Thread: I don't understand.

Why is the baht staying relatively strong and all other currencies are drowning?

Live rates at 2008.10.07 05:41:22 UTC Notice:
The THB rate shown below is the international rate.
Rates used within Thailand may vary.

1.00 AUD = 24.9514 THB

Australia Dollars Thailand Baht 1 AUD = 24.9514 THB
1 THB = 0.0400779 AUD

A very good question and one that has me mystified and drinking more water

Seriously. There's a world financial crisis, and the shit's hit the fan but the Thai baht remains strong. I know nothing about economics, mores the pity, and I'd really like to know peoples views on this.

All I know is that a grand UK used to be 74,000 baht back in '04, and now it's just under 60k baht.

^ quite, but why is the baht gaining over all other currencies when there's a world crisis and riots in the streets of BKK.

Is there really a world crisis?
At the moment it looks more like an American - European crisis.

Could be because there is less reliance on Europe/America for trade and more on neighboring countries whose economies are relatively strong.

EU finance chiefs in crisis talks
European Union finance ministers are to meet in Luxembourg for emergency talks on the world's financial meltdown.
The ministers from all 27 member states hope to bolster money markets after a day of panic saw huge share index losses in Germany, France and the UK.
A $700bn (£398bn) US bank bail-out and moves by several EU states to help their banks have not quelled fears.
Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis.
Japan's Nikkei index plunged more than 5% - shattering the psychological 10,000-point barrier for the first time in nearly five years - before bouncing back.
Australia's financial market suffered before the country's central bank cut its official interest rate by 1%, prompting a rally. It was the largest cut for 16 years by the Reserve Bank of Australia.
Share prices in China, Taiwan and South Korea also saw a turbulent morning's trading.
Earlier on Wall Street, the Dow Jones index fell 8% before regaining some of its losses. President George W Bush said it would take some time for the rescue plan to restore confidence to the financial system.
'Apocalyptic tone'
EU leaders earlier issued a joint statement saying they will take the necessary measures to protect both Europe's banking system and individual depositors.
In Luxembourg, the EU finance ministers aim to frame guidelines for guaranteeing public savings, correspondents say.


There's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much too cheaply to consumers and businesses
Robert Peston
BBC business editor

Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe.
Analysts say the move has angered fellow EU member states who fear it could prompt savers to transfer their money into guaranteed institutions.
Luxembourg's Prime Minister Jean-Claude Juncker said no major financial institution would be allowed to fail.
Jean-Claude Trichet, president of the European Central Bank, added: "We will continue to provide monetary markets with all the liquidity they need for as long as it is necessary."
But Europe's fragmented response to the crisis so far has done little to reassure investors, correspondents say.
The strains threatening the continent's economies have been felt most acutely in Iceland, where PM Gier Haarde made a national address warning his country it faced national bankruptcy.
The BBC's Ray Furlong in Reykjavik said the tone was, at times, apocalyptic.
In a late-night session, parliament passed emergency legislation to shore up the country's banking system after the national currency, the krona, fell 30% against the euro on Monday.
IMF warning
Across Europe, central banks have already offered more than $74bn in short-term loans to banks in an attempt to make cash available.

But while the idea of a European fund to rescue troubled banks has been floated, it has attracted too little support to go any further, says the BBC's economics correspondent Andrew Walker in Washington.
He also says the financial crisis will come under the microscope at the International Monetary Fund meetings in Washington in the next week.
Its analysts will say the global economy has been sandbagged by high commodity prices, the housing slump and the growing financial crisis.
IMF economists have already warned of an increased risk of a severe and protracted economic downturn.
On Tuesday a banking reform bill is due to go before the UK parliament while German lawmakers are scheduled to hold an emergency session.
Congress hearings
In the US, both Mr Bush and Ben Bernanke, the chairman of the US Federal Reserve, are scheduled to speak later about the crisis.
Meanwhile, Congress began hearings into the cause of the financial meltdown that triggered the rescue plan.
Richard Fuld, the head of collapsed US investment bank Lehman Brothers, said federal regulators knew his firm had, like others, been caught up in a financial tsunami emanating from the mortgage markets.
The day after Lehman filed for bankruptcy, the government bailed out the insurance giant AIG, saying it was too big to fail. AIG executives are also testifying.
The FBI is looking at Lehman, AIG and US mortgage giants Fannie Mae and Freddie Mac as part of a probe into possible corporate fraud.
Meanwhile US utility companies reported a record rise in the number of customers defaulting on their gas and electricity bills.
The largest increase in power cut-offs were in the states of Michigan (22%) and New York (17%), although rises were also reported in Pennsylvania, Florida and California.

Story from BBC NEWS:
BBC NEWS | Business | EU finance chiefs in crisis talks

Published: 2008/10/07 05:37:22 GMT

I believe the government is propping up the baht

How does it do that?
Sorry, but I really know nothing about these things.

^It buys baht on the international currency markets, or alternatively sells its reserves of $'s, Euros etc.

Ok, I understand that. Must have a lot of reserves then.

Originally Posted by lom

Is there really a world crisis? At the moment it looks more like an American - European crisis.

