In august 2009, here what I wrote on the chart with USD-THB exchange rate and thai holdings of US Treasuries.
The BOT fantasy : buying more and more USD (via US debts) in order to maintain the exchange rate USD-THB.
Well, 5 months later, where are we ?
Higher US Treasuries holdings… and higher THB. Well done guys !
But I agree, you could also see the half full glass here : It means, if the BOT haven’t piled up USD, the THB would have been even stronger.
I remind you the obsession of virtually every asian central banks : weaken their local currencies versus the US Dollar, in order to boost, stimulate their dear exports.
Each countries use different tools, but with the same cheap short term obsession : the Beggar thy neighbour policy. China for instance sets the exchange-rate (It’s much more convenient) because China is an authorian (to use the word “communist” would be an insult to Karl Marx…) state and because they don’t give a rat shit about what other countries and other people think.
For that matter, it’s a shame to see Geithner the slave to bow in front of the Chinese, and to delay the report on… (the alleged as they say !) currency manipulation by China (read here).
Even the Euro Zone is doing the same. The Great Greek Drachma Drama (copyrighted myself) is… very convenient to say the least (on the short term, eventhough It’s a catastrophy on the medium term) to create a little bit of distrust… and to lower the Euro versus the Dollar. Enough to “boost” the famous german exports…
Boost. Stimulation.Throught debts and cheap (depressed) currencies. It’s the Dildo Economy on Prozac.
The whole freaking planet is running toward the Zero (as far as exchange rates are concerned). Happy and Stimulated. Have a Viagra, please.
Voila. Thailand is happy with a (small) recovery in exports… in order to please the clowns Korn and Abhisit so they can use the words “GDP growth” and “recovery”, leading to surplus. And those surplus are used to buy… US debts… allowing to keep a relative control on the USD-THB exchange rate. But meanwhile, those surplus and this fake “GDP growth” excite foreign money, oceans of liquidities… Leading to inflows (buy buy buy thai stocks !)… leading to a higher THB… leading to the need to further depress the THB if they want to continue to boost exports… with surplus… etc. etc.
It’s not even a vicious circle anymore. It’s a clown circle. A bozo circle.
Last but not least : the view with % of change year on year. I agree : the BOT seems to slowdown. But it’s too early to say.