Thai baht goes from top-performing to worst-hit currency in Asia

[JamesR]

18 minutes ago, AussieBob said:

Long way to go - still 20+% over valued - the inevitable correction will occur eventually.

 

If it does and I hope it does I will buy you a beer!

[JamesR]

4 minutes ago, gummy said:

Thanks for that observation. All the time I have used them I stupidly never paid attention to that.

I will look out for that info the next time I send via Wise.

[BlueSphinx]

12 minutes ago, JamesE said:

There's this interesting feature in Wise that gives you an idea what they're thinking: the Guaranteed rate (time). Wise, being much smarter about such things than I am, makes me pay attention to this. The time is shown next to the exchange rate you're quoted when you start your transfer. If the time is longer (>24 hrs during the week and >60 hrs on the weekend), Wise is thinking that things will be stable or move in a direction that would be favorable for them. With a short time the converse applies. Right now they're guaranteeing 7 hrs. Which is the shortest I've ever seen it.

I do not think that Wise is 'playing the transfer processing time' in order to make a profit.  Depending on the time and method chosen for your transfer he transaction can be almost instantaneous (quickest arrival of funds on my Thai bank-account after clicking GO on the Wise website was 6 SECONDS).  Wise is just the 'middle man' that transfers the funds you sent them from your foreign bank-account to their account on one of their 3 Thai partner-banks, which then transfer those funds - domestic transfer so no charges - to your Thai bank-account.  So the delays in receiving the funds on your account are mainly because of either your foreign bank not processing your order to Wise immediately, or Wise's Thai bank not immediately transferring the funds to your account.  And there will ALWAYS be a delay when your Thai bank-account is from a different bank than one of Wise 3 partner-banks.  

But I stand to be corrected if Wise has indeed a policy of holding your transaction when they reckon the rate will change favorably for them.

[AussieBob]

9 minutes ago, JamesR said:

If it does and I hope it does I will buy you a beer!

I will hold you too that .

The 'correct' amount IMO is about 30 per AUD, 37 per USD, and 55 per GBP.

[AussieBob]

1 minute ago, BlueSphinx said:

I do not think that Wise is 'playing the transfer processing time' in order to make a profit.  Depending on the time and method chosen for your transfer he transaction can be almost instantaneous (quickest arrival of funds on my Thai bank-account after clicking GO on the Wise website was 6 SECONDS).  Wise is just the 'middle man' that transfers the funds you sent them from your foreign bank-account to their account on one of their 3 Thai partner-banks, which then transfer those funds - domestic transfer so no charges - to your Thai bank-account.  So the delays in receiving the funds on your account are mainly because of either your foreign bank not processing your order to Wise immediately, or Wise's Thai bank not immediately transferring the funds to your account.  And there will ALWAYS be a delay when your Thai bank-account is from a different bank than one of Wise 3 partner-banks.  

But I stand to be corrected if Wise has indeed a policy of holding your transaction when they reckon the rate will change favorably for them.

Probably the Thai bank doing the 'holding' - not Wise. 

[JamesR]

4 minutes ago, BlueSphinx said:

I do not think that Wise is 'playing the transfer processing time' in order to make a profit.  Depending on the time and method chosen for your transfer he transaction can be almost instantaneous (quickest arrival of funds on my Thai bank-account after clicking GO on the Wise website was 6 SECONDS).  Wise is just the 'middle man' that transfers the funds you sent them from your foreign bank-account to their account on one of their 3 Thai partner-banks, which then transfer those funds - domestic transfer so no charges - to your Thai bank-account.  So the delays in receiving the funds on your account are mainly because of either your foreign bank not processing your order to Wise immediately, or Wise's Thai bank not immediately transferring the funds to your account.  And there will ALWAYS be a delay when your Thai bank-account is from a different bank than one of Wise 3 partner-banks.  

But I stand to be corrected if Wise has indeed a policy of holding your transaction when they reckon the rate will change favorably for them.

My thinking and it is an assumption is Wise order an amount of money from the money market and the rate is guaranteed to them for a certain number of hours so they and we do not lose out on the deal. 

[JamesR]

7 minutes ago, AussieBob said:

I will hold you too that .

The 'correct' amount IMO is about 30 per AUD, 37 per USD, and 55 per GBP.

