GBP vs THB

[Bristolian]

I'm no financial expert, but do you not think with the huge debts Thais are accruing that they are about to follow what the US/Europe are going through? From what I can see, they are borrowing well beyond their means.

I hope that you are right and that we see a realignment of the Baht over the forthcoming months but I believe that this is just wishful thinking.

With confidence in the Thai economy running high, the level of overseas investments is growing. I pick up on some of the more recent investment announcements made in the press during the last few months

In February 2013 the consumer goods giant Unilever announced plans to increase its investment in Thailand by 2.8 billion baht on confidence that domestic consumption will continuously expand.

Of course one of the biggest growth drivers for Thailand is the automotive industry.

In November 2012 Nissan, Japan’s second-largest carmaker announced plans to invest 11 billion baht ($369 million) to build a second plant in Thailand.

January 2013, Toyota announced plans to invest $401 million in Thailand, for a new eco car
factory

February 2013, Honda said it will invest about 20 billion baht ($673 million) in a new factory with annual capacity of 120,000 cars.

February 2013, After spending Bt837 million to expand the AutoAlliance Thailand (AAT) plant in Rayong for 1-tonne pickup trucks by 20,000 units per year to 195,000, Mazda has decided to invest almost Bt10 billion to open a transmission plant in Chon Buri.

Thailand’s total vehicle output may rise 30 percent to 3 million units by the end of 2015 most of this increase will be exported. Are all of these companies wrong in their analysis of Thailand’s ongoing competitive situation?

It is true that Thailand’s central bank faces a balancing act in containing inflation while preventing a stronger baht from wrecking its export-led economy. Personal debt is certainly on the increase, as we have seen in many newspaper reports. However the fundamentals of the economy are still good with High GDP, exports growing and a politically stable situation, when compared to other nations in the region.

In my opinion, the value of the Pound relative to the THB will only improve when the UK gets its act in order. Currently the UK government is intentionally driving the value of the Pound downwards to increase its competitive situation. Unfortunately, I believe that the Pound will not regain in value in the short term.

[caller]

The Sunday Times is reporting that the pound will be at parity with the euro by the end of this year, based on the views of leading experts in the field. There seems to be a head of steam gathering for the UK to change tack and maybe that report is part of it? It does rather feel that we have a Govt. fiddling whilst Rome burns....

[STEVE G]

And to think that for years I've worked overseas and banked in the UK because I thought it was safe!

[MrPlum]

Every country, forced to print money, will see their currency lose value against others. Thailand did well to avoid the global mortgage scam. This should mean a stronger baht against Stirling, for a few years, perhaps a decade, until Thailand overheats and the bubble pops. Where the Stirling floor is, is unclear but it would seem prudent for expats try and make themselves independent of their pensions.

[Bristolian]

http://uk.finance.yahoo.com/news/pound- ... 06035.html

Pound plummets against dollar and euro

The value of the pound has reached new lows after Britain’s credit rating was cut on Friday - and it could get worse
Sterling fell to a two-and-a-half year low against the dollar and a 16-month trough against the euro on Monday after the loss of one of the UK's prized triple-A credit ratings.

More falls are likely in the near future given a grim outlook for the British economy, the prospect of more monetary easing and growing evidence that the Bank of England is comfortable with a falling currency as it seeks to rebalance the economy and encourage more exports.

Moody's on Friday cut Britain's rating by one notch to Aa1 from Aaa, citing weak prospects for economic growth. Britain joined the United States and France in having lost its triple-A rating from at least one major agency.

So far this year sterling has lost nearly 7% against the dollar while the euro has gained 7.5% against the pound.

"[The rating cut] reinforces the perilous economic position the UK is in. It supports the unwinding of the safe haven trade too," said Kathleen Brooks, research director at Forex.com. "This downgrade may fuel more speculation that quantitative easing will be re-started later this year. This is pound negative for the medium term and we could see sub- $1.50 in the near term."
More quantitative easing is seen as a negative for the currency as it involves the central bank printing more money to buy bonds. That increases the supply of the currency and puts more pressure on its value.

Sterling was already under pressure last week after Bank minutes showed policymakers, including Governor Mervyn King, edging closer to another round of easing. The bank's quarterly report earlier this month also said policymakers were prepared to tolerate higher inflation to support growth.

"By moving the goal post of its 2% inflation target from two to three years, the Bank has reduced real rate expectations, markedly pushing the pound lower," Morgan Stanley said in a morning note."Now rising inflation and pound weakness will pare living standards back down. We expect sterling to fall further and Friday's rating downgrade was a marginal event in dictating the future path of the currency."

