bouncing baht

[elef]

Under the law governing the central bank, the BOT is allowed to invest only in secured government bonds issued by certain developed countries like the United States. The low-risk bonds offer low returns for holders compared to other securities.

 

 

Atchana said the BOT obtained about 7 per cent of return from its investment portfolio, mostly consisting of dollars, while interest expenses were averaged 5 per cent from issuing bonds to sterilise liquidity in the economy. Although the central bank received a 2-per-cent margin in dollar terms, it took a loss when the margin was converted into baht.

 

Link

[Denarius]

 

 

That quote discusses how the BoT invested their currency holdings and had a loss due to the increase in the exchange rate of the baht. Interesting but ... What does that quote have to do with the BoT raising interest rates to keep the baht low?

 

 

 

[elef]

To keep the baht low BoT is selling baht, more bahts on the market buying the same number of products cause inflation, so by issuing bonds with higher interest rates they are borrowing back the bahts instead.

[OCgringo]

whats the street rate at the money changers around Nana changing US$ cash $50-$100 bills ?

 

OC

[elef]

I just familiar with Pattaya but if we look at Bangkok Banks exchange rates

 

buy 35.09

sell 35.74

 

average is 35.415

 

so the best places in Pattaya will buy your 50-100 for around 35.40 baht/dollar.

 

 

[Palatkik]

So what's to stop sending baht overseas from Thailand to change to USD at offshore rates and wiring back the USD to get more baht at onshore rates??

[junglesoup]

So what's to stop sending baht overseas from Thailand to change to USD at offshore rates and wiring back the USD to get more baht at onshore rates??

 

Thats called arbitrage. Buying something at a certain price in one market and then selling it at a better price in another market. Then you profit the price differential.

I dont know if what your talking about is viable. You would have to pay the wire fees so you would need to be changing a large amount.

 

[Denarius]

So what's to stop sending baht overseas from Thailand to change to USD at offshore rates and wiring back the USD to get more baht at onshore rates??

 

Thats called arbitrage. Buying something at a certain price in one market and then selling it at a better price in another market. Then you profit the price differential.

I dont know if what your talking about is viable. You would have to pay the wire fees so you would need to be changing a large amount.

 

Foreign exchage trading would be a more efficient method of doing this. It dwarfs the world stock markets in trading value volume. You can open an account to do this. But unless you don't mind big losses, I would not advise it.

 

 

[Palatkik]

Well I haven't tried it, but when I go to an ATM with my foreign card it costs at least me 25 USD more to withdraw 10,000B that it does just wiring it as USD to a Thai bank these days (wire fees inc). So money to be made, but only on lager sums worth the effort I guess?

 

[Denarius]

4X trading is not meant for what you are describing. But yes large amounts can be made with fractions of a cent change in currencies, with large levered investments. You can also lose large amounts.

 

I'm not sure I am following what you are saying. Are you using a Thai bank card to withdraw cash in the USA, and that is costing you $25? Using a USA card in Thailand should only cost around $2-3 per transaction.