chiangmai
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Post by chiangmai on Jun 29, 2023 8:09:17 GMT 7
The exchange rate is starting to look attractive, about time too! A strong USD seems to be driving all regional currencies downwards which means the current party will come to an end sooner rather than later because USD rarely remains stable for long......fill yer boots whilst you can, I say. Some have suggested that a weak Baht might see increased capital inflows, but I doubt that. Foreign money has abandoned the SET in droves and at 2%, interest rates are not sufficiently attractive to make it want to stay, not when the UK is offering close to 6% and the US over 5%. The Thai bond market is solid but the numbers are not globally competitive.
It's also true that the MFP Party seems increasingly unlikely to form a government so the role may be left to the number two party and all that involves. One Senator, at least, forecasts political unrest, regardless of what happens from this point on. I've always viewed the impact of political unrest on the currency as fleeting, next time around should be no different. No, once again this is a USD story, I think and until the Fed reaches terminal velocity on rates and inflation cools, ex. rates should remain good. Thereafter however, watch out. TAT said recently that inbound tourism numbers were poor at 28 million, that's nearly three quarters of their record high 40 million, they're getting greedy quickly! It looks like the Chinese economy is a key driver of Thai tourism numbers now, when that changes, the hoards will return.
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Mosha
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Post by Mosha on Jun 29, 2023 20:09:57 GMT 7
At 50 plus to the £, where does it go next?
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chiangmai
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Post by chiangmai on Jun 29, 2023 21:17:11 GMT 7
At 50 plus to the £, where does it go next? I'm pretty certain that 50 is only a pipe dream, my money bets it won't get close to that. BOT just loosened currency controls again, that's a move aimed at weakening the Baht. You have to ask if they would have done that, had they thought the Baht was going to weaken naturally anyway, clearly the answer is no.
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chiangmai
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Post by chiangmai on Jun 30, 2023 8:54:33 GMT 7
Baht strength/weakness depends on the Thai economy, which in turns depends mostly on the US and Chinese economies. The US economy is reporting at a stronger level than expected, which doesn't bode well for interest rate increases but continues to project USD to the upside. Powell has already pretty much guaranteed at least two more rate increases this year and won't discount them being back to back......inflation remains the key global issue. Higher interest rates means subdued consumer spending, that means fewer tourists, case in point China. The Thai economy can still balance the books at anything over 20 million tourists per year, as long as customs exports don't fall too far, in which case the number of tourists must be increased, in order to compensate. That's not to say they won't still complain and paint pictures of economic Armageddon, but more than 20 million is still good economics. The only two downsides I can see are increased fuel oil costs and the negative impact on consumer consumption resulting from fewer tourists. The upside is that the US will probably not fall into recession, which is (Thai) exports positive. China remains the economic wildcard in all of this but current news is not great. finance.yahoo.com/news/the-us-economy-is-a-lot-stronger-than-wall-street-thought-164449700.html
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siampolee
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Post by siampolee on Jun 30, 2023 10:28:10 GMT 7
Certainly what one may call, ''an interesting read,'' concerning Thai financial issues...
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chiangmai
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Post by chiangmai on Jun 30, 2023 11:51:55 GMT 7
Certainly what one may call, ''an interesting read,'' concerning Thai financial issues... A couple of things: it says that Thailand has the highest value of bank deposits at USD 55 bill., accounting for 17% of GDP. I'm pretty certain they mean, equal to 17% of GDP because bank account values aren't part of GDP ir its measurement. "The level of bad debt at Thai banks is 4% of total debt". Unless the article qualifies the word debt, this is a meaningless statement. Debt is the basis for the entire banking industry, there's is good debt, bad debt, non-performing debt, irrecoverable debt and so on. If they mean that 4% of the debt is non-performing, that's marginally high but once again, the term bad debt needs qualification. International guidelines are that Consumer NPL's should average around 2% but that a further 5% can be special attention loans. There's then the issue of collateralised loans, the security necessary to secure the loan in the first place. Virtually all commercial loans are securitised but retail or consumer loans are mostly not, this means that if the 4% is in the consumer lending sector, recovery of the NPL is highly improbable. Lastly, the article does reinforce Thai banks adherence to Basel II capital adequacy regs., this reassures that if people do start to go bankrupt en-masse, at least the banks are sufficiently well capitalised with adequate levels of liquidity so they are unlikely to be taken down as a result. Having said all those things, I'm not sure the article is really that meaningful or if the people that wrote it, actually know what they're writing about. But it will certainly give Thai Visa readers something to talk knowingly about as they sit and discuss Thai economics on the steps of the country's 7/11's.
