Thread: Thai currency continues upward trend

Originally Posted by Butterfly

Originally Posted by socal

To use their own words,the dollar is backed by the full faith and CREDIT of the US government. Treasuries are US debt, treasuires back the dollar. If treasuries collapse, there is no CREDIT left in the US dollar. The dollar would go back to its intrinsic value, which is zero.

Hyperinflation is more understandable if you think of it as hyper-devaluation. The devaluation comes first. Prices nominally go up but that is only a reflection of the currency going down.

like I said, you need to study Macro Econ 101 about what drives hyper-inflation

Im glad you have no explanation because I already know it is wrong.

One looming question for Thailand in the coming months is the effect of these floods on the rice harvest.

The government has been selling stocks in readiness for the new harvest. If the harvest is poor this country will not be selling rice for some time while it replenishes the stocks.

Originally Posted by socal

Originally Posted by Zampan0

"Thormaturge;1589129]I've just realised that we all have got this terribly wrong.

The Dollar is backed up by something far more powerful than gold."

You are correct .

Military Power - Not Gold or the USD or the Renminbi - is the Real Coin of the Global Realm - Attila the Wimp -- Seeking Alpha

Thats what everyone thought about the Soviet Union too, also Britain in its heyday. Britain even lost reserve currency status.

You are correct again, you should read the article.

Her's another interesting aritcle.

"On this note, sovereign wealth funds (SWFs) from around the world are buying up American infrastructure. Sovereign wealth funds are state-owned investment funds of stocks, bonds, financial assets, resources and property. Some of the world’s largest SWFs are those of the United Arab Emirates, Saudi Arabia, Norway, China, South Korea, Kuwait, and Russia. As the “recovery” edges into the oblivion of the Great Global Debt Depression, SWFs are buying up American infrastructure, including:

A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.

America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble. Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia's SAMA Foreign Holdings, and the UAE's Abu Dhabi Investment Authority.
“Crisis is an Opportunity”: Engineering a Global Depression to Create a Global Government

Here is what you will see in 3-4 years. Do you really think the Lord Humugus' of the world will want your gold? lol. They will want your women, your juice (gas), and your pain.



Personally I not waiting for Max to save me. I am going to join up with Humungus' crew.

I guess to get back on track, I'll chime in with some non-gold news... we're almost back at 1 usd = 30thb

Originally Posted by socal

Originally Posted by Butterfly

Originally Posted by socal

To use their own words,the dollar is backed by the full faith and CREDIT of the US government. Treasuries are US debt, treasuires back the dollar. If treasuries collapse, there is no CREDIT left in the US dollar. The dollar would go back to its intrinsic value, which is zero.

Hyperinflation is more understandable if you think of it as hyper-devaluation. The devaluation comes first. Prices nominally go up but that is only a reflection of the currency going down.

like I said, you need to study Macro Econ 101 about what drives hyper-inflation

Im glad you have no explanation because I already know it is wrong.

I think the explanation would be lost on you

Originally Posted by Butterfly

Originally Posted by socal

Originally Posted by Butterfly

Originally Posted by socal

To use their own words,the dollar is backed by the full faith and CREDIT of the US government. Treasuries are US debt, treasuires back the dollar. If treasuries collapse, there is no CREDIT left in the US dollar. The dollar would go back to its intrinsic value, which is zero.

Hyperinflation is more understandable if you think of it as hyper-devaluation. The devaluation comes first. Prices nominally go up but that is only a reflection of the currency going down.

like I said, you need to study Macro Econ 101 about what drives hyper-inflation

Im glad you have no explanation because I already know it is wrong.

I think the explanation would be lost on you

With the little unintelligent overly simplistic knowledge that you get from CNBS or Bloomberg, I can take a stab at where you think it comes from.

You probably think it is as simple as new money being printed and put into circulation which devalues the existing pool of cash. Print enough and boom, you have hyperinflation.

would that be Demand pull or Supply pull hyper-inflation ?

Originally Posted by Butterfly

would that be Demand pull or Supply pull hyper-inflation ?

there is no such thing as demand pull hyperinflation and calling the other one "supply pull " is not correct.

