chiangmai
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Post by chiangmai on Jul 23, 2020 10:02:44 GMT 7
Will repayment of this debt cause major problems? I realise not just a question for Thailand but for all countries that have borrowed big. But how do you see Thailand managing things. I understand that government borrowed the 1.9 trillion very well, they took 900 bill. from BOT's Foreign Currency Reserves and then a low rate promissory note on the remaining 1 trill.. so the servicing side of the debt is very low. Ditto the high speed rail link deal they did with China. China wanted the deal doen in USD so the Thai side forward fixed an exchange rate on the loan at a time when THB was at its strongest and USD was close to its weakest point....I wish I could borrow like that! As far as other government/budget debt serviceability goes, most of that is via bond issuances and of course the base rate is ultra low so coupon rates will also be very low. The IMF was pushing Thailand to increase its budget deficit last year because by comparison to other countries and to fundamentals, it was too low, that suggests even the IMF believes the Thai government has ample room to take on more debt without problems. But that was pre-covid and today is a different proposition, the above assumes economic growth will return within reasonable timescales which I think most people believe it will. And don't forget, all but 4% of the debt is in THB, foreign currency risk is almost non-existent.
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Post by rgs2001uk on Jul 23, 2020 21:10:43 GMT 7
Any truth to the rumour those 3 blokes are you, Fletch and AyG? Certainly not me, I'm a relative novice at this stuff. I find country level economics fascinating for a number of reasons, it's like trying to build a complex jigsaw and finally seeing a picture take shape and understanding what it is. Every aspect is interconnected to so many other things yet after you've looked at it for a while the connections are very basic and you can't understand why other people can't see it also. Baht strength is one of those aspects, the Baht is strong because the country exports more than it imports and that creates a trade surplus which feeds the current account and the foreign currency reserves, what could be more simple than that. Yet people persist in the wild arse notion of the three blokes in the back room at BOT. It was actually naam who made me think more about the economy, he had a great way of passing along information and pointers that sparked my interest. Sadly, that interest sparked too late because I'd made a couple of costly mistakes before that, so now I sort of hope I can get others interested and help them understand some of the basics that I do. But most people, especially at TVF, associate that sort of learning with bankers, rich people and distrust and much prefer to cling to a belief that manipulation by the elites is the real answer, people in finance only exist to enrich themselves so that must be the reason/ answer for everything they do. But hey, so what, sometimes the thinking aloud part helps improve the picture plus the facts are there for others to pick up on (or not) as they chose. And it's surprising that there are people out there who have a deep interest in the subject but they are afraid to be identified because it's almost counter culture for typical expats, especially at TVF. A GREAT GUY, with an outstanding sense of humour and knowledge, which he would pass on, no time for fools, and called it like it is, I hope he is well. I think his best quote was, "if i dont understand it in 2 minutes, i dont touch it" Cant comment on TVF, I remember there used to be a couple of really knowledgeable guys on the finance forum, I think they like me just walked away. Why waste time arguing with an idiot, they will only drag you down to their level.
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Post by rgs2001uk on Jul 23, 2020 21:14:56 GMT 7
The Baht faces fresh problems. The reduced of supply of USD coming into the country resulting from fewer exports and the dire lack of tourists means BOT will not be able to help weaken the Baht with the same regularity as in the past. On the upside, markets took a dim view of the all change in the MOF and BOT with several proposed candidates rejecting offers. As a result, THB finally made it onto the US Fed's top 20 list of currency manipulators, just. Despite popular belief to the contrary BOT was in the habit of intervening in the FOREX market almost monthly in an attempt to stop the rise of the Baht and evidence of this can be seen in the BOT monthly Foreign Currency Reserves report. And as if that's not enough, the value of USD is falling even further, the Dollar Index is now at 94.XX which in an election year is not good news for the incumbent President although it might just be good news for everyone else! All of this doesn't help exports which definitely need a helping hand but the problem is USD, much less so THB. For Brits, however, GBP/THB is looking the best it's been in a while, 40 is on the horizon, not exactly the 60 that was imagined by so many impoverished, rural, 7/11 doorstep sitting, pole dancer spouses, Leo swilling TVF members but still good enough for many of us....as has been said, it's the new normal. Many fail in their understanding, its all about the $$, there is no pound to baht exchange rate, if the $$ climbed tomorrow it would take the pound with it. Signed a non impoverished Leo swiller, with a non pole dancer wife, who well remembers the days of sub 40 to the pom peso.
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Post by rgs2001uk on Jul 23, 2020 21:18:27 GMT 7
Time for a wee song, , keep the printing presses churning out those worthless dollars, reminds me of Germany and the EU. When was the last time an team of independant auditors carried out an inventory check in Ft Knox?