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chiangmai
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Post by chiangmai on Jun 30, 2023 13:54:24 GMT 7
Talking about China and the Chinese economy: www.bnnbloomberg.ca/china-has-3-trillion-of-hidden-currency-reserves-setser-says-1.1939869#:~:text=(Bloomberg)%20%2D%2D%20China%20is%20sitting,economy%2C%20according%20to%20Brad%20Setser. Only half of the Chinese foreign currency reserves are visible and appear on the Central Bank books. The other half is hidden from view and is the result of private ownership and unofficial, off balance sheet lending by provinces and business. The half or USD3 trill. that can be seen, is mostly from payments made by the US Treasury to China for their Treasury bill holdings, this is the US debt that China has purchased over the years. The other half is income that was denominated in USD, mostly, loans made to other countries but which is not on the official balance sheet and USD income from massive export surpluses (export bills are settled in USD). So why is this a problem? Whilst China has officially at least, been selling down its holdings of USD assets, T-bills and the like, their shadow holdings have meant that their total USD assets have likely increased. This means that USD has become the asset that underpins the Chinese currency, which is why China constantly struggles with its unofficial currency peg to USD. This begins to explain why the Yuan only features in less than 2% of countries foreign currency reserves holdings whereas USD accounts for more than 60%. The net effect of these things is that economic measures taken by China, often have a global impact because the yuan is nothing more than a proxy currency whereas USD continues to be the underpinning that provides support and stability. It therefore makes all this talk about the demise of USD and the growth of the Yuan, as a reserve currency, nothing more than uninformed gossip (mostly by the 7/11 door step sitting brigade).
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oldie
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Post by oldie on Jun 30, 2023 16:56:34 GMT 7
The 7/11 doorstep brigade . Reminds me of the time I was sitting on an Air Asia flight in Bangkok waiting for others to board when this loud mouthed American came wandering down the aisle talking at the top of his voice into his 200 baht Nokia which was turned off "yes I'm in South East Asia perusing my portfolio of hypotenuse obtuse triangles hemeglobin refrigerator gypsophila zygote accounts.....", and a pile of other big words whilst looking around for the obvious audience. I was thinking "you do realise you're on a budget airline wearing flip flops and a stained wife beater, and no-one either cares or is impressed"
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rubl
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Post by rubl on Jul 1, 2023 8:36:37 GMT 7
Maybe I live in the wrong part of town. The only doorstep sitters here are lottery ticket sellers. Did you already buy one and if yes why not some more?
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chiangmai
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Post by chiangmai on Jul 1, 2023 13:49:24 GMT 7
Up here in Buddha's country, or Northern Thailand as some like to call it, we have a better class of doorstep sitter. 7/11 door step sitting is a a reserved profession that Thai people may not door step sit, only farangs may participate. Ditto the wearing of fishermans pants, man buns and inking containing Chinese characters.
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rott
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The Baht
Jul 1, 2023 14:01:58 GMT 7
via mobile
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Post by rott on Jul 1, 2023 14:01:58 GMT 7
Maybe I live in the wrong part of town. The only doorstep sitters here are lottery ticket sellers. Did you already buy one and if yes why not some more? The wrong part of town used to be where shirtless men with large dogs on the street at dawn were assumed to be night watchmen (ie homeless alcoholics) after a shift. Just saying like.
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rubl
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Post by rubl on Jul 1, 2023 16:11:25 GMT 7
Maybe I live in the wrong part of town. The only doorstep sitters here are lottery ticket sellers. Did you already buy one and if yes why not some more? The wrong part of town used to be where shirtless men with large dogs on the street at dawn were assumed to be night watchmen (ie homeless alcoholics) after a shift. Just saying like. Just bought a large bottle of Singha water beer so I can smile but don't get too close to my dog.
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rubl
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Post by rubl on Jul 1, 2023 16:14:44 GMT 7
Up here in Buddha's country, or Northern Thailand as some like to call it, we have a better class of doorstep sitter. 7/11 door step sitting is a a reserved profession that Thai people may not door step sit, only farangs may participate. Ditto the wearing of fishermans pants, man buns and inking containing Chinese characters. meaning "fooled another bloody foreigner"
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rubl
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Post by rubl on Jul 1, 2023 18:01:11 GMT 7
From a few days ago, after morning walk and before going to 'work'
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chiangmai
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Post by chiangmai on Jul 2, 2023 8:29:57 GMT 7
This is another interesting story about the economy and currency in China. finance.yahoo.com/news/china-central-bank-vows-support-130238493.html#:~:text=(Bloomberg)%20%2D%2D%20China's%20central%20bank,of%20the%20Chinese%20economic%20rebound. The Yuan is at its lowest level for 15 years as the economy fails to strengthen. "domestic demand is still not strong". Manufacturing has contracted again plus the Yuan has fallen 5% against USD, this quarter alone. I interpret that as there being no reason to think Chinese tourist numbers will increase substantially and save the day, neither will Thai exports to China. Those things seem to rule out a Thai economic recovery based on what happens in China. But it doesn't mean that the Thai economy can't remain fairly stable, based on economic improvement in other countries such as the US and Europe. Thailand has a fairly impressive record of finding new markets for both tourism and exports, when old markets dry up, they've done that repeatedly with tourism. My bet continues to be that 45 Baht per Pound is very close to the ceiling which historically seem about right. I'm so convinced about this that I'm going to exchange Pounds and buy a new truck, which should mean a cost savings of about 12%, over normal exchange rates.
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