Thai Baht Weakens As Federal Reserve Says Cutting Back Bond Buying

Thai baht weakens


Well, there’s finally some good news for those of us who bring a lot of money into Thailand (ie: those of us not working here or who are living on a retirement income). The Thai baht weakened yesterday as the Federal Reserve said it’s cutting back bond buying, if the US economy continues to improve. That means billions of dollars less every month coming into Thailand. The result? Speculators worried and the Thai baht weakened rapidly. Yay!

Before Federal Chairman Ben Bernanke made his comments yesterday, the Thai baht was trading at around 29.5 baht to the US dollar. Within a few hours of Bernanke speaking, the Thai baht had weakened to 29.92, the lowest the baht has been trading in more than two weeks.

Before that, the baht had risen to as high as 28.5 during the last week in April, 2013. The highest the Thai baht had ever been in more than 16 years, and a lifestyle killer if you’re trying to live on a fixed income in Thailand with money coming from the US.

Of course, the strong baht has not only been damaging the living standards of non-Thais like me who solely live off income coming in from the US, it has also damaged Thailand’s export industry. After all, when the Thai baht is strong, the cost of Thai exports are higher. The result being, less are sold and more Thais who are involved in the Thai export industry are losing money. Not a good thing at all.

The Thai baht weakening as the Federal Reserve says it’s cutting back bond buying may not be the only thing that will affect the value of the baht in the near future either. Thailand may also cut interest rates in an effort to weaken the baht, as having it so strong in the last few months hasn’t done anything to help the Thai economy. In fact, Thailand has had to cut its growth estimates as the latest reports showed the Thai economy slowing.

There isn’t any concrete information yet as to when, or if, the Bank of Thailand (BoT) will cut interest rates but, if they do, most people I have spoken to seem to think it will come in the next few weeks. All I can say is, let’s hope so.