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.

[ikke1959]

3 hours ago, KireB said:

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

There is a lot of written about it in past years... the USA has Thailand on the watchlist for these things... 

[StayinThailand2much]

6 hours ago, BayArea said:

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

 

Thailand has huge gold and foreign currency reserves (particularly compared to its GDP), and the gold price is up lately, which might (at least partly) explain it.

[Quentin Zen]

surprised, especially since I thought we would all have the REAL information before the big players.   i figured we were all both economists, politicians, soverign funds, and more!!!    

 

trying to predict these things are impossible.  giving reasons for them are even more useless, since that's old news and might have zero bearing on the future.

 

30-36 is likely just a lot of noise, but buy my book to get the information insiders don't want you to know!!!  I can predict the Thai Bath/Baht to the nearest satang for the next 3938 years.   lol.   

 

oh wait, did you see what the largest bank of XASFADSFAD just did three minutes ago???  wow, I did.  

[madone]

4 hours ago, KireB said:

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

are you kidding?

The central bank has been manipulating the baht since living memory. less so than 20 years ago, but consistently nonetheless.

Do a simple search, educate yourself

[Mavideol]

5 hours ago, ozz1 said:

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

you are correct, they can not devalue yet, the "high So" rich thais have to invest outside Thailand and get their money worth, thus it will take a little more time until all of their money it's out in a safe place, then they will think about the tourism and exports, first things first,

[KireB]

1 hour ago, ikke1959 said:

There is a lot of written about it in past years... the USA has Thailand on the watchlist for these things... 

[KireB]

38 minutes ago, madone said:

are you kidding?

The central bank has been manipulating the baht since living memory. less so than 20 years ago, but consistently nonetheless.

Do a simple search, educate yourself

You educate yourself. "primarily determined by the forces of supply and demand in the foreign exchange market"

The Thai Baht (THB) operates under a managed-float exchange rate regime. This means that its value is primarily determined by the forces of supply and demand in the foreign exchange market, but the Bank of Thailand (BOT), the country's central bank, plays an active role in managing its fluctuations.

[madone]

2 minutes ago, KireB said:

You educate yourself. "primarily determined by the forces of supply and demand in the foreign exchange market"

The Thai Baht (THB) operates under a managed-float exchange rate regime. This means that its value is primarily determined by the forces of supply and demand in the foreign exchange market, but the Bank of Thailand (BOT), the country's central bank, plays an active role in managing its fluctuations.

seems what you posted here just supports my claims, what part of managed is unclear to you?

 

[John Drake]

Question: why does the rising price of gold increase the value of the baht and how does Thailand export so much gold, when there is almost no gold mined in Thailand? I would think Thailand would import much more gold than it buys.

[jas007]

8 hours 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, raising concerns for Thailand's fragile economy.

I'd hardly call it a "striking turn of events," and I would hardly call it a "surge."  

 

In any event, the dollar has been under a lot of pressure lately around the world. A geopolitical temper tantrum, primarily as a reaction to Trump's tariff proposals, coupled with concerns over mounting US debt and the effects of Trump's agenda.  

 

Here's a chart.  A USDX level of 100 is deemed to be a critical level. A break below that level portends trouble. 

So the trajectory is down.

 

For what it's worth, the US Fed isn't the only Central bank playing the money printing game.  It's a race to the bottom, in terms of the world's fiat currencies. 

[Nickcage49]

This government controls their currency as well as they do their water.

[spidermike007]

8 hours ago, BayArea said:

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

Total fiction. Inflation is not going down in the US, the government is desperately trying to demonstrate that fiction, by throwing out fake numbers, but I'm here right now and I could tell you inflation is raging. It's likely closer to 20% than the official figure of 3.1%, sorry but magnesium ore just doesn't mean that much to me in my daily life. 

[hotchilli]

It is what it is... no sense getting all worked up about it.

[spidermike007]

The Thai baht is grossly over inflated, but the confidence in the dollar is extremely weak, and the extreme level of instability that is being created by a circus clown is destabilizing the world's major currency, and Asia is bound to profit from that extreme level foolishness. 

 

In the long run Asia will continue to ascend while the US continues to decline. 

 

Mr. Trump is taking a wrecking ball to the pillars of American power and innovation. His tariffs are endangering U.S. companies’ access to global markets and supply chains. He is slashing public research funding and gutting our universities, pushing talented researchers to consider leaving for other countries. He wants to roll back programs for technologies like clean energy and semiconductor manufacturing and is wiping out American soft power in large swaths of the globe.

