Baht hits 13-month peak

[reader]

NOTE --  If you're planning a trip and trying to figure out what the exchange rate will be when you arrive, I wouldn't waste a lot of time or effort. Rates fluctuate by the minute. You can get a clue on what direction they may be moving bythe  action of your home country's central bank on interest rates. If they are raising rates, your currency will likely appreciate against the baht. If they are lowering rates, it will likely depreciate.

Cross currency rates at 0700 today:

 

Dollar              34.35

Euro                38.28

Pound             45.07

CAN dollar      25.29

From The Thaiger

The baht is poised to strengthen further, potentially reaching 34 per US dollar or even higher, following a 13-month peak attained yesterday. This surge occurred as the Bank of Thailand opted to keep the policy rate steady at 2.5%, encouraging potential inflows ahead of the US Federal Reserve’s upcoming September meeting.

Closing at 34.21 on August 20, the Thai currency rallied to 34.06 against the dollar early yesterday, marking its highest level since July 2023, before settling at around 34.13-15.

The appreciation of the baht mirrored movements in other Asian currencies, driven by a drop in the dollar index to its lowest point since December last year. Market expectations suggest the US central bank might ease its policy stance as early as next month.

Over the past two days, the baht appreciated by over 2%, coinciding with the Bank of Thailand’s decision to maintain the policy rate at 2.5%, a decade-high level, said Kanjana Chockpisansina head of research, banking, and the financial sector at Kasikorn Research Centre (K-Research).

 

[vinapu]

This morning at TT Exchsnge in Pattaya by the Boyztown:

1 USD =34.17, up fro 34.15 last evening

[reader]

The baht continues to outpace the following four currencies. The changes over the past year generally reflect the change in interest rates in the respective countries (the lower the rate, the more likely it is to fall vs the baht). What could alter the trend? The Bank of Thailand could lower its rate, something the director of the BOT is reluctant to do despite increasing pressure from the business sector.

Visitors may see the effects in the price of accommodations and, of course, ATM withdrawals. However, in most cases the exchange of 1,000 units of currency doesn't amount to more than a single admission to most show bars.

[bkkmfj2648]

2 minutes ago, reader said:

What could alter the trend?

The BOT (Bank of Thailand) will eventually lower their interest rates.

Why?

• Thai exports have become more expensive.
• In bound tourists will have less money to spend due to the higher baht.
• The nearby Chinese economy seems to be in trouble.

We have seen this global rate cut cycle repeat itself so many times in the past.

https://www.bangkokpost.com/business/general/2870433/all-eyes-on-the-baht

 

[reader]

From Pattaya News

Urge Bank of Thailand to Tackle Strong Baht

On September 25th, 2024, Mr. Prasert Taedullayasatit, the chief executive of a property business, urged the Bank of Thailand (BoT) to implement measures to prevent the baht appreciation from negatively impacting key sectors such as exports, tourism, and real estate.

Prasert highlighted that over 86 billion baht worth of condominiums are awaiting ownership transfers in Q4 2024, with around 20-30% of these properties being purchased by international buyers. The strong baht is making Thailand’s property market less attractive to foreign investors, as they now require more capital to complete transactions.

Mr. Khajornsit Singsaensern, the President of Siamese Asset PCL, echoed these concerns, stating that the current exchange rate, which has dropped below 33 baht per US dollar, has weakened foreign demand, particularly in the condominium market.

Khajornsit urged the BoT to consider lowering interest rates to weaken the baht, which would not only benefit the real estate sector but also revitalize other areas like exports and tourism. Additionally, he noted that lower interest rates would ease the financial burden on businesses and reduce loan repayment costs for citizens.

https://thepattayanews.com/2024/09/26/thai-real-estate-leaders-urge-bank-of-thailand-to-tackle-strong-baht-as-foreign-condo-buyers-face-struggles/

 

[reader]

From Pattaya Mail

Factories and SMEs shutting down due to baht’s strength

Recent discussions have highlighted the rising concern over the closure of factories in Thailand. One major cause being pointed out is the continued appreciation of the Thai baht, which has made Thai products significantly more expensive than those from competing nations.

The Bank of Thailand’s approach, which ties the baht to the U.S. dollar and its performance against the Dollar Index, has been called into question. The Dollar Index measures the value of the dollar against a basket of six currencies from major economies, including the Eurozone, the UK, Sweden, Canada, Japan, and Switzerland. While this strategy may seem logical in some contexts, critics argue that it puts Thailand at a disadvantage against its direct competitors, who are not included in the Dollar Index.

The Currency Disadvantage in Key Export Industries
Thailand’s major export competitors include:
Agriculture: China, India, Vietnam, and Cambodia.
Heavy Industry (Steel): India, China, South Korea, and Taiwan.
Plastics Industry: China, India, Singapore, Taiwan, and South Korea.
Cement and Clinker: China, Vietnam, and Indonesia.
Automobiles, Batteries, Machinery: China, Taiwan, South Korea, Vietnam, Singapore, and Indonesia.

The Bank of Thailand has strengthened the baht by around 10% compared to the U.S. dollar since last year, while competitors such as China, Vietnam, and Taiwan have devalued their currencies by roughly 10% relative to the dollar. This results in a 20% cost disadvantage for Thai exporters, making it extremely difficult for Thai products to compete globally.

The Impact on Factories and SMEs
As a result of this cost disparity, many large and small factories in Thailand have shut down. SMEs have already been severely impacted, and agricultural products have suffered from declining prices. The closure of major industries, including automotive and steel factories, has already started, and there is concern that this trend will spread to other key sectors.

Call for a Weaker Baht to Compete
In light of the situation, experts argue that the Bank of Thailand must re-evaluate its currency strategy. They suggest adjusting the exchange rate to at least 37 baht per U.S. dollar, which would still leave a 10% handicap compared to competitors. Ideally, the baht should be devalued to align fully with key competitors, reducing the cost gap by 20%.

https://www.pattayamail.com/thailandnews/factories-and-smes-shutting-down-due-to-bahts-strength-making-thai-products-20-more-expensive-than-china-vietnam-and-taiwan-474027