Your cut has just gone up to two beers and a packet of crisps. 

[JamesE]

38 minutes ago, BlueSphinx said:

I do not think that Wise is 'playing the transfer processing time' in order to make a profit.  Depending on the time and method chosen for your transfer he transaction can be almost instantaneous (quickest arrival of funds on my Thai bank-account after clicking GO on the Wise website was 6 SECONDS).  Wise is just the 'middle man' that transfers the funds you sent them from your foreign bank-account to their account on one of their 3 Thai partner-banks, which then transfer those funds - domestic transfer so no charges - to your Thai bank-account.  So the delays in receiving the funds on your account are mainly because of either your foreign bank not processing your order to Wise immediately, or Wise's Thai bank not immediately transferring the funds to your account.  And there will ALWAYS be a delay when your Thai bank-account is from a different bank than one of Wise 3 partner-banks.  

But I stand to be corrected if Wise has indeed a policy of holding your transaction when they reckon the rate will change favorably for them.

Question for anybody who wants to answer: How does Wise make its money? They're not doing this out of the goodness of their hearts.

[BlueSphinx]

5 minutes ago, JamesE said:

Question for anybody who wants to answer: How does Wise make its money? They're not doing this out of the goodness of their hearts.

Wise charges a service fee of approx 1% of the Funds transferred.  And that service fee lowers when the amount transferred is larger. 

As Wise uses the mid-market rate (which is the REAL exchange rate - between the Seller's and Buyer's rates) that service fee easily beats the conversion rates charged to you by banks.  In as good as all cases you get more THB for your $, Euro, GBP or other, than when using your bank to transfer the funds.  On top of that you know EXACTLY how much THB you will receive the moment you click GO (the mid-market rate fluctuates continually, but Wise 'freezes' it the moment you click GO for the transaction you want to perform, and guarantees that that is the amount you will receive on your Thai bank-account). 

[Marc26]

14 minutes ago, JamesE said:

Question for anybody who wants to answer: How does Wise make its money? They're not doing this out of the goodness of their hearts.

They are making money just as any FX currency exchange

 

But their technology seems to do a better job of matching up transfers so they can book a middle rate and then charge both sides 

 

So if you are sending 20k baht and someone wants to send 600usd

They match them up, so costing them nothing and they then charge both sides

They have grown fast so they are able to give better FX rates

 

So they are making less per transaction but doing a lot more transactions

So lower margin/higher transactions

 

PS......It is an aspect of what I do every day

And when I am busy and have to buy and sell equal USD/CAD dollars I can make a lot more money than if I am just one sided and have to go out in the market and buy or sell USD

[Thommo]

On 7/26/2021 at 12:43 PM, Thaiger said:

Before the pandemic, the Thai baht was the strongest-performing currency in Asia. Now, it’s the worst-hit currency in the region, according to Japan-based Mizuho Bank. The Thai economy has been shrinking over the past year, hitting lows which some compare to the contraction during the 1997 Asian financial crisis. The Japanese bank says the under-performance of the Thai baht is “uncharacteristic” and renders it “the worst performer to date in 2021.” The financial analysis platform Refinitiv Eikon also found the Thai baht to be the weakest-performing currency in the Asia Pacific region. As of this morning, the Thai baht had dropped […]

The post Thai baht goes from top-performing to worst-hit currency in Asia appeared first on Thaiger News.

Read the full story

 Still remember the days when I was getting 30 baht for my AUD

[JamesR]

1 hour ago, JamesE said:

Question for anybody who wants to answer: How does Wise make its money? They're not doing this out of the goodness of their hearts.

They charge you a transfer fee, very cheap compared to major banks. 

You pay the fee at the time of arranging your transfer. 

For example you send £10,000 delivered in Thai Baht and the charge is about £51

[JamesR]

45 minutes ago, Thommo said:

 Still remember the days when I was getting 30 baht for my AUD

I remember on one visit I was getting 85 baht to the £, in those days it cost 60 baht a beer in a pub. 

[Bob20]

4 minutes ago, JamesR said:

They charge you a transfer fee, very cheap compared to major banks. 

You pay the fee at the time of arranging your transfer. 

For example you send £10,000 delivered in Thai Baht and the charge is about £51

Have you got shares with them? Only joking. 

I use them too and it's good value and quick too.

