Whats up with the baht?

[vegasdave49]

What is up with the baht. Looks like it is under 39 to the $. From some of the things I have read it would seem like it should be going the other way. I know the greenback has been on the skids but this is nuts. Between inflation and the low dollar LOS is on the brink of getting expensive. Well not actualy expensive, but certainly less cheap. All and all it looks to be about 15 to 20% more costly than just a couple years ago. I have a trip coming up in Jan and wonder if anyone has a sense of if the baht will be dropping.

[unit731]

Geopolitical.

 

In the US it has to do with the M1 and M2.

 

And, of course, the deficit and trade imbalance.

 

See . . . Georgy boy . . . and his cronies want US goods to sell overseas. Make US goods cheaper overseas and the foreign customers will purchase. Good for the US economy, eh?

 

And US tourism - coming from abroad. Spend their Pounds and Euros in US.

 

And, of course, the war. Got to have a good war now and then.

 

Have I missed anything?

[elef]

Some predict that you soon just will get 30 baht for the dollar - I guess around 35 within a year.

[junglesoup]

Thailand has a trade surplus, the US a trade deficit. Massive global trade imbalances. The weakening of the US dollar is a longterm process.

[dean]

Actually, you missed what the policy of a weak dollar does for our debt overseas. Most U.S. bonds are owned by foreigners and with a cheap dollar, these bonds can be paid back with a cheaper dollar.

[yfs]

I feel your pain. Even the Euro has decreased somwhat. Only thing to do is take some steps to counter the drop such as...reduce/eliminate purchase of lady drinks, tip less, drink less (well maybe not), go short time.

[cavanami]

Last year at this time, the USD was rising nicely vs the Baht.

Not this year ::

 

I watch the exchange like a hawk, waiting to jump on a few easy Baht...today it went down more: 38.075.

 

Could go down more as it has been lower over the past few years.

 

Grab enough Baht now and be prepared to grab more if the baht gets weaker.

[jitagawn]

Oddly enough my good Thai friend who has every right to forecast these things requested 3 weeks ago that when I return to BKK next month and bring dollars (usual 10k) he wants to buy them instead of me taking it to the money exchange.

He expects the baht to get progressively weaker and siad there should be amelt down next year in the poorer classes-Has not been wrong yet... Gues I will wait and see... ::

[elef]

Correct, you never know, most analysis are based on economical factors and IMO the thai economy is in much better shape than the american, BUT currencies are also commodities traded as such with market price variations according to supply and demand - here are other factors involved and speculation is a big one. ´

 

The country with most dollars now is China (except USA of course) and I don't think they want to lose money and get a revaluation of their own currency, so they're supporting the dollar. ::

[Guest]

A book could be written on this subject, but the best discussion of exchange rate changes can be found in an article entitled "McCurrencies" in the 27 May 2006 edition of The Economist.

 

Disregard all the political nonsense about George Bush trying to manipulate the US dollar for his or the US's political advantage. It can't be done in a market economy. And forget about speculating on currency changes - unless you want to spend all of your time watching exchange rate fluctuations, have studied currency markets (start with Krugman's works) and you have a huge appetite for risk - and even then its a 50/50 chance you'll get burned.

 

There is a great deal of mythology surrounding exchange rate changes. The 1997 crash here is often explained by local businessmen and economists - who should know better - in terms of exchange rate myths. It's all nonsense; the crash was driven by domestic problems - primarily connected lending.

 

Bottom line: unless you specialize in this area, you're wasting you're time and money trying to predict or anticipate changes. If you are involved in trade, the smartest move is to hedge against exchange rate risk. In simple terms, this means moving the risks of exchange rates changes to professionals who are willing - at a price - to take on that risk. Traders in goods and commodities who think they are can outsmart the exchanges markets typically get burned - this is well established.