thailand is cheaper than hk, agree. but hk's as easy to visit for the middle-class chinese as thailand is. chinese potato queens are more likely to go to europe or australia for white meat.

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I wasn't sure where to post this, but I'm sure everyone is aware that the dollar has just dropped below 30 baht. I think prices in Thailand should be dropping--but they are not. And apparently Thailand has a good economy because its stock market has been one of the best performers in the world since January 1.

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Why do you think prices in Thailand should be dropping? Perhaps on items imported from the United States...but this is a baht economy, not a USD economy.

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Prices of rooms in hotels around Silom as quoted in online booking sites have gone up by more than 10%. The difference between last month & next month rates for the same category of room at the same hotel is now about US10 in the low to medium-price range.
And November is the beginning of high season...

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If rates are quoted in US dollars, it makes sense for them to go up, because the dollar is weaker now against the baht.

If the rates are in baht, they go up do to inflation and/or market forces (ie., they can charge more so they do. viva capitalism!).

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I know -- but the Japan yen has also been constantly increasing in value over the years -- and Japan has been having deflation (I think because of its strong yen). A stronger currency should lead to deflation--unless it's just the U.S. dollar dropping on its own. I think some American should write a song, "Brother can you spare a yen? Brother can you spare a baht? . . ."

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Thailand definitely does not have deflation. Saw some figure recently somewhere...it was significant.

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Wantasian - indeed as Icon 513 says, the Thai economy is not that linked to the US economy and has a dynamic of its own.

Your argument that since the USD is falling against the baht so prices of things should fall can only be true if most things in Thailand are denominated in USD or sourced from the USA. This obviously is not the case. Thai labour, land, food, cars, construction materials, clothing, medical supplies.....how much of these things do you imagine is supplied from the US?

From this webpage you can see that the US provides only 6.3 percent of Thailand's imports behind Japan, China and Malaysia.

Prices rise in Thailand for many reasons, but overall, inflation is persistent. As you can see from Xinhua News, the increase in Consumer Price Index for the year to June 2010 was 3.3 percent.

From this webpage, you can see a chart of CPI increases for the last 30 months or so.

When comparing Sep with Nov hotel prices, you need to consider that High Season rates usually kick in around October.

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Japan is not a typical example. The Yen has been rising constantly since 1983 and the US$ is now worth less than 1/3rd what it was then. Deflation has been caused by the Japanese propensity to save and reduce personal consumption. The Japanese government has tried all sorts of measures to increase domestic spending, but none of it has worked. I know of no other county with similar economic statistics.

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Isn´t that a rather typical American view? As Icon and many others have written, the rate of exchange for USD has NO implication on the costs in any other country - unless we talk about goods imported from USA. A bad value for USD is just the result of "bad job" in the US of A. So - work harder :-)

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U.S Dollar weakness should eventually have some bearing on Hotel rates as this loss of strength inhibits travel and therefore capacity.

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US travellers make up only a small percentage of travellers in Thailand. Other currencies have been rising fast against the dollar, including Australia, Japan and many Asian countries. Even the Euro is up 10% in the last few months. So whilst the number of American tourists may decline, the slack will be made up by visitors from other countries There is therefore zero incentive for hotels to reduce rates. Americans have to start realising that their currency will not be the world's currency of choice for much longer.

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-- Don't many of the world's Central Banks hold USD. in one form or another?
- Were I holding assets that I saw to be depreciating rapidly then, at least, I'd start to be concerned.
-- I write as a non-economist.

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Indeed, that is probably the only big reason why the US Dollar is not declining even faster.

The Chinese, Japanese, Saudis etc, are stuck with loads of USD. While the IMF reports that they are gradually reducing their holdings, nobody wants to do so quickly lest it triggers a collapse in the value of the USD.

Yet, everybody (other than some Americans) knows that the future will be one in which the USD is not dominant. The big, big problem is how to get to there from here without chaos in the interim.

The Chinese seem to be parlaying their holdings of USD into purchases of mineral rights and mining companies all over the globe, thus gradually trading their depreciating dollar assets for strategic ones. I'm not sure what the other countries are doing.

But until the Chinese and others have substantially reduced their USD holdings, they would obviously not want a significant depreciation of the Dollar.

Fortunately, the US government does not want a collapse in the value of the USD either. The Fed can actually engineer one whenever they wish by printing money to make up the US government's deficits. But once they do that, global confidence in the US Dollar as a store of value will collapse.

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On the Gaybutton board, I noted in a recent post that by the late 1990s, the average price of a drink in a Soi Twilight bar was 200 baht. Today, 10 - 11 years later it is 250 baht.

Let's look at how much it costs a European, a Chinese, a Japanese and an American.

In 1999:
1 USD bought 0.84 Euros
1 USD bought 8.28 Yuan
1 USD bought 112 Yen
1 USD bought 37.5 Baht

(all figures roughly averaged for the year)

As of 8 October 2010:
1 USD buys 0.72 Euros
1 USD buys 6.67 Yuan
1 USD buys 82 Yen
1 USD buys 30 Baht

Therefore the drink in a Soi Twilight bar, which was 200 baht in 1999, cost the tourist 11 years ago
4.48 Euros
44.1 Yuan
597 Yen
5.33 USD.

Today, that same drink costs 250 baht, which translates to these prices for the present-day tourist:
6.00 Euros
55.6 Yuan
683 Yen
8.33 USD

In other words, the drink has, over 11 years, increased in price by:
25 % for the Thai customer
34 % for the European customer
26 % for the Chinese customer
14 % for the Japanese customer, and
56 % for the US customer.

For the non-American customer, the drink price increasing 14 - 34 percent represents an inflation rate of about 1.3 to 3.2 percent per annum, which is not extraordinary.

The outlier and, unfortunately, the one who is hurting, is the US tourist. From his perspective, everything outside the USA is getting significantly more expensive.

That said, there will be ups and downs. The US Dollar will recover somewhat over the next few months or years, though the long term trend, I'm afraid, almost surely points down.

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According to most experts USD will continue to fall against most other currencies. According to a recent report from Goldman Sachs USD to EUR will in one year from now be 1,55 (today 1,39)
The good thing is that visits to USA will be cheap again

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