Strong baht may finally weaken, according to Bloomberg

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Re: Strong baht may finally weaken, according to Bloomberg

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"In the land of the blind the one eyed man is king"

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Dodger »

Bloomberg predicted that the baht would decline 0.7% to 30.4 per dollar by end-2020 before the coronavirus struck China. As he predicted, the baht started to weaken near the end of December at a steady pace, although has already exceeded 30.4. due to the coronavirus hurting the economy and the value of the baht even more.

Coming from someone like me who has absolutely no interest in global finance, it certainly appears that 32.5 by the end of this quarter that the experts predicted is a reasonable assumption.

From my admittedly ignorant point-of-view, China's economy will be fucked for all of 2020, and beyond. Thailand is tied so closely to China that it's going to be fucked as well. The baht will weaken more than 32.5 - possibly 34 by the end of 2020, due to the fact that Thailand keeps allowing the Chinese to pour into the Kingdom right smack in the middle of this coronavirus epidemic, and things can get really really bad - really really quick. It doesn't take an expert to see the writing on the wall.

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Gaybutton »

Dodger wrote:
Tue Feb 25, 2020 6:42 pm
Thailand is tied so closely to China that it's going to be fucked as well.
Isn't the opposite actually the case? Thailand has actively been trying to weaken the baht for a long time. I thought a weakening baht would benefit, not harm, Thailand.

It's sad that it took a catalyst like this to make it start happening, but for us farang, it's a silver lining on the cloud.

The current exchange rates can be checked here: https://www.scb.co.th/en/personal-banki ... tml#fxrate

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Jun »

Gaybutton wrote:
Tue Feb 25, 2020 7:22 pm
It's sad that it took a catalyst like this to make it start happening, but for us farang, it's a silver lining on the cloud.
https://knoema.com/atlas/topics/Tourism ... ent-of-GDP

According to that source, Tourism amounts to over 20% of Thai GDP. Their figures look high, but it all depends in what you count.
Anyway, the loss of tourist revenue will hurt the economy in the short term.

Longer term, tourism will recover, so I wouldn't count on the baht being weak in 12 months time (or whatever it takes).

Also, when there is fear, people move to assets like gold and dollars, so that's what has happened in the last few days.

Going forward, I also see political risk. On all sides. For the US, continuing the current reckless borrowing under Trump, or perhaps a hard left president ? The latter tends to result in capital flight. Perhaps the best result would be a moderate democrat.

And on this side of that currency pair, perhaps the low competence and high corruption will eventually lead to pressure for change.

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Dodger »

Gaybutton wrote:
Tue Feb 25, 2020 7:22 pm
Isn't the opposite actually the case? Thailand has actively been trying to weaken the baht for a long time. I thought a weakening baht would benefit, not harm, Thailand.
Sometimes a strong currency helps a countries economy - and sometimes it hurts them. Only an Economist could explain this, and that's certainly not me.

I know that the loss in Chinese tourists, in-and-by-itself, is a major blow to Thailand's GNP which Jun highlighted in his post.

Thailand and China are connected at the hip. Some say that 80% of the wealth in Thailand is controlled by Chinese, either as direct business owners, or through Thai/Chinese joint ventures and partnerships, many of which involve the Thai Army who own many businesses in Thailand which are tied directly to Chinese conglomerates. If China's economy suffers - so will Thailand's. That's just the risk involved in these types of close business ties. Building a multi-billion dollar railroad which runs from Thailand to China is just one of many joint Thai/Chinese projects which is now at risk. There are many others on paper.

A weaker Baht would improve exports which are suffering right now, and possibly improve foreign business investments over time, which seems to be the main reason the Thai Central Bank was trying to convince the government to weaken the baht, long before the coronavirus came to town. Now, with the expected short and long term effects of the virus on both Chinese and Thai economies, it would be very surprising to see the Baht ever strengthen like it did again in this epoch. I'll hold firm to a projection I made at this time last year, that the Baht will weaken to 34 before the dust settles. Now, I'll let all the Economist's and financial experts articulate why their hypothetical data doesn't support this.

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Gaybutton »

I'm wondering how far this might go. From what I've been reading, Asian stocks are plunging and currencies are in trouble. Is this virus scare potentially going to cause another Asian currency meltdown as happened in 1997?

I know zilch about economics. I know it's only speculation, but just how weak do some of you think the baht is likely to get, how soon, and how long will it last?

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Jun »

Speculation:
I do not foresee an Asian currency crises like 1997.

For a start, Thailand has had a strong economy, a trade surplus and has not been trying to fix the currency.
Although, tourism is important. The airport rail link was very quiet yesterday. So a big short term hit to the economy.

Also the Chinese Coronavirus is rapidly going global. In February it was an Asian crises. In March, it looks like being a global crises. Including the US.

How long would it last ?
(i) For the current outbreak, presumably a vaccine would be widely available in 2021. That must put an end date to it.
(ii) I have read that there are 4 main strains of flu that regularly circulate at present. There has been a suggestion that we will now have a fifth. (Not quite sure about terminology)

Background reading on current flu vaccines:
Old:https://www.cnbc.com/2015/10/19/the-16- ... f-flu.html
https://www.who.int/influenza/vaccines/ ... ations/en/

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Dodger »

Jun wrote:
Thu Feb 27, 2020 9:09 am
For a start, Thailand has had a strong economy, a trade surplus and has not been trying to fix the currency.
I'm not so sure about this. Thailand had a strong economy, but right now its got one foot on a banana peel and the other in an economic grave.

Remember that the 1997 Asian financial crisis began in Thailand and then quickly spread to neighboring countries. It started when Bangkok unpegged the Thai baht from the U.S. dollar, setting off a series of currency devaluations and massive flights of capital. Since then, China has replaced the U.S. as Thailand's top export customer, and China's economy is now bent over waiting to get it rammed up the anal aperture. Just in the past 90 days, Thailand's currency went from the top performer in SE Asia to the worst. These factors, among others that seem fairly obvious, seem to indicate that Thailand HAD a strong economy - but China is about to weaken it (even more).

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Re: Strong baht may finally weaken, according to Bloomberg

Post by Up2u »

Up2u wrote:
Mon Feb 24, 2020 7:58 am
Good news indeed. I will be using TransferWise this Wednesday afternoon and I just got a quote of 31.725.
I initiated a transfer using TransferWise yesterday. The guaranteed rate was 31.83. Money scheduled to arrive Monday, March 2, the first business day of the month.

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Re: Strong baht may finally weaken, according to Bloomberg

Post by 2lz2p »

Up2u wrote:
Fri Feb 28, 2020 8:19 am
Up2u wrote:
Mon Feb 24, 2020 7:58 am
Good news indeed. I will be using TransferWise this Wednesday afternoon and I just got a quote of 31.725.
I initiated a transfer using TransferWise yesterday. The guaranteed rate was 31.83. Money scheduled to arrive Monday, March 2, the first business day of the month.
Softening a bit - I initiated a transfer with Transferwise yesterday, due to arrive March 4 - the guaranteed rate was 31.52.

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