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Home » Reader question » Thailand question: Thai currency at rock bottom for European tourists?
Dear readers,
The €uro has risen to its highest point since April last year against the dollar, I just read in the Telegraaf. Thailand still has a poor economy post-Covid-19 compared to pre-Covid-19 in 2019/20.
Who can explain to me clearly why the Thai currency is at its lowest point for European tourists?
Regards,
Julien
Editors: Do you have a question for the readers of Thailandblog? Use it contact form..
First and foremost: the Thai Baht is at its peak for the Thais. Thai politics should not be aimed at supporting foreigners.
The previous finance minister warned years ago – in those terms indeed – that the Thai Baht would remain high because so much has to be imported and invested in infrastructure. Think of the high-speed trains. A strong currency is good if you import and the Thai governments prefer not to do that, except for tourists with a lot of cash. That warning applied to the companies that are also ready for a renewal of their machines etc. all imports. Imports of consumer goods generate a lot of taxes for the Thai government; just think of cars and wine.
Globally, the emerging markets are in better shape than the bankrupt USA ($31 trillion debt and the limit has been reached and Congress does not want to join in to print even more). There are more young consumers in Thailand, and SE Asian countries are still making something that can be exported... and wanted in the world. If China doesn't export anything for a month tomorrow - perhaps they are already putting on the brakes - then within a month there will be nothing left in supermarkets in the USA and their GDP, which consists of 75% of consumption, will not fare well.
The exchange rates are subject to political unrest and that is coming here.
Another thing: models based on jobs/inflation/wages etc. are only partly more common. There are a lot of people who have had a lot of time to reflect on their existence in "the rat race" after 2 years of sitting at home. The fact that US consumers suddenly could no longer spend money has, for example, ensured that they suddenly had enough money for a down payment for a house, an oversized/expensive car, etc. But that trend is now over. Saving is not in the nature of certain ethnic groups, generations, citizens of certain cultures, etc. I am not going to talk about the Dutch or the Belgians!
You can follow it here:
https://www.bot.or.th/english/statistics/_layouts/application/exchangerate/exchangerate.aspx
what you get in Thailand, or try the Sikh exchange agents if you have dollars
https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eurofxref-graph-thb.en.html
how is the Euro-Baht rate doing
For the latter, you can go beyond the table to recent history.
Another point is of course how hard you can fight back when your currency is under pressure from the US speculators. The Thai Central Bank has hundreds of billions of dollars in foreign currency to keep the Thai Baht up.
The opinion of a veteran of the socio-economic planning office.
It is not the Thai baht that is at a low point, it is the Euro that is losing value. Incidentally, other Asian currencies are also on the rise against the US dollar, which is also depreciating. In short: the Thai Baht is doing well while both USD and Euro are losing value. Click on one or both links for more information: https://ap.lc/KFKnO and / or https://ap.lc/OgEuj
The Thai currency is at its lowest point for the European tourist, which was my question?
Then ask your question correctly and you have a better chance of getting a correct answer.
Your question is ambiguous and can be interpreted in two ways: it is only a low point for the tourist as he gets less for his euros. For the THB, this is by no means a low or high point.
The Thai Baht is not at a low point. You're making a reasoning error. It is the Euro that has become worth less for those who exchange Euros for Thai Baht. Has nothing to do with tourism. Also I -not being a tourist- get less baht for my euro [so I don't exchange it (yet)]. Why the Euro is worth less and the Baht firmly in the saddle has been explained many times, and is regularly discussed on this blog.
Dear Julien,
I suspect you are not keeping up with current events. If you did, you would see that what you are asking here has been out of date for a long time. The THB is no longer 'linked' to the USD, so it makes little sense to extend the EU-USD line to the exchange rate of the EU against the THB. worth, So the Euro has lost a lot of value against the THB in a few months. Already BELOW the rate of April last year. The tourist who comes to Thailand benefits little from the exchange rate of the USD-EU.
I follow current events very closely, therefore my question; why thai currency is at rock bottom for european tourist i see no answer in your response.
The THB is also never linked to the USD in my opinion, where do you get this information from?
