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Originally Posted by gez
the pound has fallen a bit against the dollar over the past couple of weeks. I think I'm correct in saying that the baht is generally tied to the dollar, so the pound has fallen against the baht as well.
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The Baht is not tied to the dollar any more than it is tied to the Euro or pound.
Since yesterday the Pound fell 97/100 of a cent against the dollar.
Since yesterday the Baht fell 96/100 of a cent against an equivalent amount of dollars(1.75 Dollars).
Therefore, one could more easily say that the Baht is tied to the pound than to the dollar.
Of course the fact that the Baht gained against the pound makes it clear that it is not so simple. In this particular case, it picked up about 70% of what it lost to the dollar in its gain against the pound, but not 100%. Both the Baht and the pound were net losers against the dollar, and in that sense were moving in concert vis a vis the dollar.
The fact is that the Baht moves to the middle ground. When it loses against the dollar, it gains against the pound. When it loses against the pound, it gains against the dollar.
The European currencies are dominant world currencies, which the Baht is not, so it adjusts itslef to those two currencies, but its tied to neither, or both(depending on how you look at it), but not one or the other.
If the economy of LOS was is crisis, of course, it could fall against both currencies as happened in the troubled economic times in Asia in the 90's, when it lost against both the pound and the dollar. Currently, LOS is not having an ecomomic crisis, but is just taking the middle ground in the currency wars between the major currencies and this is how it has been for at least the past 5 years.