US Dollar Expected to Weaken Further to 33 Baht

[Gaybutton]

Thailand's Baht May Strengthen to Bt33 Against Dollar

 

BANGKOK, July 6 (TNA) -- The Thai currency, the baht, which had appreciated about 2.3 per cent against the US dollar during the first half of 2009, may strengthen further to Bt33 to the dollar late this year, according to a report issued by Kasikorn Research Centre.

 

The report said the baht--which ranked second in terms of Asian currencies strengthening most among Asian currencies during the first half of 2009, after the Indonesian rupiah, is expected to appreciate further during the second half on the back of economy recovery in China and other Asian countries, including Thailand.

 

Because of the expected economic recovery in Asia, inflation may also take place in the region later this year, which could force central banks, especially China’s, to step up stringent monetary measures aimed at controlling inflation in their countries, it said.

 

It is likely that the baht would move in conjunction with other Asian currencies and could test at Bt33.75 against the dollar and could even strengthen further to Bt33 by late 2009 if supportive factors continued, the report indicated.

 

However, in the worst-case scenario, current positive economic indicators seen in a number of other countries may not be strong enough to push world economic recovery significantly.

 

This may make Asian economies, including that of Thailand, to be in a difficult position to recover and the Thai baht may soften to below Bt34 against the greenback, the report said.

 

The baht by late last Friday was at Bt34.06 against the dollar compared to Bt34.07 the previous day.

 

Banks in Thailand closed Saturday and will reopen Wednesday due to Buddhist religious holidays.

 

(TNA)

[Guest fountainhall]

Typical economic "research" forecast. It may go up. On the other hand, it may go down. Take your pick!

[Gaybutton]

Take your pick!

If it's the dollar, I pick up!

[Guest fountainhall]

Sure enough, the dollar's on the rise again!

[Up2u]

Unfortunately, as American who will be traveling to LOS soon this article's prediction is rapidly coming true. The $ is approaching 33.

[Bob]

Other newspaper articles seem to indicate that the recent spike of the US dollar is due to the intervention of the Bank of Thailand. The BOT lost billions several years ago trying to do the same thing (attempting to boost the US dollar so Thai exports would be cheaper in the US).

 

I have no idea what level the baht ought to be in relation to regional currencies (although, given the condition of the Thai economy and comparing the Thai education system to that of China, India, Malaysia, Singapore, etc., one could expect the baht to fall against those currencies over the long term), but I cannot believe that the US dollar over the next decade isn't going to fall dramatically against most other currencies. Simply too much continuing imbalance in trade and way too much debt (recently, the deficits for the next 10 years are projected at a total of 10 trillion dollars).

 

This all has been predicted for years due to trade imbalances and US deficit spending.

[Guest fountainhall]

I'm sure someone will correct me if I'm wrong, but I think the BOT's massive losses occurred in 1997 when its actions were rather the opposite. Then the aim was to keep the value of the Baht artificially high against the US$.

 

The US$/Baht rate had not varied for years from its 25/1 fixed rate, but was under intense pressure from international speculators betting against the local currency. The BOT spent all the country's foreign reserves in a vain attempt to ensure the speculators did not break the peg. Their reasons were rather like those of people in Iceland, Hungary and others caught up in last year's meltdown. Many businesses had borrowed massive amounts of US$ at lower rates of interest and were desperate that the amount they'd have to pay back if the Baht was devalued would be cripplingly high. Of course the BOT's actions failed spectacularly, the Baht had to be floated, and within six months had hit around 57/1. Wish these days would return!

[Bob]

I actually have no idea what the BOT did in 1997. At that time, the Thai economy was in full collapse as was the baht as the national currency. It would seem logical, though, that the BOT stepped in to prevent the total depreciation of the baht.

 

In this decade, BOT has stepped in to prevent the baht from appreciating against the dollar and lost tons of money (a significant portion of its foreign reserves) in 2005 and 2006 doing so. Short-term, I suppose that national bank intervention can accomplish something (at least in those economies where the currency is floated in the open market)but I'm doubtful that intervention over the long haul does any good (the fundamentals or lack thereof of the given educational system and economy will take care of that).