Yes, you follow current events, but you also need to look a little further. A few years ago the baht fluctuated for years around 33 and 34 baht for the Euro. So then you can draw the conclusion that if you now get around 36 baht, you are doing well. You have to exchange a million or so Euros before you can count yourself rich, any other chatter about the rates and exchange rate difference of a few percent is completely coffee talk.
The costs only start when you start spending the bahts and you can cut back on that if necessary, not on a thousand baht more or less per month that you get or don't get because that doesn't make any difference.
The Thai Baht is determined based on a basket of currencies. These relate to the export and import of goods and services. Traditionally, the dollar plays a greater role in this because many international contracts are concluded in dollars.
And that is the problem and causes the US economy to achieve a percent or more of growth that is actually none and at the expense of all the other economic "superpowers". The oil in dollars is of course the textbook example and Saddam Hussein felt that firsthand when he suddenly announced that he would also like to price his oil in euros.
I recall that at the beginning of the previous Thai minister's policy, the basket of currencies used to determine the international value of the Baht was adjusted to better reflect that ex-import dependency. The rise of goods from China has also affected that basket. Incidentally, the current minister is someone with decades of experience in socio-economic policy. And the previous one was an academic in that field.
1. It's the other way around: the euro is at a relative low point: on Oct 27, 2022 you got 38 baht for a euro, now only 35.60 (it was 33.10 at the end of 2019).
2. If the USD weakens against the euro, it does not mean that the baht also weakens against the euro.
The baht is not pegged to the USD.
If you had followed exchange rates of various currencies, you would have known that the USD compared to almost all currencies was extremely strong at the end of 2022 (including 38 baht in 1 USD). Consequence of interest rate increase (and expectation of further increases) by the FED in the USA, which led to a lot of interest in buying USD. Now it is expected that those increases will be slightly less, while interest rates in Europe are rising in the meantime. So USD are being sold in favor of the Euro.
3. But in the meantime there is more demand for baht, and 1 reason could be that millions of tourists have come to Thailand since November.
4. Others will no doubt be able to point to other causes. Perhaps: support packages in the USA and Europe mean more USD and euros in circulation, so weakening of both currencies?
It could be related to the massive purchase of Thai Baht by the new wave of Chinese tourists.
A lot of real estate is sold to foreigners.
If you get less bahts for your Euro, which currency is weak?
It depends on how you look at it.
If you look at all coins over the past six months, you will see that the value of the THB is increasing on every coin.
Why the Thai currency is at rock bottom for the European/foreign tourist?
Clearly explained for people who do not understand this question, why has the value of the THB increased so much in the half year against other currencies?
The Thai Central Bank reports on November 11, 2 months ago, that the change against the USD is comparable peer currencies, say comparable countries. In addition, if you look into the matter, you see that the Thai baht is artificially kept relatively strong because they, Thai National Bank, have used something like 15 billion USD worth of their currency reserves to prop up the rate, otherwise you had even more for received a Euro. On the other hand, the Thais are cutting themselves in the fingers because their economy runs for three quarters on exports and a stronger baht is not so good for that. But yes for the latter they continue their policy with regard to economic growth, which always dangles at the bottom in South East Asia, year in year out. Apparently it is not a problem not to move forward as a country (economic growth) but opts for a slightly stronger baht so that the holiday home in London or the university education of the rich son etc. is cheaper thanks to the wrong exchange rates.
With this I mean that the Thai baht is not that strong at all, and has been artificially jacked up by the National Bank and which is negative for the Thai economy.
In my experience, the exchange rate of the Thai Baht is always at a low point around Chinese New Year, due to the habit of spending a lot of money and handing it out to family and friends. The price usually scribbles back up afterwards 🙂
Does your answer have that much influence on the currency market worldwide?
Around Chinese New Year, the rise has not increased as much as you suggested (no rise last week).
The value of the Baht increased from 2,7 cents to 2,8 cents around the same time as they announced that Chinese tourists would be welcome again. Could be related. The Chinese tour operators need Baht again, so demand is rising.
This is not the low point for the European tourist in terms of exchange rate. The last time I was in Thailand, December 2019, the Baht was at 3 euro cents.
Because the Euro also falls in value against the Dollar, the Euro is no longer worth a whistle in Thailand either. We can clap our hands that we still get 35 Th Bth for it.
So enjoy the happy memory that 20 years ago we still received 50 Bath for it and that Thai prices were also 30% lower than now.