Sporty Posted February 9, 2009 Report Share Posted February 9, 2009 1) Can or will they bite the bullet and take the loss? Surely' date=' the 110B baht will go quickly.[/quote'] How exactly does the government buying rice and then selling it at a loss reduce the foreign reserves of the BoT??? Also the foreign reserve is 110B USD, not baht. The $110B, one prime function of the reserve would be to settle the differece between foreign contracts and internal currency. Link to comment Share on other sites More sharing options...
HeartThais Posted February 9, 2009 Author Report Share Posted February 9, 2009 The $110B, one prime function of the reserve would be to settle the differece between foreign contracts and internal currency. Where are you learning this stuff? Link to comment Share on other sites More sharing options...
Sporty Posted February 9, 2009 Report Share Posted February 9, 2009 Investopedia explains Monetary Reserve "What Does Monetary Reserve Mean? A nation's assets in foreign currency and/or commodities like gold and silver, which are used to back up the national currency. Monetary reserves also provide a cushion for executing central banking functions like adding to the money supply and settling foreign exchange contracts in local currencies." If the Thai Government, selling rice at a loss, to a foreign country, does not get the money from the reserve, where do they get it ? Link to comment Share on other sites More sharing options...
Lusty Posted February 9, 2009 Report Share Posted February 9, 2009 Barclays reported a 6.3 Billion pound pre-tax profit, which tells you how much things were being talked up...no crisis there, quite the opposite. I just watched the BBC news and even executives and employees of the banks that fucked up still expect their bonuses! Link to comment Share on other sites More sharing options...
ThaiHome Posted February 10, 2009 Report Share Posted February 10, 2009 Well we disagree, for sure... I find it interesting you think the baht should be mostly pegged to the two strongest reserve currencies in the world, for PPP at this dire economic time. Thailand a country, that's GDP is based on agriculture, commodities, and cheap labor. ... You need to do a bit of research on the Thai economy. Just because Thailand is indeed the largest exporter of rice, doesnâ??t mean it is Thailand biggest exports. Exports of manufactured goods are some 5 times larger then all agricultural products. I do agree that cheap labor is a key factor, though since it is not as cheap as say China or Vietnam, they depend on more complicated manufacturing, since other countries can do the simple stuff like textiles cheaper. Over the last year the BOT was focused on minimizing the inflationary impact of the rising price of crude oil, by far Thailandâ??s biggest import item. They did this by gentle intervention to strengthen the baht against the dollar (making the oil cheaper), trying to balance that against the increased cost of exports. They, like the rest of the world have been caught out by the sudden decrease in oil prices and the general global slowdown. I do look for them now to let the baht deprecate slowly in order to help the exports, but will keep a close eye on the price of crude and go the other way at the first sign of it going back up. TH Link to comment Share on other sites More sharing options...
HeartThais Posted February 10, 2009 Author Report Share Posted February 10, 2009 "What Does Monetary Reserve Mean? A nation's assets in foreign currency and/or commodities like gold and silver, which are used to back up the national currency. Monetary reserves also provide a cushion for executing central banking functions like adding to the money supply and settling foreign exchange contracts in local currencies." If the Thai Government, selling rice at a loss, to a foreign country, does not get the money from the reserve, where do they get it ? Investopedia definition is correct but your logical jump isn't. Selling rice at a loss adds to foreign reserves. Selling rice at a profit also adds to foreign reserves. The baht "loss", like any other kind of baht-denominated government subsidy, comes from tax revenue either directly or via issuance of gov bonds. You are confusing the treasury function with the central bank. Link to comment Share on other sites More sharing options...
