Normally arbitrage would equalise the price
ie I send 10,000 pounds at 70 baht to my Thai account and get 700,000 Baht
I then send my money back at 65 Baht (market rate) and I get 10,769 pounds
769 pounds for doing nothing AND no risk! do that once a working day for a year and make 170,000 pounds! That is a profit from doing not much of 11.8 million baht!
Normally what would happen is arbitrage would close this gap quicky as the price to bring money in falls to 65 to match the market rate (or v.v. depending on volume). The price would equalise (except a margin) so that buying and selling baht would result in a small loss NOT a big profit
Why cant I do that? well GETTING access to the money market rate is impossible sitting as an individual in Thailand
Normal Tourist rates (usually less than 15,000 pounds) have a bigger buy/sell spread than the market arte. Eg 65.1/65.2 might be the market rate but a bank would quote 64.5/65.5 for tourists. Usually if you transfer money over 15,000 pounds from a UK bank you get much nearer to the market rates and if over 100,000 pounds you get the market arte (I know as I did that once from UK to Malaysia via USD - as ringet was then fixed to USD - I worked in a Hedge fund and checked the spot price and I got the rate like a big bank would)
So what is happening now is that the Baht is no longer a "free currency" and is being manipulated to favour exports (inc tourists) for the "small business" You are screwed if you send money out though!
Basically there is govt interference and they are setting an unrealistic rate and forcing you to accept a bad rate (if sending money back) so that you cant arbitrage.
I suppose they think the rate will go back but the banks are suffering losses in effect as they are giving you 70 baht to the pound BUT it is only worth 65!
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Originally Posted by kenkannif
^ Yes but what I'm saying is they're quoting 65 for money in or out...but the banks are giving 68-69 for money in or out (I brought money in and got 4 Baht more to the Pound than xe.com are showing).
For sure I can understand if the banks give 65 Baht on money coming in and 70 Baht on money going out...but they're not....that's what's confusing me with xe.com etc.
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Cheers Def.....yeah the banks are cool with the exchange rate but why are xe.com and the others basically lying in regards to the exchange rate???
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Originally Posted by Om Bak
Just a guess, maybe the bank you are using has a different chief currency dealer now. I can go to 3 different banks and get a difference of 2-3baht selling NZD to baht.
Another guess, if you change large amounts alot of banks can give you higher than the retail rate.
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no way! it is just that some banks dont bother or dont want to sell baht to tourists. Any currency dealer who was out by 2-3 baht per NZ dollar would have been sacked and jailed for fraud by now!