US$ and Australian$ improve against baht

[lonelywombat]

I am not sure if it temporary but noticed the improvement in the exchange rates this morning

Has the Thai Government changed the exchange rate?

[catawampuscat]

Thailand just lowered interest rates which make the baht less attractive to hold.
It was third rate drop in recent months. There may be other reasons as well.
:cat:

[x in pattaya]

Has the Thai Government changed the exchange rate?

The rate is set by the market, not the government. At times the government might try to influence the rate, but it can't set the rates unless it chose to abandon the free market approach ... which is unlikely.

It has slightly increased but not that much, you could put this down to just normal fluctuation on a day to day basis. The UK pound has'nt altered much, infact there are less bht to the pound slightly, neither the Euro. The bht is supposedly adjusted to a basket of currencies, but I have found that it is basically linked to the US dollar, if the US dollar "moves" then so does the bht irrespective of their so called "basket of currencies".

More bht to the pound won't be possible until the the dollar weakens against the UK ┬г, which I feel is not imminent.

The baht is not linked to any kind of basket. It is traded completely on the free market, and that is what determines its value against various other currencies.

Beach Bunny, the last time I read the Business section of one of the Thai newspapers, it said it was linked to a basket of Asian currencies. And on this "downturn" of the markets, the US dollar has strengthened and it seems to have reflected in a weaker bht to the dollar and a whole load of other currencies. They may not admit it, but I think the US dollar has a lot to do with the Bht in some form or other. Therefore, a contradiction of how it is done here.

I disagree that the bht is independent, but have not recently read "how it is done". And I must admit I am baffled as to how Thailand does set its rate, with a 6.3% contraction in the last quarter of 2008 and the Japan economy basically ground to a halt, in other words Asia is in worse dire straights than Europe and the US, well I will re-phrase that, it has only just become apparent over the past couple of weeks (to me anyway, although it doesn't take a mathmetician to work out that this sort of thing has been predicted) that Asia's economy is falling like no-one's business, I'm surprised that the bht is so high.

You are mistaken. The Thai government does not "set" the rate. The rate is determined by market forces.

Here's the Wikipedia entry:


From 1956 until 1973, the baht was pegged to the U.S. dollar at an exchange rate of 20.8 baht = 1 dollar and at 20 baht = 1 dollar until 1978. A strengthening US economy caused Thailand to re-peg its currency at 25 to the dollar from 1984 until July 2, 1997, when the country was stung by the Asian financial crisis. The baht was floated and halved in value, reaching its lowest rate of 56 to the dollar in January 1998.

Of course, the Thai Bht is linked to market forces and is independent, but have you done your research how these market forces work? From what I read, a basket of asian currencies. Can't find anything on basket of currencies at the moment, need to do my research, but I agree "down to market forces". But my personal belief is that it is tinkered with. I can't believe some of the economic and political problems of Thailand can warrant such a strong bht for so long.

You do surprise me that you did your research on Wikipedia, however, it does give you a good idea of how it works.

You can't find anything because there is no "basket of currencies".

As noted above, Thai government policies -- interest rates, exchange restrictions -- can affect the currency rates. But the Thai baht has been a free floating currency for over 12 years and is in no way pegged to any basket.

I anxiously await your further research.

[Bob]

Sure the baht floats in the market place but that market is occasionally manipulated by central banks to try to stop some dramatic appreciation or depreciation of the currencies. The last big effort by the Bank of Thailand was when the baht was heading toward 30 to the dollar and below, the BOT believing that such a strong baht would kill exports and thus the BOT was buying up billions of baht to try to shore up the price.

Currently, given the economies around the world are tanking, the primary goal of at least the southeast asian economies is to boost exports which involve a significant percentage of their GDP's. The quickest/easiest way to do that - although it involves other pain (like effectively increasing the amount of repayment for some international loans) - is to let your currency depreciate so that your exports are cheaper to the buying countries. That action causes the same products of neighboring countries to be more expensive (comparatively) so there often is a lot of screaming if a country is caught intentionally devaluing its currency (I suspect the main reason Vietnamese rice is so much cheaper on the world market than Thai rice is because of the formal devaluations of the dong in the last 18 months).

The "basket of currencies" concept, to my knowledge, is the method/trick used by the Chinese government to let its currency devaluate in a controlled manner. The Chinese yuan doesn't "float" but is precisely controlled by the Chinese goverment (by telling every bank in the country exactly how many yuan they use in relation to a foreign currency) but, since many other countries (mainly the US) have been screaming that the yuan is intentionally undervalued to keep exports booming, the Chinese government has agreed to devaluate in some controlled manner using a group (basket) of currency values to judge the amount of devaluation. [The Chinese government has also used the "basket of currencies" wording to suggest that they want to slowly hold in their foreign reserves a lot of foreign currencies rather than almost exclusively US dollars.]

Anyway - and maybe I'm a cynic - the "free" market ain't so free in my view and governments and very rich groups (some hedge funds in the past) are always twisting it here and there to achieve it's particular goal. We minions often end up with the short stick unless we can read tea leaves correctly (or in a lucky manner).

Okay, I'm bored to death. Time for something exciting (laundry!).

Yes...that agrees with what I'm saying. Policy can affect the rates, by affecting demand for the currency. But, ultimately, the market is what determines the value. White Desire, however, is imagining some kind of peg.

[lonelywombat]

I had PM this was posted on baht-stop. It is correct but there are two different statements

cut and paste baht stop
The Bank of Thailand cut interest rates today by one-half point.
The Thai Baht closed at 36.07 per $.

Yes the BOT did cut interest rates from 2% to 1.5%
The Thai baht has been weakening but I am not sure the two are directly related

Beach Bunny:

I couldn't have put it better myself (i.e lonleywombat's comments) - they might say it floats; there might not be anything on the internet about "basket of currencies"; the Chinese yuan does also have a lot to do with this, and for a fact the chinese do "manipulate" their currency and hand in hand "that" affects the Thai currency, hence the basket of currencies concept, but the chinese yuan is a separate argument. Anyway, I'm going to do my laundry now an all.