Thailand - THB - Now Have a 2-Tier Market

Evil Penevil · #36 23-05-2007, 17:58

This is what the BoT should have done back in December - cut interest rates. The capital control measures are largely smoke and mirrors and played into the popular misconception that a gang of offshore "speculators" are "driving up" the value of the baht. It's a very bad long-term signal for the Thai economy if the government really believes conspiracy theories about certain bankers ruling the world - compare it to former Malaysian PM Muhammad Matathir's infamous comments. It's been very well established that the Malaysian controls had less to do with controlling international speculators than rewarding Matathir's supporters.

It's clear the run up in the baht is equity-driven, in part because Thailand stocks have been underweight in international portfolios ever since the 1997-98 crisis. And some is indeed due to hedge funds involved in the carry trade - borrowing yen at about 1% interest, then investing the proceeds in the Thai market in hopes of a much higher rate of return.

However, most of the increase in the baht can be attributed to big Thai companies playing the Thai market. Nothing wrong with that, it's called capitalism. It's the way markets function. Currencies are like any other commodity. When demand for as currency goes up, so does its price. There's higher demand for the baht because of the boom in the Thai stock market - investors need baht to buy shares in Thai companies.

Lower interest rates tend to make the currency less attractive because investors can then get better returns elsewhere. If the BoT is serious about stopping the appreciation of the baht, it will play the interest-rate card.

But there's very little cheer in any of this for U.S. citizens, particularly ex-pats who are paid in dollars or live on a U.S.-based fixed income. The dollar is still overvalued by any standard and must go down to redress the structural imbalances in the U.S. economy. There will be fluctuations in the dollar's rate against the baht, but the long-term trend for the dollar is down.

Of course, many,many developments can upset or delay that scenario. Thing is, at some point, the dollar has to go down another 30% (over a long period of time, not at once) or else the entire U.S. economy will crash and drag the rest of the world along with it.

Evil

dizbuster · #37 24-05-2007, 12:20

Quote:

Originally Posted by Evil Penevil

...compare it to former Malaysian PM Muhammad Matathir's infamous comments. It's been very well established that the Malaysian controls had less to do with controlling international speculators than rewarding Matathir's supporters...

That makes me wonder if there is any "anti-Thaksin" reason behind this.

ATMwalking · #38 24-05-2007, 13:08

Quote:

Originally Posted by Evil Penevil

Of course, many,many developments can upset or delay that scenario. Thing is, at some point, the dollar has to go down another 30% (over a long period of time, not at once) or else the entire U.S. economy will crash and drag the rest of the world along with it.

Evil

Here is one thing I don't get.

The US$ is as much a global currency as a national one. So while it maybe overvalued for the domestic market, devaluing would wipe out a great deal of global wealth. So there are a lot of motivated parties to keep buying it and keep it high. Basically it is cheaper to keep buying it overvalued then let it drop and take the hit. K2 or LIL?

K2 · #39 24-05-2007, 14:35

Quote:

Originally Posted by ATMwalking

Here is one thing I don't get.

The US$ is as much a global currency as a national one. So while it maybe overvalued for the domestic market, devaluing would wipe out a great deal of global wealth. So there are a lot of motivated parties to keep buying it and keep it high. Basically it is cheaper to keep buying it overvalued then let it drop and take the hit. K2 or LIL?

Yes Chris - its NOT in China, Japan or ME Central banks for USD to tank or to abandon the US bond market. IMO the USD is not especially overvalued - LiL I'm sure be on the other side of this equation - but thats what makes a market.

I'll refrain from a long winded treatese into this as there is plenty of stuff online about it. This caught my eye and pretty informative.

http://mediaserver.fxstreet.com/Repo...f76ae19e0a.pdf

(Nice concise summary on pg 12).

ATMwalking · #40 24-05-2007, 17:00

Quote:

Originally Posted by K2

http://mediaserver.fxstreet.com/Repo...f76ae19e0a.pdf

(Nice concise summary on pg 12).

powerpoint. i like. good for the simpletons in the crowd.

Thanks

K2 · #41 04-06-2007, 11:06

Last weeks decision to dissolve TRT has not had a very big impact on Thai financial markets.

Onshore THB unchanged at 34.55 and offshore weaker to 33.15 - the narrowest spread for a while. This even despite offshore rates holding very firm o/night at 20.6% out to 1 year at 8.2%.

Stocks have added 3.5% since the announcement.

tejas · #42 31-08-2008, 03:13

HOw are the Thai financial markets now?

11 · #43 31-08-2008, 12:25

Quote:

Originally Posted by tejas

HOw are the Thai financial markets now?

SET and USD/THB were unchanged on the week - so far no impact in finacial markets.

JayBee · #44 31-08-2008, 13:44

Quote:

Originally Posted by K2

Onshore THB unchanged at 34.55.

Those were the days, my friend!!

tejas · #45 01-09-2008, 01:59

So what is the best option? to change the currency in Thailand or have it changed in your home country.

dawsey · #46 01-09-2008, 02:48

Quote:

Originally Posted by tejas

So what is the best option? to change the currency in Thailand or have it changed in your home country.

Thailand. Don't change any more currency than necessary in your own country. Rates are far better in LOS.

tejas · #47 01-09-2008, 03:13

Dawsey
Could you also tell which are the trusted exchanges in LOS? Should I bring my currency or should I have them changed to dollar?

dawsey · #48 01-09-2008, 03:27

Quote:

Originally Posted by tejas

Dawsey
Could you also tell which are the trusted exchanges in LOS? Should I bring my currency or should I have them changed to dollar?

I'm not familiar with your currency tejas, but I would say yes, change your currency to the dollar and bring those to exchange.
Siam Commercial Bank, Kasikorn Bank and Bangkok Bank are all trusted exchange places. There are plenty of these moneychangers in Patong.

TanMan · #49 01-09-2008, 09:19

I agree with Dawsey here...

I changed about 2,000 in Indian Rupee notes in Patong once and got about 60% of the cross rate to USD. I'm guessing that Mauritius rupees are the same/close/or maybe even not convertible at all. Change to a more recognized note or just bring your ATM card...