Dollars

The Thai Baht and Other Asian Currencies hiked after Trump takes a Jab at Fed Chair Jerome Powell, adding that the One-Two and more will Follow if Feds don’t stop interest hikes. The interest hikes are making the dollar stronger, but high interest makes investment less attractive. Trump wants investments, and competitive edge for exports, but the Fed isn’t helping. Trump has criticized the Fed for raising interest, and even changed the head of the Federal Reserve to the current Mr. Powell, but it seems the Trump hasn’t gotten what he wants from the Eccles building. "We're negotiating very powerfully and strongly with other nations," Trump said. "We're going to win, but during this period of time I should be given some help by the Fed. The other countries are accommodated." Trump complains that during the latest string of trade battles, the central banks of the opposition nations pitched in to alleviate the economic blows, but not his own. Well, at least there’s this issue of central banks resisting the presidential rein that Trump and Erdogan could pat each other’s backs. The US president’s criticism of the Fed coming before trade negotiations with China dented speculator’s faith in the long dollars, pulling back their investments, and of course putting it in other currencies in Asia. The Thai baht had the highest percentage increment, touching a two month high, with just about 0.8% upwards to the dollar within two days, from 33.20 baht/US$ to 32.76 baht/US$ The Yuan also saw some inclined marching, hiking back to a two week high after Trump’s blast at the Fed chair. As the world has witness so far, US president Donald Trump has stood by his audacious threats, and he has said he will continue to clobber at the Fed’s head if interest rates continue to rise. The Fed will meet again to talk about rates, and experts are expecting further hikes in September and also maybe later in the year, as well. What will this in-fighting mean for emerging markets such as Thailand and Southeast Asia? Possible continued influx of foreign investments? On Monday, yesterday, Malaysia and China inked up a MOU on a bilateral agreement to swap currencies. But, Malaysian Prime Minister Tun Dr Mahathir Mohamad also wants to cancel over $20 billion worth of projects funded by the Chinese. Why be in debt to the local hegemon when there’s possible flows from wary investors coming in, right? Thailand’s exports haven’t been doing so well since the baht has gotten stronger. On the five year scale, there has been some breathing room for exporters from the baht’s drop during the beginning of Q3/2015 to a comfy seesawing plateau below $0.029/baht to it’s steep climb passed the comfy zone again at the start of Q3/2017. With the Trump’s possible easing on the acceleration towards all out economic collision with China, and curbing of the Fed’s raising of interest rates, investment of a strong Thai baht should be on the agenda of Thailand’s leader/s, and the investors’ minds as well.