Debt menace looms | Bangkok Post: news

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Flying baht prompts top brass meet

Former ministers warn of looming debt menace

The soaring value of the baht prompted Prime Minister Yingluck Shinawatra to meet top government officials yesterday.

After the meeting Ms Yingluck played down fears over the currency's rapid appreciation, saying so far the strengthening of the baht posed no risks to the economy.

Ms Yingluck met Finance Minister Kittiratt Na-Ranong, Bank of Thailand (BoT) governor Prasarn Trairatvorakul and National Economic and Social Development Board (NESDB) secretary-general Arkhom Tempitayapaisit.

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  • pointman-1

    South KoreaPost : 243

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    Discussion 45 : 29 Jan 2013 at 17.3445

    If I'm buying currency, I like the South Korea Won and the Japanese Yen. There's many factors involved, keeping me away from the Thai Baht. Mostly, because of no large Thai investment in the USA. The Baht will continue to strenghten through 2013.

  • onlyme

    BotswanaPost : 414

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    Discussion 44 : 28 Jan 2013 at 20.1744

    facts-only - I understand Economics 101 very well. The fact remains that 'effectively get cheaper' does not equate to actually get cheaper. A case in point is that there was a large differential in the price of books between Canada and the US due to "exchange rates" but when the CDN $ was above the US the price still didn't change. Same here.

  • facts_only

    ThailandPost : 507

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    Discussion 43 : 28 Jan 2013 at 18.3543

    onlyme 42, when a currency gets stronger, it's purchasing power increases. Imports effectively get cheaper.

  • onlyme

    BotswanaPost : 414

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    Discussion 42 : 28 Jan 2013 at 11.5542

    faranginkorat - thanks for your reply but your comment was 'Thailand imports nearly as much as it exports and a strong THB makes those imports cheaper, but nobody complains about that.' Although not all imports are US the baht is also strengthening against the Euro, The CDN $, the HK $, the Chinese Yuan etc. so again show me a price drop on an import product.

  • pointman-1

    South KoreaPost : 243

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    Discussion 41 : 27 Jan 2013 at 20.2841

    The Thai-Baht will continue to strenghten simply because of little, or no Thai investment in the United States. The same goes for American investmnent in Thailand. Furthermore, the U.S. Government has failed to address an out of control trade deficit, an out of control federal deficit and a bloated, costly federal bureaucracy, adding to a collapse of the U.S. Dollar. Becoming overly-involved in world-affairs, has cost the United States a fortune and a debt-problem that will be very difficult to solve. I see the Thai-Baht reaching 28 Baht to the U.S. Dollar.

  • faranginkorat

    Post : 233

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    Discussion 40 : 27 Jan 2013 at 07.0840

    Dear Onlyme,

    The price of imported goods does not drop as the THB strengthens as it is only strengthening compared to a rapidly depreciating US$. They are all fiat currencies allowing governments to spend more than they can borrow, and all are losing purchasing power. The exchange rate is basically a measure of which one is losing purchasing power faster. Inflation in both countries is more like 10% than it is the government reported 2-3%. The US government numbers are kept ridiculously low now to keep the Social Security cost of living adjustments low. They were 14.3% in 1980 and 11.2 % in 1981, permananently increasing the cost of S

  • onlyme

    BotswanaPost : 414

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    Discussion 39 : 24 Jan 2013 at 21.2939

    boons - stop talking sensible, no one will understand. Faranginkorat, when was the last time you saw the price of an import product go down?

  • boons

    United StatesPost : 664

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    Discussion 38 : 24 Jan 2013 at 20.2038

    I would be very cautious about debt calculations as a percentage of GDP. Remember that the debt is not denominated in baht. This puts the Thai central bank in a far more difficult position than it first seems.

    When export levels collapse because of the high baht (and they are already collapsing) the BoT will be forced to lower the baht. But doing so increases the debt because the debt is not baht denominated.

    Secondly, GDP has been artificially raised by one-time schemes and infrastructure projects. So the debt appears far smaller than it actually is when viewed from a % to GDP ratio.

    When GDP contracts and debt rises it's o

  • oldairman

    ThailandPost : 742

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    Discussion 37 : 24 Jan 2013 at 19.2637

    D32
    1 You are correct that Thailand has a trade deficit but it does have large reserves.
    2. The public debt IS higher and will go HIGHER still in 2013 and 2014 as the government wants to borrow 2Trn baht to finance public works which will HAVE to be repaid WITH interest in the future at the same time that they are reducing the tax income.
    3. Nothing I have seen that the government wants to do will provide a quick ROI and this government spends its way into debt and if 100% corruption is not stamped out NOW Thailand will go bust as in 1997 when your hero was also in the government.

  • jacksprat

    ThailandPost : 2,450

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    Discussion 36 : 24 Jan 2013 at 18.5636

    A colleague brought his savings over here when the UK pound was 73 baht. He is so glad he did, since sterling only gets 47 right now. The higher baht is probably discouraging some from retiring here too.

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