Originally Posted by socal

there is no such thing as demand pull hyperinflation

nice of you to rewrite the entire economics curriculum

Originally Posted by socal

calling the other one "supply pull " is not correct.

ok should have said supply shock instead, couldn't find the word

Wednesday it was at 28. 7 to buy, BUT over 30 to sell - at Kasikorn.
how do they get away with that?
BASTARDS

Originally Posted by Ripley

Wednesday it was at 28. 7 to buy, BUT over 30 to sell - at Kasikorn.
how do they get away with that?
BASTARDS

Forex Spread | OANDA Forex Consulting
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The spread is the difference between the bid price (the price you sell at) and the ask price (the price you buy at), quoted in pips. (A pip is 1/100 of one percent.) For example, if the quote between EUR/USD at a given moment is 1.4222/1.4223 (sell vs. buy, sometimes expressed as 1.4222/223), then the spread is 1 pip. If the quote is 1.4222/1.4242, then the spread is 20 pips.

The spread is also how banks and brokers make money. Wider spreads mean a higher ask price and a lower bid price. As a consequence, you pay more when you buy and get less when you sell, making it more expensive for you. The difficulty lies in knowing whether a wider spread is based on market conditions (that is, when there is less market liquidity during critical news events or non-trading hours), or if it’s simply based on extra profit for the bank or broker.

Banks and forex brokers typically don’t earn the full spread because they, in turn, must hedge out net client foreign currency exposure with other banks, which costs them the spread as well. The spread compensates forex brokers for taking on the risk that the price might change from the time they execute a client’s trade to the time they safely hedge their net exposure with a bank.

Banks make money by creating trading volume that results in natural trading offsets (situations where the banks are earning the full amount of the spread). Banks also make money by increasing the spread charged in excess of the interbank spread for forex trading

Capital controls becoming the new normal

• Published: 29/10/2010 at 12:00 AM
• Newspaper section: Business

We are indeed living in a volatile world - unexpected weather, unpredictable capital flows and an uncertain economic outlook. It's hard to tell what will happen next. The best we can do is to accept the change, make the most out of it and move on.

Over the last few weeks we have witnessed many new capital flow regulations, as countries across the world intensify the efforts to restrain the appreciation of their currencies against the US dollar. Brazil just stepped up the capital controls it first put in place in October 2009 by doubling inflow taxes on foreign investors on investment in domestic bonds (from 2% to 4%). The tax on foreign equity investment is maintained at 2%, while foreign direct investment is still not taxed.

Thailand has also introduced a 15% withholding tax on capital gains and interest payments on foreign holdings of government and state-owned company bonds. South Korea and Indonesia, whose capital controls were implemented in June 2010, plan to introduce further measures to curb capital inflows. The policy measures announced by South Korea and Indonesia are of great significance because both countries are Asian members of the G20 and South Korea chairs the G20 meeting this year.

It seems that capital controls have become the new normal. This has happened just in time, as low interest rates in developed countries have fuelled the boom in emerging markets. Capital is rapidly leaving for those countries offering better rates of return. Since Fed Chairman Ben Bernanke signalled that additional monetary stimulus may be warranted to boost the US economy, the subsequent depreciation of the dollar has caused a huge flow of hot money into emerging markets.

The rapid pace of international capital inflows into these countries has caused currencies to appreciate sharply, threatening export performance and raising concerns about asset bubbles. The Korean won, for example, has risen 3% this year while the Malaysian ringgit and the Thai baht are up 9% and 10% respectively. Apart from pushing up the value of local currency, cross-border capital flows tend to be "pro-cyclical" - too much money comes in during an economic upturn, and too much money goes out during a downturn. Capital controls can, therefore, play an important role in helping maintain financial stability by smoothing the inflows and outflows of capital. Most controls target short-term highly speculative capital flows rather than longer-term investment.
For decades, the IMF and the US had been the main advocates for the free flow of money across countries without any restrictions. The traditional argument against capital controls has been that they could not be effective because financial markets are always smarter than the policymakers. The argument for capital controls is that even if this is true, evading the controls means incurring additional costs to move capital in and out of a country, which is exactly what the controls aim to achieve. After years of being an enthusiastic supporter of capital liberalisation, the IMF recently acknowledged that capital controls may have their place as a policy tool, as developing countries with capital controls appear to be less affected by the global financial crisis.
In its global financial stability report published this month, the IMF is increasingly ready to admit that as a last resort capital controls may be desirable. A recent IMF study also finds that capital controls helped prevent some of the worst effects of the financial crisis in several emerging markets, such as Brazil, Colombia, China, India and Thailand. The post-crisis economic soundness of the countries that imposed capital controls has cleared the bad perception associated with such a policy.

