Thread: Thai currency continues upward trend

An interesting point of view from Australian Mining News Net today.......For all those currency supporters and all those "gold Bugs"!....So maybe hanging on to those Thai Baht is the go!...and producing more!......I wonder how much gold dust a visitor to Pattaya will need in the future for a "good time"???


Tania Winter
Friday, 29 October 2010


ONE of the world’s foremost financial forecasters and self-proclaimed gold bug James Dines has tipped the price of the precious metal will reach $US3000-5000 an ounce, while rare earth metals are heading towards a supermajor bull market.

The keynote speaker at the Mining 2010 Resources Convention in Brisbane, Dines gave a
compelling talk to conclude the three-day gabfest, warning delegates that the “mother of all bubbles” was approaching thanks to governments around the world printing whatever amount of money they deem necessary without linking it to gold.

“Yet the [masses think] the system is normal and acceptable and the Washington economic establishment insists it does not need a link to gold,” he said.

Dines also believed uranium’s supermajor uptrend had resumed and was showing no signs of slowing down given China’s forecasts that it would build two new uranium plants every week by 2020.

Warnings of an impending currency catastrophe have been documented in the form of currency plunges such as in 1994 in Mexico, 1996-97 in Asia, 1998 in Russia, 1999-2002 in Argentina, Brazil and Turkey, in 2000 with Zimbabwe and Ecuador, in 2004-07 the Japanese Yen, in 2008-09 the Australian dollar, sterling pound and New Zealand dollar, in 2009 North Korea, and this year Greece, Latvia, Romania, Hungary and Portugal.

“Look at these warning systems, these are all currency plunges and every year there is another one,” Dines stressed.

“The currency tremors are warning of a coming currency catastrophe as the US dollar is speeding towards a brick wall at rising velocities and the unprepared might end up needing a diaper change.

“When this invisible bubble finally bursts in a volcanic climax, the American delusion that government spending is good, that over-buying is wonderful and that going deeper into debt will bring prosperity, that you can spend your way out of debt is a form of insanity.

“It will come crashing down on our heads and not everybody will survive financially in what I call the coming second great depression after this current bull market ends.

“Americans were taking second mortgages on their homes, egged on by Washington’s politicians who urged everyone to own at least one home on cheap credit, borrowing heavily on those homes to buy cheap trinkets from Wal-Mart which were made from China while it quietly amassed a fortune.

“That would have been impossible for them to have accumulated had there been a link to gold and the dollar.

“America would have run out of gold and have been forced to demand that China buy in equivalent from America to keep jobs in the US instead of the delusionary idea of creating jobs.

“But the US gets deeper and deeper into debt, another bubble, until China finally now has $2.65 trillion in its war chest.

“If you spent $1 million a day since Jesus was born you could not spend $1 trillion and China’s war chest is still growing.”

He said the US was gleefully adding new debt at the rate of $US1.4 trillion this year.

This is tipped to grow to $9 trillion by this decade and $20 trillion by 2020.

“If you think they are going to pay that debt back, with what, the manufacturing capacity that has moved to Asia?” he quipped.

His advice was to anticipate closing borders to financial transfers.

“You need to prepare by keeping your assets in more than one country,” he said.

“China has been dumping the dollar because it foresees the US crash and is buying gold, although not silver yet, so you still have a chance to get in ahead of them, and has been buying up currencies and the debts of its neighbours to control them.

“It also buys the yen to push it up, making Japan less able to compete and a weaker US ally, so there is also a geopolitical element here.”

higher oil prices and raw material will eventually "shift" the production supply curve, and that's a demand killer !!!

we could see another 2008 again,

Originally Posted by ssidewineder

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.

I doubt it. Gore would have done what Obama is doing now. Bushes deficits where around 400 billion, Obamas are around 1.5 trillion.

They both appointed the same federal reserve chairman too.

Originally Posted by Butterfly

higher oil prices and raw material will eventually "shift" the production supply curve, and that's a demand killer !!!

we could see another 2008 again,

When the Euro fell from 1.50 to 1.19, just because oil got more expensive for people earning Euro's, doesn't mean there was a sudden "demand" for oil in Europe.

When the Thai baht fell in 1997 and oil got incrementally more expensive, I hate to break it to you but there was not a sudden "demand" for oil in that case either.

Originally Posted by socal

When the Euro fell from 1.50 to 1.19, just because oil got more expensive for people earning Euro's, doesn't mean there was a sudden "demand" for oil in Europe.

