i guess the way I look at it (right or wrong) is that a strong Yuan - weak Baht is good for Chinese investors.fountainhall wrote: ↑Tue Jun 25, 2019 10:54 am I am no more an economist than you, Dodger. But I don't follow one issue in your analysis. So the Chinese control the majority of the money in Thailand. Agreed. And the likelihood is that this will increase. Agreed. That being the case, is it not in China's interests to see the baht kept at least at its present level. They surely do not want their assets to depreciate.
Unless Trump and Xi can come to some agreement on trade soon, my wonder is: what will the Chinese do with all the $1.3 trillion + of US Treasuries they hold in their $3 trillion foreign exchange reserves? I have read that they are already diversifying so that if there is a $ crash or substantial weakening, they will not lose too much. But with so much US denominated debt (only the US Federal Reserve holds more), China cannot quickly offload it without resulting in a depreciation of the US$ and/or a sharp spike in US interest rates. The former is not in their interest. Similarly if the US just continues to print money through its historically low interest rates, China again suffers unless it further reduces the value of the Yuan.
I suppose there as many answers out there as there are economists!
I think Thailand has way too many major projects in the works for them to handle, when historically, these types of projects have run way over-budget, missed their completion dates by years, not months, and have always placed a financial burden on the tax payers, thus having a negative impact on the economy. Due to the way business operates here it's not uncommon for money that's been appropriated for a given project to vanish and become totally unaccountable. This only adds to the risk involved. Good planning and investments = economic growth = stronger currency. Poor planning and management of investments = economic hardships = weaker currency.
ONE EXAMPLE:
Thailand has committed to the new Thai-Chinese High Speed Rail Project (just one mega project IN the works involving the Chinese) at a projected cost to Thailand of 300 billion baht, although the cost/benefit analysis supporting the financial justification for the project has not been disclosed to the public...RED FLAG! Historically, Thailand has never managed a large project anywhere close to budget...another red flag! Thai tax payers, who have just had their taxes on utilities and gasoline increased by approximately 20%, will shoulder the burden of paying for this...another RED FLAG! Chinese businessmen involved with negotiating these types of joint/international projects hold MBA's from western universities. Thailand's generals don't know what MBA stands for...another RED FLAG. This is just one of many reasons I see the value of the Thai baht taking a hit over the next 3 years.