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Up and Down Arrows

It never ceases to amaze me that one set of Thai experts say one thing and another say the opposite at the same time.

This is particularly true about the strength or weakening of the Thai Baht in 2020.



Conflicting Reports - Thai Baht in 2020

As can be seen from the articles I link to, one predicts a a further strengthening of the Baht despite the economic problems that Thailand is seeing.


"The impressive foreign reserves make Thailand stand out as a safe haven for investor capital, both real investment and speculation......The outlook is that the baht’s value is likely to keep surging next year".

Another report written at the same time, states that Thai Baht will weaken as speculators withdraw and the bull trend reverses because the Baht is overvalued and because of the sluggish economy.

Quote from the Bank of Thailand:

"Global investors are starting to view the baht as overvalued, given the country’s economic slowdown and the narrowing current account surplus..."

“The baht is starting to reverse its [upward] trend. We did not do anything, but the market views the baht’s upside gain as limited,”

Bank of Thailand soothes jitters over baht gain - 4th December, 2019.

When faced with such conflicting information I suspect that people will have to judge the reports based on who produced them. Therefore my money is on the latter report.

Exchange Rate

Many normal Thai people have lost their jobs and been adversely affected by the strength of the Thai Baht. A lot of ex - pats and tourists have also been adversely affected. It is a fact that if the Baht remains strong these adverse effects will continue and get worse.

There are arguments that a change in the type of tourist and ex pat will occur and everything looks rosy, but anecdotal evidence from the coal face and reports from the Hoteliers Association and similar say otherwise.

As for industry, there are reports of many factories closing or laying off staff. Especially those that rely on sending their product abroad.

I believe the people on the ground, both the normal Thai and the farang.

UPDATE: 1 February, 2020

So the beginning of the Brexit transition period is now underway, business confidence is rising, the pound has surged and all looks rosy. With 1 GBP now getting about 41.19 Baht (midmarket rate). Long may the upward trend continue.

A huge bet for the GBP in the futures market is a good indicator of the increase in confidence.

UPDATE: 24 April, 2020 

Covid-19 is well and truly messing up economies but there seems to be little impact on exchange rates - YET.

I am no expert in such matters so I have no idea of what the impact will be in the future. There surely must be some as countries are spending loads of money, including Thailand and the UK. Are they printing it, or borrowing it?

UPDATE: 26 July, 2020

The upswing didn't last long, actually dropping to 38 Baht to the GBP a few weeks ago. If it doesn't rain. it pours. There is speculation now that if a trade deal is not made this year with the EU then the UK economy will be at emerging market status.

That is a bit dramatic and I hope is just a continuance of project fear. We will see. 40.45 (mid rate) at the time of writing.

There are reports of Thailand being put on the USA currency watch list for currency manipulation. It is amazing to everyone that the Baht is so strong. Especially considering the state of the Thai economy. Something is not right.


UPDATE: 24 August, 2020

It has just been announced that the Thai government pension fund (1 Trillion baht) will be diversifying their stockholdings by buying up overseas tech stocks instead of the now poor performing Thai stocks. I am not an economist but the outflow of Baht from Thailand should increase which might help to weaken the Baht.

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