When the Thai baht fell in 1997 and oil got incrementally more expensive, I hate to break it to you but there was not a sudden "demand" for oil in that case either.

I think once more, you failed to understand what I meant

"demand killer" means that demand is killed, not that demand will shift or increase

I suggest you learn how to read first and then you will probably understand all those important concepts in those economics books, it will help to detect the BS in those blogs you have been reading

[quote=Butterfly;1593270]

Originally Posted by socal

When the Euro fell from 1.50 to 1.19, just because oil got more expensive for people earning Euro's, doesn't mean there was a sudden "demand" for oil in Europe.

When the Thai baht fell in 1997 and oil got incrementally more expensive, I hate to break it to you but there was not a sudden "demand" for oil in that case either.

I think once more, you failed to understand what I meant

what you meant made no sense, I was trying to make you aware of that but the blind and stubborn are hard learners.

"demand killer" means that demand is killed, not that demand will shift or increase

Why should I bother..... whatever, here we go.

Lets say the demand for oil stays stagnant but you increase the stock of currency you are pricing it in or the value of the currency falls. Did the demand have anything to do with the price movement ? No.

suggest you learn how to read first and then you will probably understand all those important concepts in those economics books, it will help to detect the BS in those blogs you have been reading

No wonder you are blind, you are probably reading keynes text books that are loaded with garbage that makes no sense.

Most Viewed

• Kasikornbank sees baht at 25 in two years
  
  
  The Kasikornbank research unit forecasts the Thai baht will reach 28 baht per US dollar next year and keep rising to hit 25 baht within two years.

I wouldn't wait for it to rip through 32 then. What do you think, buttfrier?

Originally Posted by phomsanuk

Most Viewed

• Kasikornbank sees baht at 25 in two years
  
  
  The Kasikornbank research unit forecasts the Thai baht will reach 28 baht per US dollar next year and keep rising to hit 25 baht within two years.

Oh dear, the Thai had better get ready for a domestic boost for their economy because foreign demand will simply wither away.
Perhaps their banks will lend more and offer significant saving rates to boot?

is the US trying to slow world growth by outpricing SE Asia and repatriate that growth back home ? quite possible,

Originally Posted by Butterfly

is the US trying to slow world growth by outpricing SE Asia and repatriate that growth back home ? quite possible,

Yeah, its called keynesian economics. Productive industry doesn't just appear out of thin air as the dollar devalues(inflation) Higher gas prices, higher food prices and more expensive foreign currency prices do though.

Enjoy getting poorer and enjoy losing money on your $100,000 invested in treasuries

classic

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!

I wonder if the producers are reporting no drop in exports based on the dollar value. If so as the Baht appreciates against the dollar and export dollar value remains the same then units shipped is going down. Less production going overseas means less jobs in Thailand (eventually) even if the exporting company is still making the same gross revenue.

Countriess all over the world (think China) have been compensating for their weak domestic demand by exporting to the US for years thus avoiding unemployment at home. This is why countries like China try to artificially keep their currencies at low value compared to the dollar. This is not sustainable.

Do you think an unemployed American is happy to see a strong dollar? I think he would rather have more expensive imports and a job so he/she can support his/her family and be able to pay the mortgage.

[quote=mikediver;1596195]

Originally Posted by beppi

Countriess all over the world (think China) have been compensating for their weak domestic demand by exporting to the US for years thus avoiding unemployment at home. This is why countries like China try to artificially keep their currencies at low value compared to the dollar. This is not sustainable.

Do you think an unemployed American is happy to see a strong dollar? I think he would rather have more expensive imports and a job so he/she can support his/her family and be able to pay the mortgage.

I hear what you are saying but I don't believe the exchange rate is the entire problem.

During 2001 I went to China and the exchange rate was around 8.2 yuan/$USD. Now its 6 something anad our (US) trade imbalance is greater than ever. Some mfg went abroad (China) to escape a punishing business environment, such as The Americans with Disabilities legislation.

With respect to a strong dollar, the US unemployed ill take it on the chin no matter what. A weak dollar means higher gasoline prices and more expensive electronics. Anything imported will be more expensive, even if the end consumer does not see the actual currency exchange-its still there...

http://www.bangkokpost.com/opinion/o...nd-a-hard-baht

Caught between a rock and a hard baht

• Published: 9/11/2010 at 12:00 AM
• Newspaper section: News

Thailand is experiencing a flood of inflows. Not just of water, but of funds.

