People are lost : one year ago the name of the game was “Save the Private Exports and curb the appreciation of THB versus USD”.
And today : the BOT intervenes on the market… to support the THB !
What’s going on ?
Well… one factor is… a black swan : oil prices.
Just to put things in perspectives : in may 2007, barrel = 63 USD… One year later = 130 USD. This is a black swan.
Now here is a new chart about the trade balance (exports-imports, source BOT). You see that we are plunging. The reason is obvious : the energy bill (crude oil but not only, coal and natural gas too).
By the way, the current account was also in deficit in april.
Now the same chart, with oil prices (monthly average, WTI, USD per barrel, source EIA).
In april, the barrel was at 112… So no need to go to Harward School to forecast a little problem in… may and june.
It’s going to start to hurt. A lot. This puts a strong pressure on the THB.
Now, the game is to see if the demand is going to decrease in Thailand…
By the way, figures have been published for the US in april… Uggly… trade deficit of 60,9 billon USD. “Imports grew 4.5 percent in April, the biggest gain since November 2002, to a record $216.4 billion.
Details : oil balance has a deficit of 34,5 billions USD after 30,2 billions in march… Record import price for crude oil at 96,81 USD per barrel against 89,85 USD in march…
96,81 only we should say.
There is no escape, unless a big decrease of demand… may and june are going to be uggly. Really.