still be able to swing it but still...

I forgot, what's the minimum?

Originally Posted by chinthee

I forgot, what's the minimum?

65,000 per month or 800,000 per year in the bank.

Originally Posted by Spin

Originally Posted by "John"

ALL other currencies in the world have no problems

Do you mean in terms of specific weakness against the baht?

I mean that the $ owners are punished. But I am worried. Other currencies went up a lot and despite this the economy of those countries is booming. The $ went down a lot and the US economy is in a very bad shape. It is not the economy alone. The US infrastructure is not in a good shape too. And there are endless debts. The only strategy seems to be to make more debts and to bring the $ down further. This concept scares me because it is extremely destructive.

I dont think you guys need to get to worried as the $ US will surely recover some time in the future and all you need to do is tighten your belts for a while.

When I first come here in 1987 $ 1 AUD was 18 baht and the $ US was king.

Things have changed somewhat but its taken a long time.

Originally Posted by AntRobertson

My friend here (American) is trying to convince his folks to move out here. His rationale being the ludicrous cost of care he'd have to pay back in the US.

He is absolutely right. Forget the value of the US dollar. Moved my mom out here many years ago. Cost of care in the US about $4,500 per month. Better care here is $1,700 per month.