As a result of these inflows, the baht has appreciated by over 12% thus far this year. We usually try to comfort ourselves with the thought that our appreciation is "in line" with the region. But in this case, we have appreciated more than everyone else, except the Japanese. South Korea and Taiwan have appreciated by about 5%.

What to do? There are no easy options.

Each option has its drawbacks. We are caught between the proverbial rock and a hard place.

Doing nothing is not a good option.

Thailand remains an economy highly dependent on exports.

Firms hit hardest by a stronger baht are those that export a lot, but import little. They are the ones that will see their export revenue in baht drop, while failing to get much benefit from lower import costs.

These include sectors that employ a lot of labour and local content, e.g. rice, rubber, sugar, garments, footwear, and the like.

Unfortunately, firms in these sectors also tend to be smaller and less likely to hedge their foreign exchange risk for reasons of access or pricing.

What the Bank of Thailand does to try to limit the pace of appreciation is to intervene and buy up the incoming dollars.

That they have been doing this with gusto is evidenced by the very rapid increase in their foreign exchange reserves. In the last three months alone, reserves (including forwards) have increased by over US$21 billion.

By comparison, they increased by about 8 billion during the entire first seven months of the year.

But the rapid appreciation of the baht indicates that the intervention has not really worked all that well.

Which takes us to other options, such as capital controls or taxes.

The track record of such measures has been mixed at best. These can range from the very light (like the recent 15% withholding tax on bond yields) to the hugely draconian (like the 30% URR or unremunerated reserve requirement implemented in 2006). The former unsurprisingly has had little impact. Thai bonds are yielding about 2%. At 15% withholding, that means just 0.3% in yield foregone, compared to a foreign exchange gain from baht appreciation of nearly 8% in the last three months alone.

The 30% URR measure had the dubious distinction of causing the SET index to fall a record 15% in just one day.

South Korea, Indonesia, and Taiwan have all put on measures, but have not markedly slowed down the appreciation of their currencies.

The one exception might be Brazil, which charges a hefty 6% tax on bond investments. But such moves have big, long-term implications for the attractiveness of our stock and bond markets. It seems odd for our officials to go on international roadshows promoting our stock and bond markets to investors, and then slapping on taxes and controls when they do invest.

There have been calls for more extreme options like pegging the baht at some fixed rate to the dollar. This is a non-starter. If we peg the baht to the US dollar _ and still allow funds to flow in and out of the country _ Thai interest rates must converge to US interest rates for macroeconomic stability.

This is not just theory. Hong Kong pegs its currency to the US dollar. Interest rates in Hong Kong are only 0.25%, pretty much the same as in the US. Such low, near-zero interest rates are hardly appropriate for Thailand and would be a sure-fire recipe for asset bubbles.

What if we instead pegged to the dollar but kept our interest rates high? Funds would then keep on flowing in because they can earn a higher interest rate here with no exchange rate risk. This should sound familiar. It is essentially what happened here in the years preceding the 1997 crisis, and we all know how well that turned out.

The short but unfortunate conclusion is that there is no easy quick-fix. If there were, someone somewhere would have implemented it already.

This is really a global problem that requires a coordinated, global solution. South African Finance Minister Pravin Gordhan had it right when he said, "You have a burst pipe behind the wall, and the water is coming out. You have to fix the pipe, not just patch the wall."

The recent announcement by the US Federal Reserve to pump another $600 billion into the system means even more water will be coming out of the burst pipe. Any wall patching is not likely to stop the inflows.
But if we cannot stop the inflows, we can at least help with the outflows.

Boosting investment _ e.g. through big ticket infrastructure spending _ would help outflows by increasing imports of capital goods and reducing our current account surplus. It would do much to improve productivity. It is a win-win solution, but not a quick one. Which probably means it won't happen.

The analogy with the floods wracking the country is both telling and sobering. We know it rains a lot. We know we can't stop the rain. All we can do is help the outflows. But somehow we never get around to building really effective drainage and flood control. We might have to learn to live with both a stronger baht and getting wet.


The writer is with the SCB Economic Intelligence Centre. The views expressed here are his own and not necessarily those of SCB or its affiliates. He can be reached at:
sethaput.suthiwartnarueput[at]scb.co.th

Gold Trades North Of $1,420 After China's PBOC Advisor Li Says "Absurd" Dollar Is Reserve Currency

The baht is going higher.

