Photo courtesy of Bangkok Post

 

Thailand's central bank may implement multiple interest rate cuts this year to buttress the economy if looming US tariffs render Thai goods less competitive. Experts suggest that without intervention, the Thai export sector could face significant challenges.

 

Kanjana Chockpisansin, leading the research on banking and finance at Kasikorn Research Center (K-Research), revealed that the Bank of Thailand's Monetary Policy Committee (MPC) is likely to approve at least one more rate cut before the year's end. However, the situation could call for additional reductions.

 

"If the US imposes higher tariffs on our exports compared to those from other regional economies, it could severely impact Thailand’s economic outlook in the second half of the year," