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Coins More Popular than Bank Notes in Thailand
By Richard Giedroyc

Signs of a weak economy can be seen everywhere. When people begin breaking into their proverbial piggy banks to spend coins rather than use higher denomination bank notes this should be an indication of hard times.

It's difficult in Thailand to determine which is the better economic indicator - the increasing number of bank notes recently being exchanged for coins or as the July 27 Bangkok Post newspaper put it, "Mama instant noodles can be as reliable a gauge as any for economic trends - when times are bad, people cut back spending in favor of a classic, cheap Thai comfort food."

I'll keep the instant noodles urban legend in mind if I ever publish a second edition of Superstition, Urban Legends and Our Money.

Regardless of your choice of leading economic indicators the facts, according to the Treasury Department of Thailand, are that between seven million and eight million coins are now being returned each month to that department as compared to between three million and four million coins during more stable economic times. There is also a significant increase in the use of 10-baht coins in circulation although the use of 25- and 50-satang coins (It takes 100 satang to equal one baht) does not appear to be increasing.

An unnamed Treasury official told the Bangkok Post, "People are bringing out their coin savings for everyday use, a sign of the troubling times. Normally people will throw their small change into a drawer or put it in a coin bank without a second thought. That we're seeing more use and coin exchanges shows how hard times are right now."

The 10-baht coin is the highest denomination coin currently in circulation in Thailand, prompting officials to consider if a 20-baht denomination should be introduced while phasing out the bank note of the same denomination at the same time. One source indicated it is believed the coin would last for about 10 years in circulation, while the bank note has a significantly lower average life span.

The Treasury Department takes the higher than normal return of coins to the Treasury as good news. The price of the metal required to strike new coins is increasing, but Thailand may be able to decrease its coinage production for 2009 due to the economic downturn. There have been past problems with coinage supply and demand in circulation. As an example, each month about 10 million 25- and 50-satang coins are released into circulation. Only about one million of these, the lowest denomination coins in use, come back later to be exchanged for something else.

According to the Bank of Thailand, the domestic economy for the first quarter of 2009 contracted 7.1 percent when compared to the first quarter of 2008. The central bank is now forecasting a contraction for calendar year 2009 of between 3 and 4.5 percent when compared to the economy for all of 2008. Perhaps this is bad news for the economy, but it is good news for collectors as well as for the bank if this means fewer coins will be struck for circulation during 2009.

According to the Treasury Department, there is an estimated 17 billion coins normally in circulation. About 70 percent of these coins are the 1-baht denomination, this being the workhorse coin of the economy. Thailand also issues coins in denominations of 25 and 50 satang as well as 5 and 10 baht. Bank notes are issued in denominations of 20, 50, 100, 500, and 1,000 baht.

The most recent edition of the MRI Banker's Guide to Foreign Currency indicates it takes 35.37 baht to equal one US dollar.


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