There has been plenty of predictions as to where the exchange rate is going. Few ever turn out to be right, but according to this article the exchange rate might reach 37 baht to the US dollar. No complaints from me if that happens, but to me the important aspect of this article is the baht, which has strengthened slightly since last month, is likely to weaken against the US dollar. How soon that will happen, if that happens, and where the exchange rate will stabilize remains to be seen:
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Baht to resume weakening trend
The Nation
February 10, 2016
The Thai baht would soon lose its strength and weaken against US dollar despite the recent appreciation, Siam Commercial Bank's economic team said.
In a research note released today, the economists said that they maintained the view that the US Federal Reserve would raise interest rate this year. They anticipated a 50-basis point increase throughout this year. Hence, the baht could weaken to Bt37 per dollar at the end of this year.
It said that the recent surge of the Thai currency, from Bt36.1 in January to Bt35.4, would be temporary as it was driven mainly by the anticipation that the Fed would postpone rate hike. In the same period, the dollar also weakened against other currencies in light of greater risks in the global financial markets.
http://www.nationmultimedia.com/breakin ... 78996.html
Baht may weaken to 37 to the US dollar by year's end
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Gaybutton
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Jun
Re: Baht may weaken to 37 to the US dollar by year's end
If the baht rises from 35.23 (as I write) to 37, that's a relative USD rise of 5%.
If Ms Yellen manages to get another 0.5% of interest rate increases through, then anyone moving to dollars at the predicted 37 rate would need 10 years of the extra interest to make up for the delay in moving the cash. Maybe they expect more rate increases.
However, economic forecasts are on average almost useless & it's probably best to ignore them and prepare for whatever happens.
As an example, when asked to predict the DIRECTION of the next interest rate move, economists get that right just over 50% of the time. So about as accurate as tossing a coin. As James Montier says, economic forecasts have such a bad record, they make astrology look reliable (I paraphrased it slightly).
Finally, if the 5% movement was a nailed on certainty, it would have already happened.
If Ms Yellen manages to get another 0.5% of interest rate increases through, then anyone moving to dollars at the predicted 37 rate would need 10 years of the extra interest to make up for the delay in moving the cash. Maybe they expect more rate increases.
However, economic forecasts are on average almost useless & it's probably best to ignore them and prepare for whatever happens.
As an example, when asked to predict the DIRECTION of the next interest rate move, economists get that right just over 50% of the time. So about as accurate as tossing a coin. As James Montier says, economic forecasts have such a bad record, they make astrology look reliable (I paraphrased it slightly).
Finally, if the 5% movement was a nailed on certainty, it would have already happened.
Re: Baht may weaken to 37 to the US dollar by year's end
If these forecasters are any good why haven't they made a fortune for themselves and retired??
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Gaybutton
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Re: Baht may weaken to 37 to the US dollar by year's end
Good question. The same question applies to the fortune tellers.gerefan wrote:If these forecasters are any good why haven't they made a fortune for themselves and retired??
"I'm a soothsayer. Quiet! I'm about to say the sooth."
- Zero Mostel (Pseudolus), 'A Funny Thing Happened on the Way to the Forum'
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Up2u
Re: Baht may weaken to 37 to the US dollar by year's end
What's happening to the dollar we were above 36 not long ago and now just above 35? Those 37 prognosticators?
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Gaybutton
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Re: Baht may weaken to 37 to the US dollar by year's end
Yesterday, it even was back in the 34s for a few hours. Who knows? Maybe the prospect of Donald Trump becoming the next President is weakening the dollar . . .Up2u wrote:What's happening to the dollar we were above 36 not long ago and now just above 35?
"What a nauseating prospect."
- Charles Laughton (Sir Wilfrid Robarts), 'Witness for the Prosecution'
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Gaybutton
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Re: Baht may weaken to 37 to the US dollar by year's end
So far, the predicted weakening of the baht is not exactly working out that way.
Today, the exchange rate closed at 34.88 baht to the US dollar.
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Baht reaches 7-month high, stays firm as market eyes Fed
by Reuters
16 Mar 2016
SINGAPORE — The baht hit a seven-month high against the dollar on Wednesday, showing resilience despite potential risks from the US Federal Reserve's policy statement due later in the day.
Moves among Asian currencies were mixed, with the baht and Philippine peso edging higher, while the South Korean won and Indonesian rupiah retreated against the dollar.
The Fed is widely expected to hold interest rates steady at its policy decision due later on Wednesday.
The focus is whether the post-meeting statement and comments by Fed Chair Janet Yellen will lead to any increase in bets for the Fed to raise interest rates by mid-year, following some recent improvement in US economic data.
Analysts say Asian currencies could come under pressure against the dollar under such a scenario.
