Bad news: Thai bonds are popular

[readerc54]

An article in today's Bangkok Post calls attention to the popularity of Thai bonds that investors see as a "safe haven" in the neighborhood. Now you'd think that was a good thing because it leads to a strengthening baht. A stronger baht, however, means tourists and expats alike getting fewer Thai notes for their depreciating currency.

The Bank of Thailand isn't happy about it either as it makes exports more costly. The central bankers have a few tools in their kit to retard gains but they're limited in effect. Meanwhile, tourists can handle the fluctuations better than ex-pats who can't take shorter trips or as easily reduce what they budget for the basics.

The effect on ex-pats is not equal: some have seen a more drastic impact on their country's currency than have others. If you're living on a fixed income, this can have a real effect on your lifestyle. So what to do and what lies ahead?

The only thing you can count on is that fluctuation will continue in both directions. But if you step back from the day-to-day movements and look at rates over time, there's a story being told that we're all free to interpret in our own way. Perhaps the simplest way to appreciate this is to look at exchange rate charts over specific time frames (I personally like the one-year as a starting point). This link enables you to pick your currency and time frames and is easy to navigate:

http://www.xe.com/currencycharts/

This, of course, cannot predict the future. But as you view trends over various periods, it may give you clues you can match to historical events of the time. History is often prologue.

This may or may not come as much comfort. You see occasional posts on the boards, Stickman and Thai Visa about ex-pats who have packed up and returned home as they could no longer sustain their lifestyle. Some returned for other reasons (i.e., medical, advancing age, disenchantment). But of those who believe they're here for the duration, most have managed to adapt by economizing across a range of options.

Currency trends can reverse on a dime: central banks increase borrowing rates; economies can under perform; political tensions can threaten peace; "black swan" events can emerge from the blue. Some times seemingly bad news can be good news for particular currencies. But there's no secret sauce to try to take advantage of future fluctuations. More people have lost money attempting to do so and some of them were the smartest guys in the room. It's like gambling; play long enough and you'll lose as much as you won--and probably a lot more.

Of the ex-pats I've met over the years who are still enjoying life in the LOS, they faced the frequent ups and downs head on and acted accordingly. They had good reasons for emigrating and they took the same actions they would have if still living at home when economic conditions changed.

Here's the article about bonds and rates from The Bangkok Post:
http://www.bangkokpost.com/business/new ... t-headache

[Dodger]

readerc54 wrote:

Of the ex-pats I've met over the years who are still enjoying life in the LOS, they faced the frequent ups and downs head on and acted accordingly. They had good reasons for emigrating and they took the same actions they would have if still living at home when economic conditions changed.

One of the factors that I strongly considered when deciding about my retirement plans in Thailand was exactly what you're talking about, i.e., the fluctuating and sometimes unpredictable exchange rates as life moves forward. To mitigate the risk associated with this I decided to buy my own place to reside after retirement versus rent, as well as the selection of a place to live with a lower cost of living as compared to places like Pattaya where prices are inflated to service the tourist industry. My thinking here was...reduce the overhead - reduce the risk.

[Dodger]

One of the factors that I strongly considered when deciding about my retirement plans in Thailand was exactly what you're talking about, i.e., the fluctuating and sometimes unpredictable exchange rates as life moves forward. To mitigate the risk associated with this I decided to buy my own place to reside after retirement versus rent, as well as the selection of a place to live with a lower cost of living as compared to places like Pattaya where prices are inflated to service the tourist industry. My thinking here was...reduce the overhead - reduce the risk

[Jun]

To mitigate the risk associated with this I decided to buy my own place to reside after retirement versus rent, as well as the selection of a place to live with a lower cost of living as compared to places like Pattaya where prices are inflated to service the tourist industry. My thinking here was...reduce the overhead - reduce the risk

That's two ways of reducing the currency risk - owning a property and living in a lower cost location.
Assuming your title to the property is watertight.
As for low cost locations, the idea of living well within your means has to be common sense for anyone exposed to large currency risks.

Another way is stock market investment. In Thailand, or as I prefer, a broader range of Asian stocks.

Just to put the exchange rate risks in perspective, in the last 10 years, the UK exchange rate has gone from 68 baht to the pound to 42.8 currently.
That's a 59% increase in the sterling cost. Don't think it could not go further & also don't think the strong USD is forever either.

Who knows, I might also buy an apartment eventually. However unless there is an exceptional investment return on offer, I'll not be even thinking about it until I have spent many months living in Thailand.