Baht expected to reach 36 to US dollar in July, 37 by end of the year

[Gaybutton]

The Feds finally raised the key interest rate so maybe we'll get the 36 we hoped for

Just to show how ignorant I am about how it works, would someone be kind enough to explain why raising the interest rate results in a better exchange rate - US dollar to baht? I'm embarrassed to admit it, but I am clueless as to why.

[RichLB]

A simple explanation is that when interest rates rise, yields on new issues of bonds and other government securities increase. That means an increased demand for the dollar for external agencies to invest. Thus, the exchange rate improves as entities move from one countries securities to US securities. This is a grossly simplified explanation and the factors which influence exchange rates are far more complicated.

[readerc54]

All other factors being equal, higher interest rates in a country increase the value of that country's currency relative to nations offering lower interest rates. However, such simple straight-line calculations rarely, if ever, exist in foreign exchange. Although interest rates can be a major factor influencing currency value and exchange rates, the final determination of a currency's exchange rate with other currencies is the result of a number of interrelated elements that reflect and impact the overall financial condition of a country in respect to that of other nations.

Generally, higher interest rates increase the value of a given country's currency. The higher interest rates that can be earned tend to attract foreign investment, increasing the demand for and value of the home country's currency. Conversely, lower interest rates tend to be unattractive for foreign investment and decrease the currency's relative value.

http://www.investopedia.com/ask/answers ... e-rate.asp

Also influencing the demand for dollars is that oil in priced in US dollars. The dollar has become the world's reserve currency. Oil sellers demand payment in the dollar because of the perceived strength of the currency. There's been much talk about trying to move away from the practice. However, if you were selling a commodity you own, would you prefer to receive any other form of payment?

The bottom line: if something--anything--is rising in demand, the seller can ask more from those who desire it.

[Up2u]

Some good answers here.

[readerc54]

Various members have chimed in over time on international economic issues, particularly when they affect the value of their currency and other market conditions that can influence how they live as ex-pats or their ability to travel to the LOS or the duration of their visit. Most of us, however, know little of an organization that functions behind the scenes but has an out-sized influence on these matters: the Bank for International Settlements (BIS) in Bern, Switzerland.

I'm not going to try to fully explain exactly how in works as much of its policies are secretive and records of its closed-door gathering of members (mostly central bankers such as Janet Yellen) are not recorded. I don't mean to infer that it's a clandestine entity but rather that its members maintain a certain "what-happpens-in-Vegas-stays-in-Vegas" attitude towards their private discussions. You can, however, get a quick run down in this Wikipedia piece:

https://en.wikipedia.org/wiki/Bank_for_ ... ettlements

While researching info on the BIS, came across an article from The Telegraph that covered a 2014 speech by a BIS official. Basically he suggests what we might describe as irrational exuberance resulting from accomodative policies of the world's central banks. This was first mentioned recently by Traveler Jim who opined that there's no way of telling what could trigger the next 50% pullback in equities. What's noteworthy is that this BIS spokesman was concerned about it on July 13, 2014 when the DOW was 16,894. As I write this the DOW sits at 19,852.

I guess the party goes on until it doesn't.

http://www.telegraph.co.uk/finance/mark ... surge.html

[Undaunted]

1 U.S. Dollar = 36.03 Thai Baht....Now.....

[Up2u]

My VISA atm card returned an exchange rate of 35.96 this morning.

[Undaunted]

The dollar has hovered slightly below and above 36 for a while, I wonder what it will take to break from this trading range, the Euro might actually be on a course to equal the $ while the pound lingers at a low point.

[Up2u]

The dollar has fallen the last few days, so we never made it to the hoped for 36. Well, tomorrow is another day.

[thaiworthy]

The dollar has fallen the last few days, so we never made it to the hoped for 36. Well, tomorrow is another day.

I think it did hover around 36 for a while, but never made it to 37.