Sporty Posted February 12, 2009 Report Share Posted February 12, 2009 Well we disagree' date=' for sure... I find it interesting you think the baht should be mostly pegged to the two strongest reserve currencies in the world, for PPP at this dire economic time. Thailand a country, that's GDP is based on agriculture, commodities, and cheap labor. ...[/quote'] You need to do a bit of research on the Thai economy. Just because Thailand is indeed the largest exporter of rice, doesnâ??t mean it is Thailand biggest exports. Exports of manufactured goods are some 5 times larger then all agricultural products. I do agree that cheap labor is a key factor, though since it is not as cheap as say China or Vietnam, they depend on more complicated manufacturing, since other countries can do the simple stuff like textiles cheaper. Over the last year the BOT was focused on minimizing the inflationary impact of the rising price of crude oil, by far Thailandâ??s biggest import item. They did this by gentle intervention to strengthen the baht against the dollar (making the oil cheaper), trying to balance that against the increased cost of exports. They, like the rest of the world have been caught out by the sudden decrease in oil prices and the general global slowdown. I do look for them now to let the baht deprecate slowly in order to help the exports, but will keep a close eye on the price of crude and go the other way at the first sign of it going back up. TH My post clearly stated GDP (Gross Domestic Product), your Export response is not the same, once you think about it a bit. I think you will realize it, and it will be easy to look up, if not. It is quite clear to me, what the BOT is doing, take advantage of the FX situation, to itâ??s own benefit. Just as clear, itâ??s very likely to backfire. Rice is just a visible example, of how it will effect exports. I am well aware of Thailand other exports, do you know that agriculture involves more than 50% of the population, yet only contributes to about 16% of total exports, while Manufacturing, is done by 8% of the population, yet contributes about 48% of exports, I am equally sure, it will effect other commodities, in the same way, Sugar, Rubber, Pineapple, Tungsten, Chicken, Tapioca, Tin, lumber and Fisheries. The labor market for Manufacturing for Auto, Small Appliances, Computer Components (SMT), Computers and Shoes, will also have to compete for offshore business, with a strong baht. All of the above is from memory, so if I left anything substantial out,or percemtages are a bit off, you got enough, to make my point. One thing that will not be so easily affected is colored stones (Gems). I spoke with a friend, in a family shoe business, they need to manufacturer about 3,000 pair per week, to break even, since the first of the year, averaging about 1,400. Losing business to Viet Nam. This same Thai friend tells me other manufacturing sectors have been impacted, as well. Thai language press reported Ford light truck, may not reopen after Songkran Holiday break, typically 5 day break or so in length, with Toyota, questionable as well, but likely will be at reduced production capacity. Your quote â??I do look for them now to let the baht deprecate slowly in order to help the exports, but will keep a close eye on the price of crude and go the other way at the first sign of it going back up.â? Yes, they have Saudi Arabia in the formula of FX exchange, for this reason, along with the current two stronest reserve currencies, $ and Yen. I would suggest they make adjustment to the formula. Take the pain, like the rest of the world, or exports already in a downward spiral will even worsen. My thinking, the FX $110B surplus, will disappear faster than it was gained, if changes are not made. THAIHOME â?? I read your opinion in the past, of the Thai Property Market, I'd be interested to hear your opinion again in this far different economical time, maybe in a fresh post. Link to comment Share on other sites More sharing options...
Sporty Posted February 12, 2009 Report Share Posted February 12, 2009 Your last response: â??Investopedia definition is correct but your logical jump isn't. Selling rice at a loss adds to foreign reserves. Selling rice at a profit also adds to foreign reserves. The baht "loss", like any other kind of baht-denominated government subsidy, comes from tax revenue either directly or via issuance of gov bonds. You are confusing the treasury function with the central bank.â? I agree, with you, both ways adds to the FX Reserve, for now. Please feel free, to refer to my last post, to Thai Home, for your opinion, of overall long-term effect, FX and the economy in general? â??Big Pictureâ? Do you think itâ??s a good thing, for the Thai Economy? http://www.bangkokpost.com/business/economics/11350/rice-exports-look-set-to-miss-target http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory_336892.html Link to comment Share on other sites More sharing options...
Faustian Posted February 12, 2009 Report Share Posted February 12, 2009 Back to the Pound briefly, it got hammered again, was down to 49, after being at 52 earlier this week. Upto 50 now, again... fluctuating wildly this week. Link to comment Share on other sites More sharing options...
The_Munchmaster Posted February 12, 2009 Report Share Posted February 12, 2009 I love it when the pound gets hammered. :thumbup: Link to comment Share on other sites More sharing options...
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