Max. amount baht transfer is 2m. For larger amounts a bank may be more suitable.

Also take into account that Wise uses an intermediary bank for the actual exchange (likely not your own Thai bank), so the amount reaches your account in already exchanged baht (not in foreign currency), so if you're in need of an FET, you may have to do some work to get it from that other bank.

[JamesE]

Well, you guys are close but off by an order of magnitude, maybe more.

When I use US$1K to buy 33+K of Thai Baht the reason it shows up in my Thai account so quickly - sometimes even before it's left my US account - is because Wise (or its algorithm anyway) needed to get $1K to fund a transfer from, say Euros, to USD. For which they charged +/-1%. But there was a better transfer by using my $1K to buy Swiss Francs and then buying the Euros with the Francs, each at +/-1% plus the small arbitrage gain they made by going through Francs instead of straight to Euros. In fact, assuming their algorithm is as good as I expect, they can keep my US$ rolling through the system for any number of transfers, each adding +/-1% plus some arbitrage gains. Now multiply that chain by however many transactions are happening at any one time and link those chains into this financial mesh. So my $1K can be turned into Francs and merged with somebody else's Francs or split into bits and sent off on their own transactions. Now, just to really mess with your heads, link that mesh with other meshes and that's probably the minimum level of complexity Wise is operating under.

It's really hard to visualize, but really simple to program once you figure out what parameters drive the various decisions. But go back to the original chain. Instead of a financial transaction imagine a bridge with lights on it. On one end of the bridge is my $1K and on the other end is my THB, when I press those two lights come on, and then the next pair of lights closer to the middle, and so on until the two lights in the middle come on. Then they start going off in reverse order. The lighting of the lights represents a new transaction and the turning off represents that transaction being cleared, so that when the bridge is dark again, all transactions are complete and the ledger is balanced. (Of course each one of those lights is on at least one other bridge so there could be a lot of flashing...)

The beauty of this is that Wise doesn't spend any of its own money to make it happen. They fronted me the Baht to make me say "Wow! That was fast." and they gave me the mid-market rate in exchange for lending them my $1K for a bit, but they really didn't have any skin in the game other than covering some positions - like fronting me the Baht - for a short time. All of this is taking place internally to Wise and outside the normal business of interbank money movement. This is how they can give a better deal than anybody, with better performance than anybody, and still rake in the dough.

Which description ties back to the original topic of the Baht's performance and using the Wise "Guaranteed rate (time)" (GRT) parameter to decide if now's a good time to move money. Since each transaction on the bridge has to be closed any uncertainty in the rate behavior adds risk that Wise would rather avoid. The Baht jumping up and down recently that uncertainty and, therefore, risk. So Wise came up with the GRT to provide a measure (I think) of how long the bridge can be. Shorter time equates to more risk which leads to a shorter bridge, and vice versa. They're just nice enough to share it with us.

[Viggen840]

On 10/7/2021 at 10:28 AM, JamesE said:

Well, you guys are close but off by an order of magnitude, maybe more.

When I use US$1K to buy 33+K of Thai Baht the reason it shows up in my Thai account so quickly - sometimes even before it's left my US account - is because Wise (or its algorithm anyway) needed to get $1K to fund a transfer from, say Euros, to USD. For which they charged +/-1%. But there was a better transfer by using my $1K to buy Swiss Francs and then buying the Euros with the Francs, each at +/-1% plus the small arbitrage gain they made by going through Francs instead of straight to Euros. In fact, assuming their algorithm is as good as I expect, they can keep my US$ rolling through the system for any number of transfers, each adding +/-1% plus some arbitrage gains. Now multiply that chain by however many transactions are happening at any one time and link those chains into this financial mesh. So my $1K can be turned into Francs and merged with somebody else's Francs or split into bits and sent off on their own transactions. Now, just to really mess with your heads, link that mesh with other meshes and that's probably the minimum level of complexity Wise is operating under.

It's really hard to visualize, but really simple to program once you figure out what parameters drive the various decisions. But go back to the original chain. Instead of a financial transaction imagine a bridge with lights on it. On one end of the bridge is my $1K and on the other end is my THB, when I press those two lights come on, and then the next pair of lights closer to the middle, and so on until the two lights in the middle come on. Then they start going off in reverse order. The lighting of the lights represents a new transaction and the turning off represents that transaction being cleared, so that when the bridge is dark again, all transactions are complete and the ledger is balanced. (Of course each one of those lights is on at least one other bridge so there could be a lot of flashing...)

