Integrity Legal

General “Stonewall” Jackson once said that his tactical and strategic imperative was to keep his opponents between the “horns of a dilemma”.  Expatriates living in the Kingdom of Thailand often find themselves caught between the horns of a dilemma when it comes to the issue of exchange rates. As a long time expatriate and small business owner in Thailand, this blogger often finds that the fluctuating value of the Thai baht when compared to other currencies can be both frustrating and (in some cases) exhilarating. When the Thai baht is weak against other currencies it generally means that the Thai economy is stronger because exports increase (as Thai products are viewed as less expensive) and tourism flourishes. The net result of increased exports and increases in the number of tourists means more money comes into Thailand and the economy improves.

On the other hand, when the Baht is strong it means that an expatriate earning money in Thailand has higher purchasing power in either their home country or other countries that they visit. In many cases, expatriates travel more than the average citizen of their home country, so currency fluctuations affect expatriates disproportionately when compared to those who primarily reside in one place for most of their lives.

The examples cited above are rather simplistic and definitely do not pertain to issues involving international currency markets, stock exchanges, and financial institutions; but they highlight an underlying day-to-day dichotomy that can be paradoxical for the average expatriate. Is it good to have a comparably strong or weak local currency? Following the economic crash in 1997, many expatriates in Thailand, especially those with significant foreign capital, were able to make investments into the economy that may not have been possible prior to the extreme devaluation of the Thai baht. This was definitely a positive development for the limited number of expats able to make such investments. Furthermore, it could also be viewed as something of a “silver lining” for the Thai economy. That being stated, the overall economic trauma caused by the 1997 crash was a burden on Thais as well as foreign expatriates as the Thai economy was stunted for some time in the aftermath. Meanwhile, it took many years for Thailand to once again be viewed as solid jurisdiction for large foreign investment.

Presently, there are those who speculate that Thailand may be standing on the precipice of another economic downturn. There are those who believe that the Baht will lose value (at least against the dollar) in the coming months and some who argue that previously implemented economic policies will lead to full-scale recession. At one time, expatriates were virtually immune from local economic downturns, now as the world has become more globally integrated such immunity may not prove so strong should an economic collapse occur again. Also with the ASEAN Economic Community quickly moving toward realization economic issues in one country could lead to problems across the region.

There is no unequivocal answer to the expatriate’s dilemma, but for expatriates in Thailand it might not be a bad idea to keep a close eye on those exchange rates.

Tags: Baht-Dollar Exchange Rate, expat, Expat in Thailand, Expat Life, expatriate, Thai Baht