BAHT expected to strengthen again

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It seems to be something that we have heard a lot in the last few months if not years. The Thai baht is still continuing to strengthen, this despite of reports that the Thai economy is starting to slow in many sectors, although tourism certainly isn’t one of those areas, if you believe everything coming out of TAT.
If we compare the Thai Baht against Sterling, certainly since Brexit, it has continued to strengthen with minor fluctuations, many of which were barely noticeable since that time. Movement against the US dollar have been at little bit more obvious with the baht hitting 36 against the dollar in and around the time of President Trump’s inauguration and then falling back down to around 34. However, if you believe the figures coming out of tradingeconomics.com, the baht is expected to rise to 36 again by the end of 2017 and hit 41, yes 41 by 2020.
To some degree you can understand why the Ministry of Finance here in Thailand would want this to happen. After all it gives the impression that the country is continuing to grow and become a major a player (giving impressions is something that we know is popular in some areas of Thai culture), it also suggests that the country is stable again after years of upheaval including overthrowing of governments and military coups – this I can understand somewhat more, and of course you could be forgiven for thinking that it encourages investment.
This last point is one that is quite interesting. If a foreign company came to Thailand surely the initial investment would be far higher (in their local currency) than say 12 months ago? Wouldn’t this make other countries in the region more attractive? Also, if the foreign company in question were looking at IMPORTING goods from overseas they would need to pay in Thai baht to gain any benefit, how would they generate the Thai baht in the first place, and how would this help the Thai economy?
To me, a strengthening Thai baht does very little to improve the prospects of Thailand on the world stage, it just looks good and it is good for Thais travelling overseas – hardly things to get overly excited about in reality. If, and it is a big if, Thailand is genuinely looking to attract foreign investment, wouldn’t they be better with a weakening baht? This makes it easier and cheaper for money to brought INTO Thailand, something that has to be more beneficial to the Thai economy as a whole?
Thailand is doing all it can to attract more tourists, something that should be applauded, especially if you live in tourist centres such as Pattaya and rely heavily on tourism for your own personal success. TAT keep saying that they want to attract “quality tourists”, again I can see the point, but not always 100% sure how this is defined but can these “quality tourists” afford to keep coming if the baht continues to strengthen? For many, the fact that Thailand used to be quite cheap was one of the attractions.

Many of us working in Pattaya are involved in the real estate industry in some respect or some form, even if it is indirectly. The industry definitely suffered locally in 2015 but recovered in 2016 and moving into 2017. With a large percentage of properties still being purchased by foreigners, the industry could again be hit hard if the baht continues to strengthen, especially during a fledgling recover that is so vulnerable.
Once you own a property here then it is a completely different story, especially if you are earning in Thai baht. It is not hard to understand why some of the projects offering rental guarantees are looking so attractive with investors looking to take the one time hit and then start having an income in the country where they live, namely Thailand. Perhaps, this is the long-term goal of the Ministry of Finance and we are all intended to self-sustained from investments in Thailand and not dependent on income from overseas?
Now I don’t want this to appear overly negative, I have called this country my home for over eight years and I love the place but I still don’t fully understand the ‘end game’. However, I am always under the impression that what is said and what actually happens are two very different things and one government department’s goal seems to conflict with another’s, as is the case with the Ministry of Finance and TAT.
For Thailand to succeed on the world stage and become a major player like everyone wants, surely everybody needs to be singing from the same page? To me it seems blatantly obvious that to encourage outside investment you need to be competitive and having a strong currency doesn’t particularly assist with that. If this comes further down the line, then great but it can’t be wise in the beginning. I understand BOI offers other incentives, but these aren’t applicable to everybody so in my opinion this is not the ideal counter argument.
I would love nothing more than Thailand to be hugely successful and the baht needs to find ‘fair’ value against other currencies. Thailand is still one of the major rice producers in the world, a lot of which is exported, they want to encourage overseas investment and they want to increase tourism. These are three areas that would benefit from a devaluing of the baht, something that I can’t really see happening until these industries start to really suffer.
Once again, space is running short and I do hope that my somewhat limited analysis and opinion on the issues with Thai Baht has maybe at least raised a smile. This is a great country and the vast majority of us love living here – just things don’t always, on the face of it at least, make sense. So, until next time, keep enjoying the Land of Smiles!

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