For now, an agreement has been reached among finance ministers and central bankers at the G20 meeting to refrain from competitive devaluation to increase economic growth. It remains to be seen how the G20 leaders will take up the issue of capital controls by its member countries at the Seoul summit next month.

Despite gaining acceptance, capital controls are a double-edged sword. They help governments retain control over their exchange rates and domestic policies but at the same time they bring into question a country's commitment to free markets.

Although it would seem that imposition of capital controls is inevitable, we should not view these controls as a panacea for all the ills of the global financial system. At the end of the day, there is nothing the governments of emerging markets can do to fight against the record low interest rates in developed economies. As strong capital inflows are likely to persist in the future, the real challenge going forward is about how to channel such inflows into the most productive use, and not about fighting the impossible currency war.


Dr Tientip Subhanij holds a PhD in economics from the University of Cambridge, and currently has a career in banking as well as academia. She can be reached at tien201[at]yahoo.com

With the large foreign cash inflow investments in Thai bonds there have been reports that asset bubbles are being created in Thailand. Can anyone speculate
on a possible scenario that would burst this bubble and cause a large Thai baht
devaluation ?

Originally Posted by ssidewineder

With the large foreign cash inflow investments in Thai bonds there have been reports that asset bubbles are being created in Thailand. Can anyone speculate
on a possible scenario that would burst this bubble and cause a large Thai baht
devaluation ?

There is no bubble to burst in Thailand. The bubble is in the US and the Chinese know it. That is why the Chinese are investing allot of their US dollar positions in Thailand.

The term "bubble" in the context we use it today did not exist 20 years ago. The fact that it is a mainstream term now is just a symptom of the problem. Fiat currency (particularly the USD ) has lost its ability to produce non price inflationary gains.

Here's the 90 day trend through yesterday from Oanda

The 10-per-cent appreciation of the Thai baht this year could cut Thailand's gross domestic producct (GDP) growth by 0.7 to 1 per cent, Naris Chaiyasoot, director-general of the Finance Ministry's Fiscal Policy Office said

A strong Baht inconveniences
- Foreign investors in Thailand
But since it currently comes with economic growth, their motivation to invest still persists, so no big deal here.
- Local producers who export their goods
Exports have (to my knowledge) not decreased, so no big deal here, too.
- Foreigners who think they can have a good life here with meagre Western pensions or other income from abroad
They are the ones mostly complaining (not only on this forum), but are hardly worth considering for the economy as a whole. They also don't seem to understand that the Baht fluctuates with supply and demand, and that by converting their (US$ or EUR) income they contribute (slightly) to the strong Baht (but not to the Thai economy, since they don't generate any value here).

The Baht value doesn't matter much for people who earn and spend here. If anything the lower cost for imported goods reduces inflation.

A strong Baht is good for people who earn in Thailand (e.g. by having invested earlier, or by working here) and transfer their gains abroad. Since Thailand needs more such people, I think a raising Baht is good for the country - whatever the non-working foreigners on this (and other) forums say!

Originally Posted by Norton

Originally Posted by phomsanuk

The 10-per-cent appreciation of the Thai baht this year could cut Thailand's gross domestic producct (GDP) growth by 0.7 to 1 per cen

It's cut Norton's GDP by 10%. Throw in 3.5% Thai inflation rate and all in all 2010 not a good year.

Ditto, not the best of years money exchange wise about 10% down on last year even including a 10% rise in the larvidchr GDP, on a positive note that is only half as bad as it could have been thankfully life is not just about the present exchange rate so still

Originally Posted by beppi

A strong Baht inconveniences
- Foreign investors in Thailand
But since it currently comes with economic growth, their motivation to invest still persists, so no big deal here.
- Local producers who export their goods
Exports have (to my knowledge) not decreased, so no big deal here, too.
- Foreigners who think they can have a good life here with meagre Western pensions or other income from abroad
They are the ones mostly complaining (not only on this forum), but are hardly worth considering for the economy as a whole. They also don't seem to understand that the Baht fluctuates with supply and demand, and that by converting their (US$ or EUR) income they contribute (slightly) to the strong Baht (but not to the Thai economy, since they don't generate any value here).

