Chart : 81 % of thai exports are paid in USD

The Bank Of Thailand publishes on its website a new set of statistics, about currencies used for exports and imports.

expcur3

The picture is very clear : US Dollar is king.

Although it’s not really a surprise, it explains the obsession of the Bank Of Thailand regarding the USD (and the exchange rate USD-THB).

All other currencies are irrelevant.

Here is another chart, about the ways those receipts are used.

expcur4

So to summarize :

-81 % of all thai exports are paid in USD
-68 % of all thai exports are converted in THB

Since the exports are falling (and will continue to do so, because of the global recession), the leverage of the exchange rate USD-THB is becoming more and more strategic. And attractive.

We can see a clear asian bias toward a “competitive devaluation” in order to soften the exports shock (China, Japan…).

It’s difficult to see how Thailand could escape it. The BOT has been resisting the political pressure before (more or less). But as the economic pressure is increasing… the bank could choose the easy path.

In other words : it was probably easy to keep the politicians at bay until now… but with a negative growth of GDP (sure for 2009), mounting unemployment… the temptation of a further devaluation of the THB versus the USD (in order to boost the exports receipts converted in THB) will increase.

Interest rates down… currencies down… the world is on a inane run to the bottom. The zero.

UPDATE
As a symbol of what I was saying : “Bank Of England Cuts Rate to Lowest Since Bank’s Creation in 1694” (Bloomberg).
It’s madness.

11 Responses to “Chart : 81 % of thai exports are paid in USD”


  1. 1 FDL 8 January 2009 at 2:42 am

    A number, if not all, of the Thai exporters require restructuring and a thorough reexamination of whether or not these Thai exporters’ business model are up to par, or, still relevant to stay globally competitive.

    Obviously the Thai exporters would be demanding assistance from the government and the banks, at varying degrees of need, with the plea that such assistance would be necessary for their survival.

    The trick, and the difficulty, is in weeding out those Thai exporters who are no longer competitive and would be merely be waste of government or banks continuing assistance.

  2. 2 dreampipe 8 January 2009 at 8:04 am

    tc – I have been stunned that the baht is staying so strong. Seems it will have to pop at one point. It is killing the british tourists for sure and the exporters must feel it to some extent.

    I know a lot of people are sourcing in Vietnam versus Thailand due to the weakness in the Dong.

    There are rumors the new administration big brilliant idea is to start forcing the baht down but so far they have not said much.

    thoughts?

  3. 3 ThaiCrisis 8 January 2009 at 8:22 am

    Believe me : the new “administration” is as clueless as the previous one…

    Right now, Abhisit is busy to redo his haircut, relocating the Asean Summit, taking care of his “friends” of the Frankenstein Coalition, giving subsidies to end subsidies, and praying for the soul of Grandma Niam… and other very important matters.

    As far as economy is concerned, like I said before, nothing new, NADA, NIL.

    A pathetic penultimate rescue, stimulus, boost package (whatever they want to call it), some subsidies, a nice smile, and voila.

    Okay, okay, I know, I’m harsh. We should give him time… 😉

  4. 4 dreampipe 8 January 2009 at 8:59 am

    tc – so what is your baht prediction for the coming months then?

  5. 5 thaioutsidein 8 January 2009 at 1:49 pm

    This is a very insightful. I expect Baht to steadily decline in the next year.

    One minor point, disagree that GDP growth will be negative for sure.

  6. 6 Charles Frith 8 January 2009 at 7:40 pm

    The Dollar is toast. It’s just a matter of time.

    The way forward is for Asian currencies to rethink a regional strategy.

    That’s for Asia to decide.

  7. 7 ThaiCrisis 9 January 2009 at 1:23 am

    I don’t know.
    I’ve just pointed out that there would be -from a logical point of view- a strong temptation to play the USD-THB card, in order to save exports. But the equation has more components, for instance the own behaviour of the USD.

    Anyway, I think that the THB could loose some ground versus the USD… Like 10 %.

  8. 8 dreampipe 9 January 2009 at 4:00 am

    cf – I think you are right but then the baht must follow it down to stay competitive otherwise the thailand just keeps looking overly expensive.

  9. 9 ThaiCrisis 9 January 2009 at 4:26 am

    Yes, that is the logic. But I want to emphasize again that everything is relative.
    If we talk about competitiveness it’s relative to other asian countries… What if all other asian currencies are going up versus the USD ? There would be no need then for the THB to go down…

    Furthermore, we can’t discard internal factors : politics.

    I mean that’s the core of this blog, 😉 so It would be foolish from myself to discard this aspect. We are not protected from a major political crisis in Thailand (succession) that could eventually influence the currencies situation.

    So we shall remain cautious.

  10. 10 Grapevine 10 January 2009 at 12:36 pm

    Street wise says the Baht will go as high as 37.5/USD and then back down
    to 32 in the 1st – 2nd Quarter.

    But,, The monkeys are still out of the cage !.

  11. 11 Spectator 30 January 2009 at 3:43 am

    The Federal Reserve is going to collapse in February oops…want proof I have none one a conspiracy I got plenty, but here is one fact congress had a closed door meeting on march 13, 2008 what was discussed in that meeting was the fall of the economy in sep. next was the federal reserve in feb, of 09 the reason why I know this is because some congressmen of course did not agree with this idea the goal is for Panic which will of course happen if this becomes so. my question to ThaiCrisis is what will happen to the thai baht and its country if this horrible event takes place.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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