"I think the Fed will definitely start paving the way for rate hikes later in the year... In fact we expect the Fed to hike rates in June," said Khoon Goh, senior FX strategist for ANZ in Singapore.
"The Fed might also leave open the possibility of moving earlier than June as well, if conditions warrant it," he added.
The baht rose to as high as 34.99 against the dollar, its strongest level since early August 2015.
Institutional investors and speculators sold the dollar versus the baht, while agent banks bought the dollar, traders said. Authorities can conduct currency intervention through such agent banks.
Stephen Innes, a senior trader for FX broker OANDA in Singapore, said the baht's rise may be linked to possible overseas investor demand for Thai bonds at a debt auction on Wednesday.
The baht has gained about 2.7% against the dollar in 2016 amid signs of inflows back into Thai assets. In 2015, the baht slid by about 8.7%.
Recent inflows into Thailand's markets are probably a result of overseas investors covering their previously underweight positions in Thai assets, said ANZ's Goh.
"We know that foreign investors had been underweight the Thai market for some time," he said.
Given the strong recent rally in both Thai bonds and the baht, investors who had been underweight could have seen their investment performance lagging behind their benchmarks, Goh said.
http://www.bangkokpost.com/business/fin ... t-eyes-fed
Today, the exchange rate closed at 34.88 baht to the US dollar.
____________________________________________________________________
Baht reaches 7-month high, stays firm as market eyes Fed
by Reuters
16 Mar 2016
SINGAPORE — The baht hit a seven-month high against the dollar on Wednesday, showing resilience despite potential risks from the US Federal Reserve's policy statement due later in the day.
Moves among Asian currencies were mixed, with the baht and Philippine peso edging higher, while the South Korean won and Indonesian rupiah retreated against the dollar.
The Fed is widely expected to hold interest rates steady at its policy decision due later on Wednesday.
The focus is whether the post-meeting statement and comments by Fed Chair Janet Yellen will lead to any increase in bets for the Fed to raise interest rates by mid-year, following some recent improvement in US economic data.
Analysts say Asian currencies could come under pressure against the dollar under such a scenario.
"I think the Fed will definitely start paving the way for rate hikes later in the year... In fact we expect the Fed to hike rates in June," said Khoon Goh, senior FX strategist for ANZ in Singapore.
"The Fed might also leave open the possibility of moving earlier than June as well, if conditions warrant it," he added.
The baht rose to as high as 34.99 against the dollar, its strongest level since early August 2015.
Institutional investors and speculators sold the dollar versus the baht, while agent banks bought the dollar, traders said. Authorities can conduct currency intervention through such agent banks.
Stephen Innes, a senior trader for FX broker OANDA in Singapore, said the baht's rise may be linked to possible overseas investor demand for Thai bonds at a debt auction on Wednesday.
The baht has gained about 2.7% against the dollar in 2016 amid signs of inflows back into Thai assets. In 2015, the baht slid by about 8.7%.
Recent inflows into Thailand's markets are probably a result of overseas investors covering their previously underweight positions in Thai assets, said ANZ's Goh.
"We know that foreign investors had been underweight the Thai market for some time," he said.
Given the strong recent rally in both Thai bonds and the baht, investors who had been underweight could have seen their investment performance lagging behind their benchmarks, Goh said.
http://www.bangkokpost.com/business/fin ... t-eyes-fed
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Up2u
Re: Baht may weaken to 37 to the US dollar by year's end
As mentioned in the above post, the Feds decided to leave the rates unchanged and reduced future planned increases from four to two. This is not positive news for a strong dollar. Oh well.
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Gaybutton
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Re: Baht may weaken to 37 to the US dollar by year's end
If we're lucky, maybe other factors will weaken the baht. I'm keeping my fingers crossed, but I'm not holding my breath. Even so, at least so far we're still a lot better off with the current exchange rates than we were a couple years ago.Up2u wrote:This is not positive news for a strong dollar.
As always, current exchange rates can be seen at: http://www.scb.co.th/scb_api/index.jsp
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Jun
Re: Baht may weaken to 37 to the US dollar by year's end
Well, as I said earlier, if the weakening was a nailed on certainty, it would have already happened before the prediction was made.Gaybutton wrote:So far, the predicted weakening of the baht is not exactly working out that way.
The current exchange rate is set by the market & large numbers of (mostly) intelligent forex traders. So I wouldn't take much notice of the predictions. The chances of most people correctly predicting the direction of movement is about 50%.
The exceptions might be predictions from geniuses like George Soros or Jim Rogers. In the case of Jim Rogers, I think he predicts short term strengthening of the dollar, just because that's where people always go in times of uncertainty & then predicts very severe weakening over the next 10 years, on the back of all the debts and deficits. I think he has similar views on the UK.
The vast majority of us don't know which way currency movements will go, but if we can choose to prepare for it.