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Investor Focus

Outlook for Thai Baht

Sep 8 2008

If you’re purchasing, selling or renting property in Thailand, the strength of the Thai Baht (THB) relative to your home currency can be an important issue.

A strong or weak Baht can be good depending on whether you’re a buyer or seller

A strong, or a weak, Baht can be good or bad for you depending on whether you are buying or selling property. If you’re buying, a weaker Baht is good because it means your own home currency will buy more Baht. As a result, you’ll you pay less for your property in terms of your home currency. However, if you’re selling and want to convert the money you receive back into your home currency, a weaker Baht is bad news for you.

Future exchange rates can be more important than today’s rates

When buying property, not only are today’s exchange rates important, but also future rates if you plan on selling your Thai property. The ideal outcome is to buy when the Baht is weak and then sell when the Baht is strong. In terms of your home currency, this means you pay less when buying and receive more when selling.

Recent changes in exchange rates

Let’s look at changes in exchange rates over the past 14 months in the table at right.

Baht vs US Dollar - Thailand’s central bank manages the Baht primarily against the US Dollar ($) and seeks to avoid rapid changes in the THB/$ exchange rate. As a result, you can see that the Baht has been quite stable against the Dollar.

Baht vs Euro – The Baht followed the Dollar in weakening against the Euro (€) and Danish Kroner (DKK), which is pegged to the Euro, between July 2007 and 2008. Over this period, the Baht weakened by 12%. Since July, the Baht has strengthened by 5% which means it is now 7% lower than in July 2007.

Therefore, for Europeans, Thailand is cheaper than it was a year ago.

Baht vs Sterling – Following the Dollar, the Baht has progressively strengthened against Sterling over the past 14 months, by about 12% since July 2007.

Outlook for Thai Baht

Since the Baht tends to follow the Dollar, we first look at how the Dollar might move against the Euro. Then we assess the outlook for the Baht in comparison to the Dollar, Euro and Kroner.

Slightly stronger Dollar against Euro by end 2008

Based on economic fundamentals, the Dollar is now considered to be at about the right level against the Euro. However, many analysts believe the Dollar will further strengthen over the remainder of 2008 - if oil prices don’t increase.

  July 2 2007 July 2 2008 Sept 1 2008 Change July 07 – Sept 08
THB/$ 34.4 33.3 34.1 Baht 1% stronger
THB/€ 46.4 52.6 49.9 Baht 7% weaker
THB/£ 69.0 66.3 61.5 Baht 12% stronger
THB/DKK 6.2 7.0 6.7 Baht 7% weaker