Baht Likely to Weaken to 35 per US Dollar this Year

[Gaybutton]

Here's one exchange rate prediction I hope comes true. Even if it does, it still is lousy in comparison to the 45 per dollar that held for many years, but it would certainly be much better than it's been in a long time.

 

The following appears in THE NATION:

_____

 

Baht Likely to Weaken to 35 per Dollar this Year

 

By Jiwamol Kanoksilp

The Nation, Bloomberg

Published on July 30, 2008

 

While the US dollar is bottoming out, experts predict the baht will grow weaker, ending up about 35 to the greenback by the end of the year.

 

"The US dollar has bottomed out," Tim Condon from ING Wholesale Banking/Financial Markets in Singapore said yesterday.

 

He predicts the dollar will appreciate against the euro and the yen, while the baht could fall further, depending on confidence.

 

ING said the baht was expected to fall to 34.15 to the dollar in the third quarter before appreciating to 33.85 in the fourth quarter. ING predicts the baht will rise to 33 to the dollar next year, but Satian Tantanasarit, executive vice president of TMB Bank, predicts the baht will appreciate to 35 to the dollar this year.

 

"I agree the dollar has been weakening and is bottoming out," he said.

 

However, Condon believes the US Federal Reserve will likely cut its policy rate 50 basis points during next year's first quarter after the worst of the inflation shock passes, while the European Central Bank in the same quarter will reverse its recent rate increase policy.

 

Condon believes the fading of the oil price shock will shift the European Central Bank's focus from inflation to growth. The US Fed funds rate is now at 2 per cent.

 

However, Satian believes the US central bank will maintain its rate and predicts the Bank of Thailand BOT will increase rates at least once more this year. The BOT's Monetary Policy Committee will meet again on August 27 for a rate movement decision.

 

The baht fell for a second day yesฌterday on speculation that slowing economic growth and a deepening US housing slump would deter investments in emerging market assets.

 

The currency extended this month's losses after the BOT yesterday cut its economic growth forecast for this year to as little as 4.8 per cent, saying highฌer prices were squeezing consumption.

 

The Morgan Stanley Capital International Asia Pacific Index dropped as much as 2.3 per cent folฌlowing a slump on Wall Street amid concerns about widening credit market losses.

 

"The Thai stock market is down a lot, with foreign investors continuing to sell and thus damping demand for baht," said Chutima Nuphan, a currency trader at TMB Bank in Bangkok.

 

"Last night, we saw steep drops on Wall Street. The baht is going to be on the weak side."

 

The baht declined 0.1 percent to 33.49 to the dollar late yesterday morning. It has been the second worst performer in the past three months among the 10 most active Asian currencies outside of Japan.

 

The BOT raised its inflation forecast for this year to 7.58.8 per cent, Assistant Governor Duangmanee Vongpradhip said yesterday. In April, it forecast an inflation rate of 45 per cent. The US$206billion (Bt6.91 trillion) economy was previously forecast to expand as much as 6 percent this year. Global funds sold about $1 billion worth of Thai stocks more than they bought from July 125. The Stock Exchange of Thailand Index fell as much as 1.7 percent yesterday.

[Guest LP]

delete

[Gaybutton]

GB, your obsession with exchange rate hardly makes any sense in present environment for people living on fixed income

 

It makes plenty of sense to me. What you say is probably correct in theory. I don't dispute a word of what you said. However, on a practical level it has nothing to do with the lifestyle I lead. On what do I spend my money in Thailand? Prices in the grocery store have gone up, but not by a significant amount. Restaurant prices are essentially the same. Prices that affect my daily life have not risen, with the exception of fuel prices. Entertainment prices have risen, but again nothing significant. Prices at the beach are the same. Local public transportation prices have not changed. Bar prices, off fees, and the amounts expected by the boys have not significantly changed. Hotel prices have not changed. Utility, telephone, and Internet prices have not changed. Medical, dental, prescription, and insurance prices have not changed. The daily cost of living, at least for me, has hardly changed at all, certainly not enough for me to benefit by what you are saying.

 

I would agree with what you say if the prices on which inflation has an effect also had an effect on me and my lifestyle. So far, it hasn't had a significant effect at all, again with the exception of fuel prices. I will admit those fuel prices have definitely caused problems for me. A year ago I could fill my car's tank for 800 baht. Now it costs more than 1600 baht and I go through four to six tanks of fuel per month. You've got me on that one. However, once they are present in Thailand, I would imagine most farang are spending their money in much the same way as I spend mine.

