Economy The Thai Baht Paradox: Currency Climbs as Economy Falters

[webfact]

File photo

 

In a striking turn of events, the Thai baht has recently surged against the US dollar, reaching 32.70 baht per dollar, raising concerns for Thailand's fragile economy.

 

Despite appearing strong, this appreciation is not driven by domestic growth but by global factors like geopolitical tensions and rising gold prices. Experts warn this trend poses significant challenges, especially for the Thai export sector, a crucial component of the country's economic growth.

 

Kanchana Chokpaisansilp from Kasikorn Research Center attributes the baht’s strength to international gold price increases and a weakened US dollar due to domestic uncertainties and Moody's recent downgrade.

 

These factors contribute to shifting capital markets that favour the Thai currency but pose a policy conundrum for authorities pegged with managing economic fragility without concrete domestic stimuli.

 

Sanguan Jungsakul from Krungthai Bank highlights the baht's unique position, appreciating rapidly due to short-term speculative flows rather than solid economic fundamentals.

 

This, coupled with the surging gold prices, up by more than 27% year-to-date, has resulted in increased demand for baht globally, despite similarities with other Asian currencies that possess larger dollar reserves.

 

The appreciating baht also signals a rise in foreign reserves, now tottering on the previous high of USD 259 billion. Analysts anticipate potential interventions by the Bank of Thailand to steady the currency’s volatility.

 

Wachirawat Banchuen from Siam Commercial Bank points to external factors like rising oil prices and potential US-Japanese negotiations influencing this trend, while noting a lack of domestic recovery to justify it.

 

Despite a seemingly robust currency, foreign investment flows into Thailand show little upward trend, impacting exporters unfavourably. Kriengkrai Thiennukul from the Federation of Thai Industries raises concerns about the baht’s volatility affecting export prices and competitiveness.

 

Exporters are forced to absorb currency fluctuation losses, rendering long-term sustainability precarious without market adjustments.

 

Wisit Limluecha from the Thai Chamber of Commerce criticises the baht’s appreciation as misaligned with real economic performance.

 

Suggestions include increasing cross-border trade in baht and utilising multiple currency agreements to reduce volatility exposure. While these strategies offer potential relief, significant costs to businesses remain inevitable, reducing profit margins and competitiveness.

 

As the baht surges unexpectedly without substantial domestic support, Thailand faces the urgent task of navigating a volatile currency environment that threatens to destabilise an already fragile economic outlook.

 

The juxtaposition of the strong baht against weak economic fundamentals paints a challenging picture for Thailand as it seeks to sustain its export sector amidst global financial fluctuations.

 

  Adapted by ASEAN Now from [source] 2025-05-23

 

 

[BayArea]

31 minutes ago, webfact said:

In a striking turn of events, the Thai baht has recently surged against the US dollar, reaching 32.70 baht per dollar,

stocks are going up, tariffs stabilizing, and US inflation is trending down yet the greenback is weaken against the mighty baht!  🤣🤣🤣

[ozz1]

Its about time to devalue the baht or its going to cost them bigtime in tourism and exports  but the elites running this country don't care their money buys more overseas

[ikke1959]

The results of manipulating the currency here in Thailand.. The greed will bring the country down.

[topt]

1 hour ago, BayArea said:

stocks are going up, tariffs stabilizing, and US inflation is trending down yet the greenback is weaken against the mighty baht!  🤣🤣🤣

I think it is a little more nuanced then that......

From Reuters re yesterday finish -

https://www.reuters.com/business/us-stock-futures-muted-trumps-tax-bill-stokes-debt-concerns-2025-05-22/

 

Quote

The benchmark S&P 500 and the Dow Jones Industrial Average ended flat, while the Nasdaq edged higher. All three major Wall Street indexes had posted their biggest single-day percentage drops in a month on Wednesday as Treasury yields spiked on U.S. debt worries.

 

[whiteman]

Thailand's gold reserves currently stand at 234.52 tonnes. In terms of value, considering what the USA  Russia China India have in store this is a pittance

[KireB]

1 hour ago, ikke1959 said:

The results of manipulating the currency here in Thailand.. The greed will bring the country down.

And how exactly is the Baht manipulated? Could you explain your claim?

[edwinchester]

Considering how much the US Govt intends to borrow to fund the massive tax cuts for the richest 1% I'm not surprised the dollar is headed down. Couple that with foreign nations holding back on their US investment as nobody has a clue on what Trump may do next as well as selling their US debt then the US economy is not in a good place for the foreseeable future.

[JackGats]

3 minutes ago, edwinchester said:

Considering how much the US Govt intends to borrow to fund the massive tax cuts for the richest 1% I'm not surprised the dollar is headed down. Couple that with foreign nations holding back on their US investment as nobody has a clue on what Trump may do next as well as selling their US debt then the US economy is not in a good place for the foreseeable future.

This thread is about the Thai currency, not about Trump or the USD.

[edwinchester]

Just now, JackGats said:

This thread is about the Thai currency, not about Trump or the USD.

It's about the Thb rise against USD so why not give reasons ongoing in the US for said rise?

[Presnock]

4 minutes ago, edwinchester said:

It's about the Thb rise against USD so why not give reasons ongoing in the US for said rise?

No matter what you write about, there will be someone on this forum that will whine about your comment as that seems the only real constant that I see regularly.  

[cdemundo]

7 minutes ago, JackGats said:

This thread is about the Thai currency, not about Trump or the USD.

For most, the value of the THB is only an issue when exchanged with other currencies.

So issues on the other side of the exchange do enter in to the discussion.

[FlorC]

5 hours ago, webfact said:

Despite appearing strong, this appreciation is not driven by domestic growth but by global factors like geopolitical tensions and rising gold prices

I while ago I highlighted the relation between THB and gold and replies here were that I was wrong.

Since then 2 articles here that confirmed the relation between the two.

 

When I'm glad gold goes up , I get the bummer that the THB/euro is worse again.

[JackGats]

14 minutes ago, Presnock said:

No matter what you write about, there will be someone on this forum that will whine about your comment as that seems the only real constant that I see regularly.  

I see another constant, turning any thread into a discussion of Trump.