Baht Fundamentals

[Gaybutton]

I tend to take all these expert forecasts with a grain of salt.

I take it with the entire salt shaker, all the salt in Salt Lake, and Lot's wife - just like the Thai weather forecast warnings to expect torrential rains . . .


"Tonight's forecast - dark. Widely scattered light is expected in early morning."
- George Carlin

[Jun]

Today's exchange rate ought to already incorporate all the forecasts of currency traders. So the average of the forecasts is priced in.

We're very unlikely to see a superior forecast published on a newspaper website. Particularly in the 21st century.

However, this is one topic where I'm preaching to the converted..

[Dodger]

We're very unlikely to see a superior forecast published on a newspaper website. Particularly in the 21st century.

Agree...just too many unknowns and variables in a global environment.

I know people who are involved in currency trading, stock markets, etc. (and that's certainly not me) who use Microsoft Minitab Statistical Software which apparently helps them develop their own forecasts. I've used this software before in my work for other reasons...great tool...powerful...does hypothesis testing as well.

I'm sure the expert forecasters use similar software and their predictions are all over the place so not sure if this is helpful.

[Jun]

I know people who are involved in currency trading, stock markets, etc. (and that's certainly not me) who use Microsoft Minitab Statistical Software which apparently helps them develop their own forecasts. I've used this software before in my work for other reasons...great tool...powerful...does hypothesis testing as well.

I also had reason to use Minitab about 20 years ago.
Also, despite having studied statistics for a couple of years, alongside more useful topics, I use almost none of that for investing.

I also wouldn't dream of trying to trade currencies. That's a zero sum game.
Investing in the stockmarket is far more interesting. For a start, after filtering the junk out, there are underlying profits from business.

[Dodger]

I also wouldn't dream of trying to trade currencies.

Wise decision.

[Gaybutton]

Grain of salt . . . ?

If they get it wrong, as usual, I hope it's because they've underestimated how far the baht will depreciate.
___________________________________

Baht to weaken next year amid US tariffs

K-Research sees 35.5 per dollar next year

by Nareerat Wiriyapong

December 20, 2024

The baht is expected to depreciate and finish at 34.50 to the US dollar by year-end, before sliding to 35.50 in 2025 as new US government policies pressure the yuan next year, says Kasikorn Research Center (K-Research).

The Thai currency fell to a three-month low of 34.61 to the greenback in early trade on Thursday, compared with Wednesday's close of 34.20, as the dollar and US bond yield gained strength following the Federal Reserve's interest rate cut of 25 basis points (bps) overnight.

The Bank of Thailand's Monetary Policy Committee kept its policy rates unchanged at 2.25% on Wednesday.

"Even though the Fed cut rates to 4.25-4.50%, a two-year low, as the market expected, a hawkish statement from the central bank and its upgrading of the US's 2025 economic growth forecast lifted sentiment for the dollar, making Asian currencies including the baht weaken against the greenback," said Kanjana Chockpisansin, head of the research, banking and financial sector at the think tank.

Fed officials expect only two rate cuts next year, down from the four they projected in September. In Thailand, the market now expects rates to be cut twice in 2025, said Ms Kanjana.

"Trends now support dollar strengthening, pressuring the baht to continue depreciating against the US currency," she told the Bangkok Post, adding that K-Research maintains a Thai exchange rate outlook of 34.50 baht to the dollar by year-end 2024.

The Thai currency has weakened 1.2% year-to-date from 34.14 baht to the dollar at the end of 2023. The Chinese yuan and Japanese yen depreciated 2.7% and 9.3%, respectively, during the period. The South Korean won lost the most at 11%, while the Malaysian ringgit was the only Asian currency that gained against the greenback, rising 2%.

Looking to next year, Ms Kanjana said the yuan is likely to depreciate in line with the slowing mainland economy. Chinese authorities recently said they are considering allowing the yuan to weaken in 2025 as they brace for higher US trade tariffs as Donald Trump returns to the White House.

K-Research expects the baht to be pressured by yuan movements, finishing at 35.50 to the dollar at the end of 2025, she said.

Asian stocks, including in Thailand, slid yesterday after the Fed forecast fewer interest rate cuts next year. The yen weakened past the key level of 155 to the dollar as the Bank of Japan refrained from raising borrowing costs at its meeting early Thursday.

Gold dropped to near US$2,600 an ounce, while Bitcoin held steady above $100,000.

Pipat Luengnaruemitchai, an emerging Asia economist at BofA Securities, anticipates three 25bps cuts by the Bank of Thailand in 2025, starting in the second quarter, lowering the policy rate to the level recorded from 2015 to 2018.

"We maintain our view that the monetary policy stance is too tight, considering the inflation rate. Rate cuts could ease financial conditions, given loan growth contraction, rising asset quality, and the weakening of domestic demand," he said.

https://www.bangkokpost.com/business/ge ... us-tariffs

[Dodger]

"Even though the Fed cut rates to 4.25-4.50%, a two-year low, as the market expected, a hawkish statement from the central bank and its upgrading of the US's 2025 economic growth forecast lifted sentiment for the dollar......

Hard to see how the U.S. economic growth forecast can show anything but a decline in 2025 with President Musk in charge. U.S. inflation will get worse instead of better with the proposed import tariffs - and if the economy grows it would be nothing short of a phenomenon. I'm not a financial guru - but even a 9 year old can see this.

I'll stick with my own prediction of the exchange rate averaging 34.2 in 2025...with a dash of salt of course.