How Will the Baht's Rise Affect You?

[Guest fountainhall]

After a period of relative stability, the Baht has slowly been strengthening against the US$. In 2012 the rate appreciated about 3%. Last month alone, it rose almost another 3%, hitting Bt. 29.66 and getting close to the low of Bt. 29.35 reached in early 2008.

Against the UK£, the rate has appreciated from a high of Bt. 50.22 on September 27 last year to 46.59 today.

Blame for the rise is put variously on the deal to at least postpone the US debt ceiling crisis, a degree of speculation, and the new Japanese government’s policy of letting the Bank of Japan substantially weaken the $/¥ rate. A few months ago this stood at around ¥78 whereas it is now close to ¥94 (great for those of us visiting Japan in the next few months)! But it is bound to boost Japan's exports at a time when Europe and the US hardly need to be importing more.

Several other regional currencies have been strengthening, though. With no end to the fluctuations in sight, I wonder if the rise in the Baht’s value is likely to have any direct affect on you? For if the rise continues, it will surely affect almost everyone - retirees, expats and potential visitors.

[Guest Jovianmoon]

Just checked XE for the baht against the AUD; it's up to 30.6912. Not an appreciable increase for me, but maybe indicative of a long term trend. Who knows? Global economics and currency speculation are definitely not my forte.

[Guest]

Even as a tourist, it's already had some effect. When I first visited Thailand, the exchange rate was much better than now. Then even a night's entertainment in Bangkok seemed like good value.

However, the exchange rate will have to move quite a bit further to curtail enjoyment of future holidays.

 

Fortunately 50% of my stock portfolio is in Asia, so a good portion of future income should be more closely correlated to Asian economies. That's one way to reduce currency risk, even if their stock markets are rather volatile.

[Guest fountainhall]

This would seem to be not very good news for those expecting the Baht to start falling against the major currencies any time soon. The BBC reports that Thailand’s economic growth exceeded expectations in the last quarter of 2012 with GDP surging 18.9% against analysts’ forecast of 15%.
 

 

"Overall, the Thailand economy is in a pretty good shape right now," Rahul Bajoria, an economist with Barclays Capital told the BBC.

"It is unlikely that the central bank will cut rates anytime soon. The numbers clearly indicate that there is no urgent need to do that."

. . . Analysts said that given the strong domestic demand and increased government spending, a rise in consumer prices remained a concern and may prompt the central bank to keep rates on hold in the short term.

"Domestic demand momentum is certainly picking up and this will spill over into 2013," said Eugene Leow of DBS Bank.
"The focus will likely turn towards inflation, especially considering the robust growth numbers."

http://www.bbc.co.uk/news/business-21495707