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chiangmai
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Post by chiangmai on Jul 24, 2020 6:11:27 GMT 7
Currency Manipulation.
The US has put Thailand on the currency manipulation watch list because it meets the following criteria:
1 - a trade surplus with the US of over USD 20 bill. and
2 - a current account surplus of over 2% of GDP.
Thailand's exports are initially measured in Baht but export bills to the US are settled in USD. As the value of USD has fallen (from a Dollar Index reading of over 100 to today where it's under 94) so the value of USD has fallen and the value of THB has increased - last year THB was up 8%.
Measure those Thai exports at 32 baht to the Dollar and the criteria above are not breached, measure them at 30 and they are.
A third criterion exists which is:
3 - persistent one-sided intervention in the FOREX markets for 8 months in the year.
Indeed BOT has intervened in the FOREX market almost every month for the past year but this was always in an attempt to weaken the Baht, never to try and strengthen it.
The currency manipulation story is a non-event and a non-story, the problem is almost exclusively a USD problem, albeit Thailand should import more goods.
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chiangmai
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Post by chiangmai on Jul 24, 2020 6:37:26 GMT 7
Exports.
EXIM is the export-import Bank in Thailand and like any other bank, it has Non-Performing Loans (NPL's) on its books. NPL's in June surged to 6.36% in June. An NPL is defined as a loan where the borrower has not made any payments for at least 90 days. Thai exporters take out loans with EXIM to cover the cost of producing and sending their goods to the importing country, the NPL may arise because the Thai exporter was unable to complete his part of the export arrangement or because the importer has not paid.
Exports are forecast to contract this year by up to 20%, just for comparison purposes, Singapore showed a 41% contraction last quarter.
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chiangmai
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Post by chiangmai on Jul 24, 2020 7:04:21 GMT 7
The Baht faces fresh problems. The reduced of supply of USD coming into the country resulting from fewer exports and the dire lack of tourists means BOT will not be able to help weaken the Baht with the same regularity as in the past. On the upside, markets took a dim view of the all change in the MOF and BOT with several proposed candidates rejecting offers. As a result, THB finally made it onto the US Fed's top 20 list of currency manipulators, just. Despite popular belief to the contrary BOT was in the habit of intervening in the FOREX market almost monthly in an attempt to stop the rise of the Baht and evidence of this can be seen in the BOT monthly Foreign Currency Reserves report. And as if that's not enough, the value of USD is falling even further, the Dollar Index is now at 94.XX which in an election year is not good news for the incumbent President although it might just be good news for everyone else! All of this doesn't help exports which definitely need a helping hand but the problem is USD, much less so THB. For Brits, however, GBP/THB is looking the best it's been in a while, 40 is on the horizon, not exactly the 60 that was imagined by so many impoverished, rural, 7/11 doorstep sitting, pole dancer spouses, Leo swilling TVF members but still good enough for many of us....as has been said, it's the new normal. Many fail in their understanding, its all about the $$, there is no pound to baht exchange rate, if the $$ climbed tomorrow it would take the pound with it. Signed a non impoverished Leo swiller, with a non pole dancer wife, who well remembers the days of sub 40 to the pom peso. This actually raises an excellent point, how does the FOREX market actually work. USD is at the top of the tree and is measured by the US DOllar Index, it's value is measured against the Swiss Franc, The Japanese Yen, The British Pound, the Canadian Dollar, the Euro and the Swedish Krona. As the value of each of those currencies changes so the value of the Dollar Index and the value of USD is adjusted. The value relationship between currencies is set out in currency pairs and the value relationship of each currency with all other currencies is enshrined in complex algorithms. As the value of of USD changes so the value of all currency pairs is also adjusted. When an event occurs that affects the value of a currency further down the currency tree, that value change is recalculated throughout the entire currency pair tree. This ensures that the integrity and relative value of a particular currency is maintained against all other currencies and not just against a particular pair. As currencies are bought and sold globally the value of mega large transactions and their exchange rates are logged by the Central Bank that owns the currency that is involved in the trade, that way Central Banks see the extent to which their currency is being demanded or supplied. As currencies are sold against USD their value weakens, as they are purchased using USD their value increases. Note: all smaller foreign exchange transactions are amalgamated at some point into very large transactions and it is these types of transaction that influence values. Lastly, there are country dependent factors that can change the value of its currency outside of the FOREX markets and these are usually referred to as economic fundamentals. These comprise things such as the amount of debt a country has issued, the condition of its current account and whether it operates a trade surplus or deficit and how much it has in foreign currency savings or reserves. As those things change so the value of the country's currency is adjusted within the FOREX market and those changes reflected throughout the entire FOREX pair tree.