[Guest fountainhall]

It would seem logical, though, that the BOT stepped in to prevent the total depreciation of the baht

 

Actually, the BOT had no choice but to stop stepping in. It had used up all the country's foreign exchange reserves buying the Baht to try and maintain the US$ peg by squeezing out those speculating against the currency. It lost spectacularly! When there was nothing left, the Baht crashed - bringing down all the Asian economies with it.

[Up2u]

Wonderful news if you're an American expat. The $ has weakened and is now below 33 (32.85). How low can we go.

 

http://finance.yahoo.com/currency-converter#from=USD;to=THB;amt=1

[mahjongguy]

How low can we go? About 3 years ago the bank rate dropped well below 32. That hurt a bit.

 

The buck is weak now and by next year might be a lot weaker, but "weak" compared to what? After all, it is a ratio. If the baht has its own internal problems then it too will be weak and the USD/THB ratio might actually improve. If there were, for example, severe political problems and social upheaval...

[Gaybutton]

One thing I've given up on is trying to predict what the exchange rates will be or in what direction they'll move. Over the years I've read what the Bank of Thailand has had to say. I've read what leading economists have had to say. I read what armchair economists have had to say. I'm still waiting for any of them to turn out to be right.

[Up2u]

One thing I've given up on is trying to predict what the exchange rates will be or in what direction they'll move. Over the years I've read what the Bank of Thailand has had to say. I've read what leading economists have had to say. I read what armchair economists have had to say. I'm still waiting for any of them to turn out to be right.

 

 

 

.....how true!

[bkkguy]

I'm still waiting for any of them to turn out to be right.

 

lets hope that this guy is not right!

 

The Day the Dollar Died

[Up2u]

The $ has strengthened the last few days. Now over 33 baht again.

 

http://finance.yahoo.com/currency-converter#from=USD;to=THB;amt=1

 

IF the long anticipated market correction in fact takes place the $ will be rebound more in the short term.

[Guest Astrrro]

That's correct. The market likes a weak dollar.

 

I sold one of my dollar hedges, UDN, about a week or so ago.

[Guest]

If you can successfully predict short term exchange rate movements, then you should have already made enough money not to worry about it very much (rather like George Soros).

 

Short term exchange rates are very difficult to call.

 

The only thing I would predict is the currencies of heavily indebted countries will go down the toilet over the long or very long term (e.g. UK, US).

[Bob]

If you can successfully predict short term exchange rate movements, then you should have already made enough money not to worry about it very much (rather like George Soros).

 

Short term exchange rates are very difficult to call.

 

The only thing I would predict is the currencies of heavily indebted countries will go down the toilet over the long or very long term (e.g. UK, US).

 

I'm definitely in your camp. Predicting short term (even year-to-year) fluctuations is little more than voodoo.

 

However, presuming Economics 101 actually carries some truth, there is no doubt in my mind that the US dollar over the long term has to head for swirlyville (i.e., drop like a rock). Too much debt, foreign countries holding gargantuan piles of greenbacks, and unbelievably huge and continuing imbalances of trade flows can only mean one thing - the dollar is ultimately going way down. We (US people and others) have chuckled for years over how many million Italian lira it takes to buy something but we very well may be in that same boat in the not too distant future. Why it hasn't already happened is beyond me (other than many countries - especially the ones that hold those tons of greenbacks and other US investments - have been working fairly hard to stop it from happening as their investments and their trade with the US will go south too).

 

The Thai baht in itself is an enigma. The country is falling behind other countries (Korea, Japan, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, India, and the ever-growing giant China) and it's education system or lack thereof (just my personal opinion there) will keep it going in that direction. So, how the Thai baht keeps up with any of those currencies is way beyond me. But, eventually, I'd guess, it can't and it won't.

[Guest fountainhall]

So, how the Thai baht keeps up with any of those currencies is way beyond me. But, eventually, I'd guess, it can't and it won't

Unless, that is, political will keeps it up there, as was very definitely the case in the first six or so years of the 1990's. Many pundits overseas realised it was being kept artificially high and more than a few, I guess Soros included, made millions if not a great deal more after the crash started on 2nd July 1997. 57 Baht to the US dollar and interest rates of over 20% certainly made Thailand attractive to tourists and the Baht attractive to investors.