GBP vs THB

[lomuamart]

There's so much manipulation that goes on, especially over the past few years by the British government and Bank of England.
I don't profess to be an expert, but I was back in the UK for a couple of months at the beginning of the year and was following the financial news with a keen eye. The B of E were definitely forcing the GBP down to help exports and employment. The 8% odd drop we saw during Feb/March particularly was brought about by the politicians and central bankers. Good old Mervyn King almost gave me a heart attack when he spoke about more qualitative easing during those months as it would have caused the GBP to drop even further - it was already below 45.
He reneged on that and I feel that that is partly the reason for some strengthening recently. However, he did say that he thought the B of E had just about got things right at 45ish to the THB - it's against the dollar but that rate is reflected in the exchange vis-a-vis the Baht. The "experts" were all saying that the pound would hover at this sort of level for a few more years.
So, I'm afraid that a return to the heady days of 60+ to the THB are highly unlikely unless the Thai economy collapses and I don't see that happening any time soon.

[Pleng]

So it is baht weakening rather than pound strengthening in this latest upward tick, correct??

It was a mix of both. The pound strengthened when it became apparent that a double dip recession was unlikely and growth, which had been predicted at 0.1% was actually 0.3%. On top of this the baht has been decreasing in value so we've had a decent run. Hopefully it will last out... it his 45.8 at one point yesterday, dipped down to 45.6 and finished up at 45.75

[jingjoe]

every economy in the world is tring to devalue their currency atm,everyone wants to be a seller not a buyer,strong economies like the oz dollar has been trying for the last 18months,so i think economies not as strong would have more chance.
The thai economy been a seller of products/manufacturing surely isn't going to devalue too much

[lomuamart]

But the stronger a currency is, the more expensive it becomes for that country to export - or to put it the other way round, it becomes more expensive for the country that imports those products.
Something that costs 1,000,000 THB will cost the UK 16,666 @ 60 to the GBP. The same thing is now costing the UK 22,222 at 45 to the GBP.
This is the primary reason why after donkey's years Thailand has slipped from being being the world's largest exporter of rice to being 3rd in the world behind India and Vietnam. There are other factors, but cost is the main one.
However, the strong Baht makes it cheaper for Thailand to import and I believe they have been doing so quite heavily in areas such as technology in an attempt to modernise their country. (It's debatable how well that's going).
So, a strong currency is bad for exports, good for imports.

[lomuamart]

Co-incidently, here's an article from today's Bangkok Post demonstrating what I was talking about above:
http://www.bangkokpost.com/news/local/3 ... trong-baht
For most of us ex-pats here, let's hope the Thai government listen!!

[musungu]

Co-incidently, here's an article from today's Bangkok Post demonstrating what I was talking about above:
http://www.bangkokpost.com/news/local/3 ... trong-baht
For most of us ex-pats here, let's hope the Thai government listen!!

A good article and the sure fire way to devalue the Thai Baht is to reduce interest rates, which will make it unattractive to Foreign Speculators. There are billions being invested from overseas to take advantage of the relative high rates being paid in Thailand.

The Government is aware of this but interest rates are independently set outside of the government by a committee with the Central Bank, and so far they have not followed the government's request - let us hope this month they do something!

[Khundon1975]

46.248 to the £ as of 9am today, doubt it will stay this high for long.
Not so good for you ex pats who are on a pension based on EX rates of around mid 70's as they were around 2001-2003

I had a meeting with the Thai ambassador to the UK a few days ago and one of the subjects we discussed was the low exchange rate and was it affecting tourism, he did not seem to think it was, as they expect more than 25 million visitors this year! up 15% on last year!



By the way, one of his favourite places to visit is Hua Hin.

[Huahinian]

I attended a golf tourism conference in Pattaya this week and the TAT governor was forecasting 25M arrivals this year. They expect the European markets to fall except for Russia. The huge increases are expected from Russia, China and Korea.

[dtaai-maai]

I had a meeting with the Thai ambassador to the UK a few days ago and one of the subjects we discussed was the low exchange rate and was it affecting tourism, he did not seem to think it was, as they expect more than 25 million visitors this year! up 15% on last year!

Of course it's affecting tourism. It's obviously up 15% because of the increase from Russia, China, etc. but it might be up 25% if (west) Europeans (and Americans?) weren't going elsewhere because of the exchange rate.

[Pleng]

I had a meeting with the Thai ambassador to the UK a few days ago and one of the subjects we discussed was the low exchange rate and was it affecting tourism, he did not seem to think it was, as they expect more than 25 million visitors this year! up 15% on last year!

Of course it's affecting tourism. It's obviously up 15% because of the increase from Russia, China, etc. but it might be up 25% if (west) Europeans (and Americans?) weren't going elsewhere because of the exchange rate.

But are Europeans going elsewhere because of the exchange rate? Or just not going anywhere because they have no money?

[caller]

But its not just about the numbers of tourists, its how much they spend. I saw a report a while ago that showed western tourists spent a lot more than those from the east. So I guess the hotels gain, but how much is there for the local communities?

[chopsticks]

There's so much manipulation that goes on, especially over the past few years by the British government and Bank of England.
I don't profess to be an expert, but I was back in the UK for a couple of months at the beginning of the year and was following the financial news with a keen eye. The B of E were definitely forcing the GBP down to help exports and employment. The 8% odd drop we saw during Feb/March particularly was brought about by the politicians and central bankers. Good old Mervyn King almost gave me a heart attack when he spoke about more qualitative easing during those months as it would have caused the GBP to drop even further - it was already below 45.
He reneged on that and I feel that that is partly the reason for some strengthening recently. However, he did say that he thought the B of E had just about got things right at 45ish to the THB - it's against the dollar but that rate is reflected in the exchange vis-a-vis the Baht. The "experts" were all saying that the pound would hover at this sort of level for a few more years.
So, I'm afraid that a return to the heady days of 60+ to the THB are highly unlikely unless the Thai economy collapses and I don't see that happening any time soon.

I thought that Mervyn King had been put out to pasture and replaced by a Canadian whizz kid who also favours Quantitative Easing (money printing) as the panacea.

[lomuamart]

He's still there at the moment - or was a couple of months ago - but will be replaced by the Canadian. I can't remember when.

[benmo]

His name is Mark Carney and he starts at the end of June

[BaaBaa.]

Haven't BOT said they're going to try and reign this in a bit? Don't see what good it does them being that high.