I first went to Thailand in 1997 and immediately fell in love with the country. Thailand at that time to me was mysterious and exotic, full of potentials and pitfalls.
Fast forward to 2010 and here I am after 13 years and many trips to the LOS sharing, with the help of my 
Thailand is Expensive!
Who agrees with this? It seems like the combination of high import taxes on western goods, increased inflation over the past few years and a historically strong Thai Baht has made Thailand less the budget destination it has been in the past and more in line with other popular vacation destinations.
It’s certainly no surprise to any of you that your dollars (or pounds and euro’s) no longer buy what they used to in Thailand. In fact, over the past 5 years the USD/THB has gone from as high as 41.99 baht to the dollar on July 11, 2005 to today’s current exchange of 33.19 baht to the dollar. In fact, the baht was even as low as 29.28 baht to the dollar in July of 2007. And the picture for the Pound Sterling, Australian Dollar and the Euro are very similar.
Obviously if you are living and working in Thailand and you draw your salary in Baht this isn’t that big of a deal to you. However if you are bringing dollars in from overseas you’ve seen your income decrease by roughly 21% which is huge! Who would want their 50,000 salary decreased to 39,500 in a 5 year period? Your income is supposed to increase over time isn’t it?!?
Because Golf and I are living in the U.S., I hadn’t really paid much attention to this continued strength in the Baht, but with our move coming up in a short 2 years the subject is becoming much more relevant to me. Specifically how do you budget when you have to take into account a fluctuating currency.
Since both of us are still young I am going to proceed with the assumption that both of us will be working in some way in Thailand and drawing a salary in Thai baht. That will help, but I am still thinking we will need to draw on U.S. dollar reserves in some cases, most importantly when we first move to Thailand. Even if I only choose to bring US$1000 a month into Thailand the difference between 41,990 baht converted and 29,280 baht converted are huge. And since we plan on bringing much more than that as part of the move something needs to be done (or at least planned for).
Since I have no way to influence the strength or weakness of both the baht or the dollar I have decided to be very conservative in my estimate of the future conversion rate of dollars to baht. I suppose I could hedge by buying forward contracts of the baht to lock in a rate, but at this time I am not that sophisticated as an investor to do something like this.
All of my plans will be based on a USD/THB rate of 25.00. I know this seems extraordinarily low and I believe it is too, but I would much rather be budgeting based on this rate and see the USD/THB go to 45.00 than the other way around. I would be more than happy to bank 15,000 baht a month if the baht were to weaken like this. On the flip side I would hate to have to figure out where to dig up an extra 10,000 or 15,000 baht a month if I was projecting a weak baht and it kept strengthening.
It seems as if the BoT is in line with my thinking as well. They are currently projecting that the baht will continue to strengthen against the dollar throughout 2010 and we could potentially see a rate as low as 31 baht to the dollar sometime in 2010. Not really outrageous when you consider the huge range from 2005-2009 coupled with the U.S. policy of a weaker dollar. On a positive note the BoT has decided to hold their interest rate firm to keep the baht from strengthening more and they are committed to keeping the baht stable at a level above 30 baht to the dollar, which they believe is important to maintain exports. One final positive note is that the Thai economy is being reported to have come out of a recessionary period and if imports start to increase (which I believe they will as PM Abhisit’s projected 1.3 trillion baht stimulus package comes online) Thailand will have a very strong reason to finally let the baht weaken back to levels above 35 baht to the dollar.
Of course I’m no economist so I could be completely off base, but the bottom line is I feel safe using a projected rate of 25 baht to the dollar to make my plans. I’m sure some of you have a much greater knowledge of economics and currency exchange than I do, please chime in and let us know what you think the future holds for the Thai baht exchange rate.
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Hi Steve,
In 5 years I don’t remember it being worse than 28 THB per dollar. Usually it’s right around 31. Right now – 32 – as of couple days ago anyway. It hasn’t gone over 33, 34 for years either. So -the range is more like 28-34. I usually exchange cash if it’s higher than 33-34. Otherwise, I hold off.
It’s good to keep most savings in usd obviously!
I should have added the chart. It was around 41 for most of the summer of 2005 and I remember coming in March/April 2006 and getting a bit over 38. Worst of all I remember being there in December 1997 and getting almost 60! Would have been a nice time to be living in Thailand on USD for sure!
It’s not the strong baht, it’s just your dollar that is so crappy
the same goes for the pound sterling. The euro is strong, the dollar has also weakenend versus the euro significantly.
I now get almost 50 baht for my euro, a year ago this was around 46.
I now get 1.50 USD for my euro, a year ago this was around 1.30.
I think it’s actually a combination of the strong baht and weak dollar. Your Euro is strong now and the weakening has been happening since April when a Euro would get you 1.26. At the current level of 1.50 the Euro is nearing a 5 year high…will it keep going straight through 1.58 (high from July 2008) or will it stall there amidst resistance and come back to more normal levels?
What I was really getting at was the difficult task of budgeting based on an ever changing exchange rate. Even when looking at the EUR/THB over the past 5 years it has been as high as 53.68 and as low as 41.15. If you were living in Thailand and expecting 48 baht per Euro you would have been in quite a bind for most of 2007.
Your correct in the value of the dollar when I was there at the end of Oct. it was around 34 BAHT to the dollar, when I left it was 33 BAHT to the dollar. Six years ago I was getting around 45 to 48 BAHT to the dollar but relatively speaking it’s still cheap to vacation there, as long as you don’t have to eat western food each meal. We do most of cooking at home Thai for the most part. Try and grill out 3 or 4 times a week and it’s usually Sea Food which as you know is a bargain there. The Thai government is saying that it will get down to around 32 to the dollar. I’m hoping that our government will do something about the drop in the dollar before it’s to late. I’m hoping that when I get there in Feb/Mar that it’s on the way back up at least to 33 to 34 range but only time will tell.