Thai Baht Poised to Strengthen Against US Dollar

The Thai baht is expected to strengthen to 33 against the US dollar in the short term, fueled by growing market confidence in an imminent interest rate cut by the US Federal Reserve, possibly in March. This anticipated move is projected to attract fund inflows, bolstering the Thai currency.

Thai Baht dips further to 37 per dollar

On Wednesday, the baht traded at 34.26-34.28 to the US dollar, experiencing a slight dip from Tuesday’s close of 34.14. This depreciation mirrored the trend observed in other regional currencies, influenced by a rise in US bond yields and increased demand for the dollar.

According to the head of research at Kasikorn Research Center (K-Research), the Thai currency is expected to exhibit wide fluctuations throughout the year, primarily driven by the Federal Reserve’s rate cuts. There is a likelihood of the baht appreciating to 33 against the greenback in the near future.

Thai baht opens weaker at 34.29 to the US dollar
The baht opened this morning (January 3) at 34.29 baht to the US dollar, weaker than yesterday’s closing level of 34.13 baht/dollar. https://t.co/It6ZS0sFnb

— The Nation Thailand (@Thenationth) January 3, 2024

Market expectations point towards the US central bank implementing substantial rate cuts, potentially reaching 1.5 percentage points in 2024. In contrast, K-Research adopts a more cautious stance, forecasting a benchmark rate reduction of 0.75 percentage points within the year.

The trajectory of the Thai baht is closely linked to the weakening US dollar and the Federal Reserve’s policy decisions. Kasikorn Research Center predicts that the Thai currency could conclude the year at approximately 34 baht to the US dollar.

Highlighting Thailand’s economic history from 2015 to 2019, the country maintained a current account surplus of 3.68 billion baht, primarily driven by a surplus in trade and services. During this period, the baht averaged 31 to the dollar. A potential rebound in tourist volume is anticipated to contribute to Thailand’s trade and services surplus once again, further strengthening the baht and attracting additional fund inflows.

-Thailand News (TN)