The Baht value doesn't matter much for people who earn and spend here. If anything the lower cost for imported goods reduces inflation.

A strong Baht is good for people who earn in Thailand (e.g. by having invested earlier, or by working here) and transfer their gains abroad. Since Thailand needs more such people, I think a raising Baht is good for the country - whatever the non-working foreigners on this (and other) forums say!

Everything is relative, but i figure most in Country living expats generate jobs/living for 2-3 Thais on average as a minimum, so thats about 150.000 thousand jobs up, hardly insignificant without being very important either, but it is a part of the whole.

Thai exporters have continuously complained to the government about the high Baht, latest very recently, so presumably they do experience a decline in business whether it is actual decline, or a decline in what might have been. Tourism is down, partly because of domestic unrest, but also because of the World economic crisis, and foreigners having a smaller budget set aside for travels, coupled with a high exchange rate money have been lost this year.

Looking ahead thailand have benefited from the low exchange rate, infrastructure problems, quality problems and corruption problems, have so far not had a significant negative impact on influx of foreign investment and business, but the moment Thailand comes closer to the cost level of other countries, those shortcomings will have a negative effect, in so far as foreign investors and producers will look elsewhere where those mentioned problems are far less pronounced.

So a continuos rising Baht will reach a breaking point, and that might not be all that far away.

Originally Posted by larvidchr

Originally Posted by beppi

A strong Baht inconveniences
- Foreign investors in Thailand
But since it currently comes with economic growth, their motivation to invest still persists, so no big deal here.
- Local producers who export their goods
Exports have (to my knowledge) not decreased, so no big deal here, too.
- Foreigners who think they can have a good life here with meagre Western pensions or other income from abroad
They are the ones mostly complaining (not only on this forum), but are hardly worth considering for the economy as a whole. They also don't seem to understand that the Baht fluctuates with supply and demand, and that by converting their (US$ or EUR) income they contribute (slightly) to the strong Baht (but not to the Thai economy, since they don't generate any value here).

The Baht value doesn't matter much for people who earn and spend here. If anything the lower cost for imported goods reduces inflation.

A strong Baht is good for people who earn in Thailand (e.g. by having invested earlier, or by working here) and transfer their gains abroad. Since Thailand needs more such people, I think a raising Baht is good for the country - whatever the non-working foreigners on this (and other) forums say!

Everything is relative, but i figure most in Country living expats generate jobs/living for 2-3 Thais on average as a minimum, so thats about 150.000 thousand jobs up, hardly insignificant without being very important either, but it is a part of the whole.

Thai exporters have continuously complained to the government about the high Baht, latest very recently, so presumably they do experience a decline in business whether it is actual decline, or a decline in what might have been. Tourism is down, partly because of domestic unrest, but also because of the World economic crisis, and foreigners having a smaller budget set aside for travels, coupled with a high exchange rate money have been lost this year.

Looking ahead thailand have benefited from the low exchange rate, infrastructure problems, quality problems and corruption problems, have so far not had a significant negative impact on influx of foreign investment and business, but the moment Thailand comes closer to the cost level of other countries, those shortcomings will have a negative effect, in so far as foreign investors and producers will look elsewhere where those mentioned problems are far less pronounced.

So a continuos rising Baht will reach a breaking point, and that might not be all that far away.

Most western currencies are in the same spot the baht was in 1996. What you are seeing is downward pressure on fundamentally horrible western currencies, not necessarily upward pressure on the baht.

Question for those knowlegable in economics here:

If Al Gore had been rightly elected president in 2000 would the U.S. dollar
be alot stonger now ?
In 2000 it was 44 baht/$ . Bush had two wars while cutting taxes, and then that hack greenspan created in part the financial crisis/ housing bubble by lowering interest rates drastically.
It doesnt seem like the above would have happened with a Gore president.

whilst America continues to devalue their currency most other currencies will have an upward trend whether the like it or not and there is scant they can do about it .