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chiangmai
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Post by chiangmai on Jul 24, 2020 14:24:25 GMT 7
Stay tuned, coming soon, the ultimate calculation: The financial impact on Thai GDP if every farang were to pick up and leave......you'll be shocked by the answer.
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Post by rgs2001uk on Jul 24, 2020 20:17:54 GMT 7
Stay tuned, coming soon, the ultimate calculation: The financial impact on Thai GDP if every farang were to pick up and leave......you'll be shocked by the answer. , the way my mrs spends money at the local garden centre would shock you, eff me, she even has shopping from home, phone calls on video, she picks what she wants and 2 hours later its delivered to the house. I will concede, I doubt very much if Boon Rawd would go bankrupt if I left. No sick or dying buffaloes here in Bang Kapi so no vets bills to worry about.
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Post by rgs2001uk on Jul 24, 2020 20:19:30 GMT 7
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chiangmai
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Post by chiangmai on Jul 25, 2020 5:10:54 GMT 7
Exports. EXIM is the export-import Bank in Thailand and like any other bank, it has Non-Performing Loans (NPL's) on its books. NPL's in June surged to 6.36% in June. An NPL is defined as a loan where the borrower has not made any payments for at least 90 days. Thai exporters take out loans with EXIM to cover the cost of producing and sending their goods to the importing country, the NPL may arise because the Thai exporter was unable to complete his part of the export arrangement or because the importer has not paid. Exports are forecast to contract this year by up to 20%, just for comparison purposes, Singapore showed a 41% contraction last quarter. It's so difficult to know exactly what's being discussed when the newspapers write about Exports. One newspaper article this week quoted a trade minister who said that exports would fall by up to 20% this year but another informative article today talks about a fall of 8% or 9% for the full year. Of course Tourism is an export so an overall fall in exports for the year of around 8% seems about right to me. But if commentators are talking solely about the shipments of goods overseas, 20% may be correct also.....it would be good if news articles and commentators made these more clear at the outset because it would give people more confidence in government forecasts.
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chiangmai
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Post by chiangmai on Jul 25, 2020 5:26:50 GMT 7
If only they would be more specific about what they are talking about when they are talking about when they say the word exports (see above) Invest overseas because the returns are better. At least one bank has been pushing investment in Vietnam of late which seems to have caught the attention of many people because their GDP growth was almost double that of Thailand. But there's more to the picture than just GDP growth, especially since Vietnam's economy is half the size of Thailand's. Vietnam may have done well in agreeing trade agreements with various countries recently and in doing so has edged into the lead against Thailand but their poor relationship with China will hurt them. And the Dong is not a completely stable currency and is prone to the effects of inflation spikes plus the country does not have the rule of law, nor does it have decent infrastructure. I don't think it's a clear cut case that Vietnam is better suited to investment and returns than is Thailand, not by any means.
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AyG
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Post by AyG on Jul 25, 2020 8:12:17 GMT 7
the country [Vietnam] does not have the rule of law, nor does it have decent infrastructure. Have you actually been to Vietnam? I think your observations may be a bit off.
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chiangmai
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Post by chiangmai on Jul 25, 2020 8:29:57 GMT 7
Not for some years although I continue to read statements such as, "Vietnam’s internal transport system is becoming more convenient, with air transport already good, though the country’s road and rail transport infrastructure need more upgrading", and: "Due to years of civil war Vietnam’s infrastructure is weak, but the country is making conscious efforts to modernize. Most of the national infrastructure is a remnant of infrastructure laid during the French colonial rule. Communications infrastructure is poor, but improving. There are now two national telecommunication satellites in orbit and submarine cable systems have been laid. Cell use is on the rise and fixed lines are on the decline. Likewise, the road system is in poor condition throughout most of the country. While most roads are paved, the majority need renovation". Those things said it does appear the country is making an effort to improve infrastructure. www.liveandinvestoverseas.com/country-hub/vietnam/infrastructure-in-vietnam/#:~:text=Due%20to%20years%20of%20civil,infrastructure%20is%20poor%2C%20but%20improving. www.asiahighlights.com/southeast-asia/vietnam-vs-thailand.htm
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chiangmai
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Post by chiangmai on Jul 25, 2020 9:24:22 GMT 7
BOT issues a series of reports monthly, quarterly and twice-yearly on almost every aspect of the Thai economy. One such six-monthly report is their macroeconomics report which was last issued in February and is linked below. It's an easy to read and understand report that shows the current state of various aspects of the economy under a series of different headings and in graph form, it also compares today against past years. www.bot.or.th/Thai/Statistics/Graph/Chart_Pack/Chart%20Pack.pdf
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