Utter toss, Won is fucked, fucked, fucked...30% down this year.

They have the 6th largest reserve of dollars as well, going to be interesting times out here. The financial people are running around telling people that it isn't going to be another 1997 but nobody believes them.

Originally Posted by mrsquirrel

Utter toss, Won is fucked, fucked, fucked...30% down this year.

I did a quick check on the won, it doesn't look like that currency has ever been stable

^ True.

Taiwanese dollar is not bad though

Market closes higher on rates decision

Posted 1 hour 42 minutes ago
The Australian share market has rebounded from earlier losses after the Reserve Bank's surprise move on interest rates.
The ASX 200 closed 1.7 per cent higher at 4,619, after diving more than 3 per cent in early trade.
The All Ordinaries index gained 53 points to 4,598.
About 4:30pm AEDT, the Australian dollar was trading at 72.33 US cents.

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Reserve Bank slashes rates

Posted 3 hours 54 minutes ago
Updated 1 hour 9 minutes ago
Unions and politicians have called on the retail banks to pass on the reduction in full. (ABC News: Michael Janda, file photo)

• Video: Rates to drop another 1 percentage point: expert (ABC News)
• Video: RBA cuts rates by 1 percentage point (ABC News)
• Related Link: RBA governor's statement

The Reserve Bank of Australia has surprised financial markets by slashing interest rates by one percentage point because of the severe international financial conditions.
Most economists had been predicting a cut of 50 basis points.
Today's cut is the first official one-percentage point move since 1994, when rates increased.
The last time rates were cut by one percentage point was 16 years ago in May 1992.
The shock announcement by the Reserve Bank has sparked a rebound on the local share market.
Stocks dived more than 3 per cent earlier, but shortly before the close of trade the ASX 200 was up nearly 2 per cent to 4,628.
The All Ordinaries index has gained 60 points to 4,605.
The decision has boosted the banks, with Westpac reversing earlier losses to gain more than 4 per cent. Westpac has announced it will pass on a 0.8 per cent cut to borrowers.
The Australian dollar is trading at 72.43 US cents.

'Turn for the worse'

In its accompanying statement, the Reserve Bank says conditions in international financial markets took a significant turn for the worse in September, and there is evidence of slowing economic growth in Australia's trading partners in Asia.
It says there is now the risk that Australian economic demand and output could be significantly weaker than it had earlier expected.
It notes banks are facing higher costs, and says the unusually large movement in the cash rate is needed in order to bring about a significant reduction in the interest rates they charge.
JP Morgan analyst Helen Kevans says the RBA reduced rates by more than expected, knowing the banks are unlikely to pass the full cut to borrowers.
"The RBA is wanting to prompt a material drop in costs for borrowers," she said.
"So hopefully borrowers with mortgages will see some decline in mortgages rates from the domestic banks.
"I think that is probably the main reason that the RBA did cut interest rates so drastically today."
Ms Kevans also says another rate cut is likely before Christmas.
"We'll definitely see a follow up cut in November," she said.
"It depends what happens in financial markets between now and then as to how drastic that cut is.
"But we're likely to see at least 25 basis points in November."

Pressure on banks

The pressure is now on the big banks to pass on at least some of the 1 per cent rate cut.
ACTU president Sharan Burrow says Australia's big banks are making enough profit to pass on the full reduction.
"If it's not possible because of the cost of credit, then it's fair enough that we would ask for the evidence to make it transparent in terms of the cost of credit," she said.
"And to see that there is some benchmark by which those banks will guarantee that at that point, they will pass on the money."
Meanwhile, a Melbourne Anglican Bishop Philip Huggins says bank executives have a moral obligation to pass on as much of the rate cut as possible.
"The obligation, the onus of proof is on them. That's the moral principle," he said.
"They have to honour that by showing, be transparent about why it is difficult for them to pass on that full cut in interest rates, because otherwise it would appear to be a deceit."

Australia $ 25.6323 25.7148 26.1927

Originally Posted by Thormaturge

ust means there will be a sudden drop when the money runs out.

How long do you think they've got to go?

^ usually the day after you have made a significant transfer.

^ Yes.....

Originally Posted by Thormaturge

Apparently Iceland is on the verge of bankruptcy. Their currency has lost half its value this year and is heading towards becoming worthless.

Thailand has been using its dollar reserves to hold the Baht up. Just means there will be a sudden drop when the money runs out. Yet another reason to keep money in foreign currency.

I THINK YOU ARE RIGHT,THEY DONT WANT TO SEE THE BAHT WEAK,LOSS OF FACE TO OTHER COUNTRIES IN ASIA,THEY CANT KEEP IT STRONG FOREVER SO WHEN IT GOES IT WILL CRASH LIKE BEFORE,I AM LOSING ABOUT 30.000 BAHT A MONTH ON MY SALARY BUT I WILL TAKE THAT AND WAIT FOR THE BAHT TO CRASH.HOPE IT COMES SOON!.

Yes, let's hope it happens soon. Preferably before Christmas or Santa's going to get sacked.

THB is still strong because when there is problem at home, investors look elsewhere, and keep bankrolling export countries like Thailand, and China

Vietnam is in a much worse shape than Thailand,