China’s trajectory couldn’t be more different.

 

It already leads global production in multiple industries — steel, aluminum, shipbuilding, batteries, solar power, electric vehicles, wind turbines, drones, 5G equipment, consumer electronics, active pharmaceutical ingredients and bullet trains. It is projected to account for 45 percent — nearly half — of global manufacturing by 2030. Beijing is also laser-focused on winning the future: In March it announced a $138 billion national venture capital fund that will make long-term investments in cutting-edge technologies such as quantum computing and robotics, and increased its budget for public research and development.

 

The Chinese electric carmaker BYD, which Mr. Trump’s political ally Elon Musk once laughed off as a joke, overtook Tesla last year in global sales, is building new factories around the world and in March reached a market value greater than that of Ford, GM and Volkswagen combined. China is charging ahead in drug discoveries, especially cancer treatments, and installed more industrial robots in 2023 than the rest of the world combined. In semiconductors, the vital commodity of this century and a longtime weak point for China, it is building a self-reliant supply chain led by recent breakthroughs by Huawei. Critically, Chinese strength across these and other overlapping technologies is creating a virtuous cycle in which advances in multiple interlocking sectors reinforce and elevate one another.

 

Yet Mr. Trump remains blindly fixated on very harmful tariffs. He doesn’t even seem to grasp the scale of the threat posed by China. Before the two countries’ announcement last Monday that they had agreed to slash trade tariffs, Mr. Trump dismissed concerns that his previous sky-high tariffs on Chinese goods would leave shelves empty in American stores. He said Americans could just get by with buying fewer dolls for their children — a characterization of China as a factory for toys and other cheap junk that is wildly out of date.

 

The United States needs to realize that neither tariffs nor other trade pressure will get China to abandon the state-driven economic playbook that has worked so well for it and suddenly adopt industrial and trade policies that Americans consider fair. If anything, Beijing is doubling down on its state-led approach, bringing a Manhattan Project-style focus to achieving dominance in high-tech industries.

 

Mr. Trump’s blinkered obsession with short-term Band-Aids like tariffs, while actively undermining what makes America strong, will only hasten the onset of a Chinese-dominated world.

 

If each nation’s current trajectory holds, China will likely end up completely dominating high-end manufacturing, from cars and chips to M.R.I. machines and commercial jets. The battle for A.I. supremacy will be fought not between the United States and China but between high-tech Chinese cities like Shenzhen and Hangzhou. Chinese factories around the world will reconfigure supply chains with China at the center, as the world’s pre-eminent technological and economic superpower.

 

America, by contrast, may end up as a profoundly diminished nation. Sheltered behind tariff walls, its companies will sell almost exclusively to domestic consumers. The loss of international sales will degrade corporate earnings, leaving companies with less money to invest in their businesses. American consumers will be stuck with U.S.-made goods that are of middling quality but more expensive than global products, owing to higher U.S. manufacturing costs. Working families will face rising inflation and stagnant incomes. Traditional high-value industries such as car manufacturing and pharmaceuticals are already being lost to China; the important industries of the future will follow. Imagine Detroit or Cleveland on a national scale.

 

Avoiding that grim scenario means making policy choices — today — that should be obvious and already have bipartisan support: investing in research and development; supporting academic, scientific and corporate innovation; forging economic ties with countries around the world; and creating a welcoming and attractive climate for international talent and capital. Yet the Trump administration is doing the opposite in each of those areas.

Whether this century will be Chinese or American is up to us. But the time to change course is quickly running out.

[bogozy]

6 hours ago, ikke1959 said:

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

Yes that is true.

The stock exchange manipulators are moving the rate of currencies.

They have well sounded explanations, all times. 

 If the rate go down, or up, they can win. 

The John Smith investor lost his money.

[Stevemercer]

The Thai government has always equated a high Baht to a good economy. Unlike other exporting countries (like Australia) the government never talks the Baht down. Sometimes the Thai central bank fiddles around the edges, but they avoid macro changes that could fundamentally chenge the economy.

 

Even if the bank lowers interest rates (as the government wants) the Thai Baht will stay strong because that is what the government wants.Why can't they have their cake (low interest rates) and eat it as well (strong Baht).