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  • End of month baht

    It's no secret that a lot of people who live in Thailand rely on income from abroad.
    I was told years ago that the baht surges at the beginning of each month to gain an advantage over various currencies flowing into the nation's banking system. I've done an informal analysis (of about 10 years) of my home currency and found that the fluctuation was significant (preceding each month) until last year. It seems the baht is now pegged to the US dollar. Anybody else noticed this?

  • #2
    what's your question exactly ?

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    • #3
      Despite the apparent strength of the US economy vis-a-vis other economies, and the seeming weakness of the Thai economy, I would not expect the two currencies to be mirroring each other unless there were some artificial (non-market) influence in play.

      canvas.jpg
      Don't know why the legend of this Thai Baht chart didn't copy, but, notice how the USD (orange) has shown very little movement against the baht since this time last year compared to the AUD (turquoise), GBP (blue) and EUR (green). The timeline starts 5 years ago, gradients are years.

      Notice how little the THB has moved against the USD since the coup -- yet the AUD, GBP, and EUR have moved considerably against the USD during the same time.

      The end of month aberrations seem to have disappeared because there is so little movement between the two currencies.
      Last edited by Texpat; 04-12-2015, 09:46 AM.

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      • #4
        The baht has been artificially inflated for years. I am sure the US plays currency games too. Doesn't ever country?

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        • #5
          Originally posted by Texpat View Post
          Despite the apparent strength of the US economy vis-a-vis other economies, and the seeming weakness of the Thai economy, I would not expect the two currencies to be mirroring each other unless there were some artificial (non-market) influence in play.

          ...

          Notice how little the THB has moved against the USD since the coup -- yet the AUD, GBP, and EUR have moved considerably against the USD during the same time.

          The end of month aberrations seem to have disappeared because there is so little movement between the two currencies.
          you got it backward, as always

          the EUR and other currencies are now falling like USD once did 8 years ago, meaning that their economic prospects is in the toilets. The US is not out of the woodshed yet, just that it has stabilized in its fall, while other countries are now joining the fall (Australia, Europe, UK).

          The end of month aberation is a side effect of the currency shock, with less Foreign currencies flowing in, some of the trends are disappearing, hence the end of month "spike" becoming "undetectable" or noticeable.

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          • #6
            Also since the military coup, a lot of "players" are being monitored in their business and financial activities, so playing the THB might have become a dangerous game.

            A lot of overseas Thai like to play the currency game so they can repatriate funds for locals working overseas, and send them to their family here in Thailand. The transfers usually happens at the end of the month.

            Recently, western countries are cracking down on those "illegal" overseas transfer, with terrorism and money laundering in the background, handling large amount cash like EUR or USD is being seriously "monitored".

            Here in France, there was one big case like this, a couple handling 100M EUR per year in "illegal" transfer by doing rounds with Asian restaurants and other immigrant employers. The guy was carrying around up to 1M EUR per day in plastic bags, taking public transports etc...

            they followed him for months, saw where he was doing the transfer (dodgy Western Union bureau), and eventually caught him at his place where he was hiding 10M EUR in cash.
            Last edited by Butterfly; 04-26-2015, 04:09 PM.

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            • #7
              I don't see how what you described is dodgy. Forex traders make an open living swapping currencies. If the guy was acting as a "wholesale/bundler" to get a better rate for larger volume, perhaps there is a law against that. Seems he's just providing a service by forwarding remittances, and taking a small cut. Given the climate in control-crazy Europe, it's probably illegal. The banks demand a transfer fee from every single individual worker, every month.

              Every time I transfer funds (once or twice a year) I watch what the rate is doing and try to avoid the end of month period, where I imagine large volumes are being traded, and people trying to manipulate the rate in their favor.

              Check out the 1/2 baht swings over the period of a few hours at the end of March, beginning of April. THB-USD. If you're transferring as little as $20K, that's a 10,000 baht difference depending on what hour your Thai bank decides to exchange those dollars into baht.

              EOM baht.jpg

              Does any foreigner think a Thai bank has his best interests in mind? Ha. Watch and see what the exchange rates do between Apr 28 and May 5.

              (I realize this is contrary to the premise of the OP, that the EOM fluctuations have subsided, but April was especially volatile.)
              Last edited by Texpat; 04-26-2015, 05:13 PM.