Precious metals have now entered their parabolic phase. The latest catalyst for gold having traded north of $1,420 is not only the ongoing collapse of Europe via surging spreads and accelerating ECB bond monetization, which in tried and true bizarro fashion have lead to a more than 100 pip move higher in the EURUSD, but the latest speech by PBOC academic advisor Li Daokui, who said that it is "absurd" that the dollar is still the reserve currency of the world. We are confident that pretty much everyone in China agrees. The likelihood that China is about to do something big in FX land was also confirmed by the biggest move higher in the CNY which rose by 0.51%, the most since the revaluation period, and also by the high yield in the one week auction, which has led some to believe that China may be willing to hike rates once again, and further weaken the dollar peg.
From BLoomberg:

Li Daokui, an academic adviser to China’s central bank, said it could be seen as “absurd” that the dollar remains a reserve currency after the financial crisis.

To a visitor from outer space, it would seem “absurd” that the dollar holds that role, given problems in U.S. financial regulation and the country’s economic difficulties, Li said at a forum in Beijing. The same assessment could be made of the nation’s ability to keep issuing currency according to its own needs, he said.

To a visitor from outer space, it would be more absurd that after precipitating the biggest Depression in history Bernanke is still in charge of the world.

The Thai baht is confirmed to move in line with other currencies in the region despite concerns for its ongoing strong appreciation, against the US Dollar, Euro and British Pound according to Finance Minister Korn Chatikavanij.


The Minister brushed aside a news report that the baht was appreciating the most in the region, saying the Malaysian Ringgit actually appreciated even stronger than the baht. He reaffirmed that the baht was moving in line with other currencies in the region.

Mr. Korn explained that the majority of currencies in the region had been appreciating because of the depreciating US dollars. He noted the Thai baht had been appreciating for years, and it did not affect exporters much because other currencies were also moving in the same direction.

The Minister, however, indicated that the purchasing power of trading partners should be monitored closely because their economic slowdown would indeed affect the Thai export sector.

As for risk factors for Thailand in the latter half of 2010, Mr. Korn believed that they would come from external factors rather than internal ones.

Can anyone tel me what the actual exchange rate is at a Siam Commercial Bank. I have a friend that told me he only got a measly 26. something to the dollar today. The exchange sites show 29. something, so it made me wonder.

Originally Posted by chitown

Can anyone tel me what the actual exchange rate is at a Siam Commercial Bank. I have a friend that told me he only got a measly 26. something to the dollar today. The exchange sites show 29. something, so it made me wonder.

The only way I know to get the actual rate is to stick your ATM in a machine. It will tell you what rate they are going to use and give you the chance to cancel the transaction.
TH

Originally Posted by chitown

Can anyone tel me what the actual exchange rate is at a Siam Commercial Bank

Their website can.

Siam Commercial Bank

New measure to tackle appreciating Thai baht : National News Bureau of Thailand

New measure to tackle appreciating Thai baht

BANGKOK, 11 November 2010 (NNT) - Ministry of Finance is preparing to announce new measures to help exporters cope with the appreciating baht by allowing them to pay for goods and freight costs with the US dollars.

In their effort to help Thai exporters cope with the rising Thai currency, the Finance ministry, the Federation of Thai Industries, the Revenue Department, and Bangkok Ship-owners and Agents Association have jointly agreed to come up with a measure designed specifically for them. The measure will allow exporters to pay for their freight charges in dollars, instead of baht, hedging their bets against the risk of the baht rising further given the costs normally are quoted in dollars. The measure is applicable to every exporter. Payments for the freight can be transferred directly to freighters’ parent companies abroad.

In addition, The Central Bank and the Revenue Department have confirmed that entrepreneurs can also pay for their domestic orders in the US currency, the value of which varies each day depending on daily exchange rates.

Originally Posted by mikediver

Countriess all over the world (think China) have been compensating for their weak domestic demand by exporting to the US for years thus avoiding unemployment at home. This is why countries like China try to artificially keep their currencies at low value compared to the dollar. This is not sustainable.

It doesn't need to be

as they improve internal demand, then the need to export becomes less

as mentioned, the Chinese currency is slowly getting stronger wrt the US$

Originally Posted by Norton

Originally Posted by chitown

Can anyone tel me what the actual exchange rate is at a Siam Commercial Bank

Their website can.

Siam Commercial Bank

So it appears to be approximately 32 baht to the dollar for the exchange rate in Thailand.