The beauty of this is that Wise doesn't spend any of its own money to make it happen. They fronted me the Baht to make me say "Wow! That was fast." and they gave me the mid-market rate in exchange for lending them my $1K for a bit, but they really didn't have any skin in the game other than covering some positions - like fronting me the Baht - for a short time. All of this is taking place internally to Wise and outside the normal business of interbank money movement. This is how they can give a better deal than anybody, with better performance than anybody, and still rake in the dough.

Which description ties back to the original topic of the Baht's performance and using the Wise "Guaranteed rate (time)" (GRT) parameter to decide if now's a good time to move money. Since each transaction on the bridge has to be closed any uncertainty in the rate behavior adds risk that Wise would rather avoid. The Baht jumping up and down recently that uncertainty and, therefore, risk. So Wise came up with the GRT to provide a measure (I think) of how long the bridge can be. Shorter time equates to more risk which leads to a shorter bridge, and vice versa. They're just nice enough to share it with us.

I have been using Wise *Transferwise) for several years and never had a problem with them. More than happy

[joseph]

AHHH, 1998. my per diem was $2.5K per month deposited BOT at 60-64 Baht. Usually the transaction took 2 days. Often a week or more as bank officials played exchange games. Typically a call to the bank threating to cancel the transaction resulted in funds being posted the next day. How times have changed.                     

[gummy]

On 10/7/2021 at 10:28 AM, JamesE said:

Well, you guys are close but off by an order of magnitude, maybe more.

When I use US$1K to buy 33+K of Thai Baht the reason it shows up in my Thai account so quickly - sometimes even before it's left my US account - is because Wise (or its algorithm anyway) needed to get $1K to fund a transfer from, say Euros, to USD. For which they charged +/-1%. But there was a better transfer by using my $1K to buy Swiss Francs and then buying the Euros with the Francs, each at +/-1% plus the small arbitrage gain they made by going through Francs instead of straight to Euros. In fact, assuming their algorithm is as good as I expect, they can keep my US$ rolling through the system for any number of transfers, each adding +/-1% plus some arbitrage gains. Now multiply that chain by however many transactions are happening at any one time and link those chains into this financial mesh. So my $1K can be turned into Francs and merged with somebody else's Francs or split into bits and sent off on their own transactions. Now, just to really mess with your heads, link that mesh with other meshes and that's probably the minimum level of complexity Wise is operating under.

It's really hard to visualize, but really simple to program once you figure out what parameters drive the various decisions. But go back to the original chain. Instead of a financial transaction imagine a bridge with lights on it. On one end of the bridge is my $1K and on the other end is my THB, when I press those two lights come on, and then the next pair of lights closer to the middle, and so on until the two lights in the middle come on. Then they start going off in reverse order. The lighting of the lights represents a new transaction and the turning off represents that transaction being cleared, so that when the bridge is dark again, all transactions are complete and the ledger is balanced. (Of course each one of those lights is on at least one other bridge so there could be a lot of flashing...)

The beauty of this is that Wise doesn't spend any of its own money to make it happen. They fronted me the Baht to make me say "Wow! That was fast." and they gave me the mid-market rate in exchange for lending them my $1K for a bit, but they really didn't have any skin in the game other than covering some positions - like fronting me the Baht - for a short time. All of this is taking place internally to Wise and outside the normal business of interbank money movement. This is how they can give a better deal than anybody, with better performance than anybody, and still rake in the dough.

Which description ties back to the original topic of the Baht's performance and using the Wise "Guaranteed rate (time)" (GRT) parameter to decide if now's a good time to move money. Since each transaction on the bridge has to be closed any uncertainty in the rate behavior adds risk that Wise would rather avoid. The Baht jumping up and down recently that uncertainty and, therefore, risk. So Wise came up with the GRT to provide a measure (I think) of how long the bridge can be. Shorter time equates to more risk which leads to a shorter bridge, and vice versa. They're just nice enough to share it with us.

Interesting piece but by the time it took me to read it all I could have done 2 WISE transfers and still saved enough for a few beers . Guess I'm just a slow reader