(Source: Reuters. Additional reporting by Philip Baillie; editing by Patrick Graham)

[STEVE G]

I've just had to make a transfer over the internet and got slightly under 44 bt to the pound which is pretty dire by any standards.

[hhfarang]

^ That's what the dollar was at when I moved here... now it's 29.

[Pleng]

It does rather feel that we have a Govt. fiddling whilst Rome burns....

Well I'm no expert on monatary policy. Both Conservative and Labour did a speach leading up to elections along the lines of "there are plenty of countries that are doing really well*. Let's build stuff and sell it to them", in which case a weak pound would make sense. The only think I'm scratching my head about is what exactly it is that we can make that China and India would a) actually want and b) couldn't produce cheaper themselves.

In any case, the point I think I was trying to make is it's easy enough for us to say how the government is making the wrong fiscal calls, because the weak pound is directly affecting our wealth. But no government in their right mind would base their monatary policy on the needs of a few people who have decided to move out of the country.

*not in recession

[caller]

In any case, the point I think I was trying to make is it's easy enough for us to say how the government is making the wrong fiscal calls, because the weak pound is directly affecting our wealth. But no government in their right mind would base their monatary policy on the needs of a few people who have decided to move out of the country.

*not in recession

I agree - and I wasn't. I'm still in the UK and I was basing my comments on a whole range of issues that need sorting to do with the economy. Two things might have an impact, the new governer of the BOE taking over soon and if UKIP win the by-election tomorrow! We're stagnating but the Govt. say they ain't changing tack.

Actually 3 things. The Italian situation could rip about the eurozone monetary policy! That would force their hands, I guess?

Of interest, the plight of expats abroad has been raised in the press recently.

[tuktukmike]

Listening to an economist on radio 5 recently made the point that the uk's main export was in fact fresh air, this is due to the huge number of empty containers being shipped back to the far east.

The problem with a weak pound of course is that imported raw materials cost more so a sort of swings and roundabouts situation.

The goverment still claim to be reducing the national debt but of course this is just clever accounting as borrowing has risen above expectations.

In a nutshell, we are screwed.

Ttm

[redzonerocker]

The goverment still claim to be reducing the national debt but of course this is just clever accounting as borrowing has risen above expectations.

Or clever fiddling

In a nutshell, we are screwed.

Ttm

The Eurozone has severe problems too, the recent events in Italy caller mentioned is just the tip of the iceberg.
Greece will never be able to pay it's debts, Spain, Ireland & Portugal are on course for more bailouts or bankruptcy.
Germany & especially France cannot afford to keep financing the poorer countries, despite their desperation to do so, they stand to lose big time if (when!) it all goes down the pan

As for the USA, the fiscal cliff put on the back burner in the new year is yet to be addressed.
I think it's sometime this month.
That could really put the cat amongst the pigeons

[StevePIraq]

For those interested in the UK economy and if you are British and still have pensions etc there you should be, then take a look at this

http://www.tradingeconomics.com/united- ... indicators

Just check out the line for government spending and click on the "trend" line to see how government spending is increasing dramatically whereas the government is continually stating they are cutting spending.

<iframe src='http://www.tradingeconomics.com/iframe/ ... t-spending' height='350' width='700' frameborder='0' scrolling='no'></iframe><br />Source: <a href='http://www.tradingeconomics.com/united- ... t-spending' target='_blank'>tradingeconomics.com</a><br />

[caller]

It seems to me the problem the Govt. made for itself is by making such great play of immediate reductions in Govt. spending, whereas the changes they have made, are continuing to make and some that Labour made (pensions), will have an impact in reducing spending in years going forward, as long as the economy gets moving again and people get off of benefit into real jobs, not P/T propped up by the state, which Co's take advantage of, because that's the black hole.

[Bristolian]

I think the problem is that, the UK is heading for a 3rd dip recession and there is little that they can do to avoid it. Production figures are down, unemployment is up. Unfortunately personal debt is also up also.

The issue that I see is that the Euro is currently overvalued. The Euro crisis is not over yet.

Combine this with a strengthening Baht and Thai economy, with the BOT not willing to stop the upward trend of the Baht. The end result is clearly a problem for Brits living here reliant on funds from the UK.

[Dannie Boy]

I think the problem is that, the UK is heading for a 3rd dip recession and there is little that they can do to avoid it. Production figures are down, unemployment is up. Unfortunately personal debt is also up also.

The issue that I see is that the Euro is currently overvalued. The Euro crisis is not over yet.

Combine this with a strengthening Baht and Thai economy, with the BOT not willing to stop the upward trend of the Baht. The end result is clearly a problem for Brits living here reliant on funds from the UK.

Too true Bristolian, watching the exchange rate drop by about 0.5 of a baht a day is quite depressing - just as well that I can't afford to get drunk now (only joking)