Connect with us


Reflecting on currency exposure



Thaiger deals Thaiger deals

PHUKET: If you are a long-term expatriate living in Phuket, Thailand, you have probably seen the Thai baht appreciate significantly against your home currency – a trend that will likely continue for the foreseeable future.

This appreciation (along with an average inflation rate of 2.7% since 2000) makes it increasingly expensive to live in Thailand at a time when you are probably contending with near zero interest rates back home and low cost of living adjustments to your pension.

Fortunately, there are investment strategies that will help you, as an expatriate living in Thailand, to manage or limit your currency exposure risks.

Before you consider investing, you must first determine the level of your currency exposure and risks by answering the following simple questions:

1) Do you divide your time between living in Thailand and living in your home country?

2) Do you foresee returning (or being forced to return) to your home country?

3) Do you still own property in your home country?

4) Do you have other liabilities back home or denominated in your home currency?

5) Do you still need to pay taxes in your home country on your investments or other income?

6) Do you need to disclose offshore investments to your home country’s tax authorities?

If you answered yes to most or all of these questions, then you will need to keep most of your investment portfolio exposed to your home currency and the various offshore investment products marketed to expatriates probably won’t make financial sense.

Americans in particular, need to be careful, due to taxation policies that apply worldwide and increasingly onerous requirements to disclose any kind of offshore accounts, along with the possibility of having to return to the USA to use Medicare for major medical problems.

With the answers to the above questions in mind, a possible investment strategy would be to allocate a portion of your investment portfolio and income to cover any liabilities or expenses you have in Thailand, and another portion of your investment portfolio to cover liabilities or expenses in your home country.

For example: visits to your home country and any liabilities there (taxes, a mortgage on a home, your children’s or grandchildren’s education) should be covered by the return or income from the portion of your investment portfolio exposed to your home country’s currency, while the rest of your portfolio will need to have a more aggressive return to keep up with your liabilities and expenses in Thailand as the baht appreciates.

Fortunately, you do not need to convert part of your investment portfolio into baht and invest directly in Thailand.

Exchange traded funds (ETFs) that trade on major world stock exchanges and invest in emerging markets, such as the iShares MSCI Thailand Index Fund (THD), or invest in foreign currencies can provide an easy way to give your investment portfolio a more aggressive return to keep up with an appreciating baht (and Thailand’s rate of inflation).

Moreover, many ETFs that invest in emerging markets (or internationally) are internally hedged to major world currencies to limit the impact negative currency swings will have on their returns.

However, you will need to be cautious when choosing your investments, as the currency your investment accounts are denominated in may not accurately reflect the actual currency exposure your investments have.

For example: A non-American investor who invests in multi-national company stocks that are either based in the United States or do most of their business there, will actually have an investment portfolio more exposed to the US dollar than to their home currency.

That may actually work out nicely if you are a British investor living in Thailand as the British pound (GBP) has depreciated more significantly against the baht than the US dollar (USD) has over the last decade, but it would be a negative if you are an Australian investor living in Thailand, as the Australian dollar (AUD) has largely kept pace with or has actually appreciated more in value against the baht.

For that reason, and if you are British (or to a lesser extent, American), you may have been better off if a portion of your investment portfolio was focused on Australian stocks or ETFs.

Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand.

He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970-5795 or email:

— Don Freeman


Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Thailand14 hours ago

Unhinged gunman fires 18 shots into school because kids were too noisy

Thailand14 hours ago

Thailand News Today | Raid finds all monks on drugs in Phetchabun temple

World15 hours ago

Iran threatens footballers’ families with prison and torture, security source says

Sponsored22 hours ago

Challenges of starting a business in Thailand as a foreigner

Thailand15 hours ago

Angry Thai man condemns foreigner for not wearing a mask on BTS

Thailand16 hours ago

Thai man commits suicide due to mass govt corruption

Crime16 hours ago

Pattaya loan sharks allegedly abduct and assault young woman

Join the conversation on the Thaiger Talk forums today!
Property News17 hours ago

Nana Overview Guide in 2023

Tourism17 hours ago

Phuket sees over 50,000 Russian tourists in past month

Thailand18 hours ago

Hapless Bangkok gold thief gets caught at a bus stop

Lifestyle18 hours ago

Stop and smell the tulips at Floral Fair 2022 in Bangkok

Thailand19 hours ago

Police seize board game after claims it could cause insurrection in Thailand

World20 hours ago

Mauna Loa, world’s largest volcano, erupts for the first time in 40 years

Tourism20 hours ago

Thailand tourism may see a decline next year

Thailand21 hours ago

Thai govt to crackdown on cybercrime & handout free laptops to poor kids

Drugs21 hours ago

Hundreds of thousands of meth pills seized in Songkhla

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11