Thai Baht Expected to Slide to 35.50 per Dollar by 2025

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The Thai baht is forecasted to weaken, reaching 34.50 to the US dollar by the end of this year and sliding further to 35.50 in 2025, according to Kasikorn Research Centre (K-Research). This comes amid new US policies expected to pressure the Chinese yuan.

 

The baht, currently at a three-month low of 34.61, fell after the US dollar strengthened following a 25 basis points interest rate cut by the Federal Reserve. The Bank of Thailand has kept its policy rate unchanged at 2.25% as of December 18.

 

Kanjana Chockpisansin from K-Research said, “Despite the Fed's rate cut, a strong US outlook has bolstered the dollar, weakening Asian currencies, including the baht.” The Fed now predicts only two rate cuts next year, down from four earlier, aligning Thai expectations to see two cuts in 2025.

 

As of 2023, the baht dropped by 1.2%, while the Chinese yuan and Japanese yen fell by 2.7% and 9.3%. The South Korean won saw the biggest decline at 11%, whereas the Malaysian ringgit gained 2%.

 

 

Next year, the yuan is expected to further weaken with China's slowing economy and potential US trade impacts. K-Research foresees the baht ending at 35.50 to the dollar in 2025.

 

Recent market changes include a drop in Thai stocks and a weakening yen amid unchanged borrowing costs in Japan. Gold prices dipped to nearly US$2,600 per ounce, while Bitcoin remained stable above US$100,000.

 

Economist Pipat Luengnaruemitchai predicts the Bank of Thailand will make three rate cuts in 2025, reducing policy rates to levels from 2015-2018, aiming to ease financial conditions amid inflation and slowing domestic demand.

 

-- 2024-12-20