 

Meanwhile, if I am receiving a significantly greater amount of baht each month if the baht continues depreciating, that does have an effect on me, quite a positive one at that, especially if the amount I receive outruns the inflation rate. I think I'll continue my 'obsession' until the actual circumstances surrounding my life work out in the manner you describe.

[Guest LP]

delete

[Gaybutton]

I.e. 40 baht per day? Lucky you.

 

Actually, I eat at home much more often than I eat out. Sure, I notice an increase in the amount I spend, but not a significant amount.

 

I can't speak for others, but for me, the inflation in Thailand has had very little effect other than the price of fuel.

[Guest LP]

delete

[Gaybutton]

GB, this is from your own post of June 17. I know that you have a theory that a collective memory of a message board does not exceed two weeks (with which I agree) but some members may have much better memory...

 

First, I am beginning to resent the insulting nature of your posts. I don't do that to you and I would appreciate it if you would stop doing that to me. Show me where I ever expressed such a theory. You should be able to do that since you have a knack for dredging up old posts.

 

Second, I remember quite well the post to which you refer. What point are you trying to make? Everybody knows that inflation has hit Thailand. I have repeatedly said, in this thread, that the inflation has little or no significant effect on me or my lifestyle and so far it doesn't. I doubt it has much effect on the lifestyle of most farang in Thailand. Believe it or not, I can actually afford the additional five baht I have to pay if I want fried rice from that mom-and-pop shop down the street. Yes, prices in the grocery stores have definitely increased. I don't dispute that. However, the amount of the increase is virtually insignificant to me. Again, the only price increase that has caused problems for me are the fuel prices. The inflation is hitting the Thais very hard, but the average Thai neither lives the lifestyle of the typical farang nor has the income and financial resources of the typical farang.

 

What are you trying to prove? That inflation exists? That I'm blind to it or can't see that it is indeed affecting my life after all? I don't know what you are getting at.

[Guest LP]

delete

[Guest GaySacGuy]

I live in Ubon now, and the biggest cost increase is of course for fuel for the car. However, there is going to be a trickle down effect of fuel cost on everything. If fuel stays high,watch the airline cost continue to rise.

 

Food cost haven't seemed to change very much for about the last year. There is a major increase in some of the imported items = fuel cost! Some of the local items, mainly produce, chicken, and pork, are so reasonably priced that a small increase will be ok. The more the baht weakens, the better I like it. I am not now bringing funds in from the US monthly, but I am banking money in the US that I will try to tranfer at the best possible time!!

[Gaybutton]

I am not going to post on this message board anymore until you keep your status of moderator, cause I do not think that the concept of moderation is applicable to you in any shape or form.

 

I'm sorry my status as moderator, according to you, disqualifies me as a person who is allowed to comment, express my opinion, and disagree with you, just as anyone else can do. I'm fine as a moderator as long as my opinion agrees with yours. So be it. There are several other boards out there on which you can post. Try the Sawatdee board. I don't post on that board, so you can post there to your heart's content without worrying about a reply from me.

[Guest]

I've noticed prices have dramatically risen, percentage-wise, for a great many grocery store items. Restaurants are raising their prices. Soon the baht buses and motorcycle taxi prices are probably going up. Truckers are threatening to halt operations as early as next week if something isn't done about diesel prices.

 

I see many prices going up and many more that should. The price paid to most guys for offs are the same as 5 years ago but the cost for them to live has increased significantly. I have seen the motorcycle taxi's ask more for trips as well as the private baht buses that are at Big C and etc when you buy groceries.

 

Costs have risen and with fuel out of control, they will continue to rise for all items.

 

As far as GayButton being a moderator, he has a right to his opinion just as much as you are I do. There should be no squabble about him moderating unless you see him deleting your or others posts which he disagree with. He has NEVER done that. When the rules of the board are followed, he is welcome to disagree, argue, etc. That is EVERYONE's right. Including yours. And, you won't see me or him or Stef or anyone else removing your posts just because we disagree with what you say. If that were the case, I would have to remove all of the posts by Jomptien as he has has a crush on me for years and I can't seem to shake his hands on my thighs in the bars at night or his flirtatious Private Messages on this board to me. Sometimes we have to live with others thoughts even though we don't understand them.