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              • #8
                what sites are you using to get those quotes ? are they official quotes or "offshore" ?

                first you need to understand that FOREX exchanges are not continuous, that is there are hundreds of "independent" FOREX exchanges with their own quotes. They all offer different arbitrage opportunities.

                There is no single "tape" of FOREX quotes, it doesn't exist (see ESMA/MFIDII regulation trying to solve that question), it's all over the place, you could be buying 32THB per USD at one place and selling 34THB per USD at another place at the same datetime stamp. Therefore, it's all based on arbitrage opportunities.

                The FOREX in general is the biggest financial market place in the world in terms of liquidity and size of deals (trillions per day), but it's also the most fragmented market in the world. Banks and traders take advantage of that situation and take onto arbitrage opportunities by having an account in each of those Exchanges, and then do the "cross-clearing" internally.

                As for Thailand, the delivery of THB is controlled by the BoT, and Thai banks have their own quoting system rules to publish their local FOREX rates. It's based mainly on London Market rates of Major currencies (triangulation) and the volume of incoming funds and outgoing funds at a certain point of time (which could explain why there could be a flash drop, someone hitting the bid with a very big incoming transfer). When too much USD is pouring into Thailand, it adjusts the local rates accordingly (hit the bid, makes the bid/ask spread difference, sometimes the spread is as high as 1.5%).

                Is this manipulation ? yes and no, it's just the way it works, like LIBOR was until we found out it was completely rigged, even though it was part of the official operating procedure to set LIBOR. Despite the scandal 4 years ago, LIBOR was still being operated the "same" way up until recently when ICE took over the administration of LIBOR. We still haven't found a better alternative to LIBOR, despite promises by regulators and the industry to re-think the entire LIBOR process.

                LIBOR and EURIBOR rates determines the global exchange rates of Major Currencies in London and therefore the long term trend of the THB.

                Short term fluctuations are determined by incoming/outgoing volume of foreign currencies into Thailand and sometimes a "currency shock" like we had at the beginning of the year with the EUR.
                Last edited by Butterfly; 04-26-2015, 10:07 PM.

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                • #9
                  That's good information, Thanks. The site I use to watch rates when I'm ready to transfer is this:

                  http://www.xe.com/currencyconverter/...rom=USD&To=THB

                  They are mid-market rates, but I merely watch for a period of relative stability -- usually mid-month, no massive peaks or valleys. And avoid timing around US Fed or BOT announcements. If I request the transfer at midnight, it's always deposited before lunch, but as that chart I referenced reflects, a lot can happen in 12 hours. I guessed that big transfers could swing my bank's rate and many of those happen EOM or BOM. I'm certainly not trying to time a winner, just don't want to miss out on several hundred bucks because I had to transfer immediately after payday.

                  I still find it interesting that the baht has maintained itself (plus or minus 1/2 a baht) the USD over the past year (since the coup) while many other currencies have not.

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                  • #10
                    XE.com is irrelevant and does not offer real rates, it's just one of those FOREX slots where anything can happen. The feed of quotes are limited to that Exchange only. Completely different quotes are happening in different exchanges, and the actual quotes for delivery will be quite different, maybe 2% or even 3% difference over what you will actually get.

                    You need to look at official Bank rates from the BoT or Bangkok Bank, they are pretty close (0.20 THB difference) to what you will actually get.

                    Watching trends or pattern in FOREX slots to make predictions is a recipe for disaster. If you want to predict the THB outlook, look at local inflation, GDP growth, and the differentials with US and EU expected inflation and expected GDP Growth, these are the real drivers behind the long term trend of the THB.

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                    • #11
                      also something to keep in mind for those who want to trade on those FOREX platforms like XE.com

                      it's completely rigged, they claim to offer you "trading scripts" so you can make "millions" on FOREX, the truth is they bet against you,

                      the firm has access to the whole book of trades (remember these are "unregulated" private exchanges) and will feed you trades to play against those trading scripts, hence you losing your shirt since you can bet with as much as 10 to 1 leverage.

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                      • #12
                        ^ for those of us will limited Knowledge of such things, could you explain how the above works, please.

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                        • #13
                          they act like an exchange,

                          when traders put their bid and ask, the "exchange" can see the whole book of each trader and their "trading patterns", and "predicts" the immediate direction of the exchange rate, and possibly bet against them, or sell that info to a third party. You can buy access to the entire book, but the trading pattern of each trader, that's another issue. It's unclear if that info is really valuable or worth it. Some claim yes, other says no.

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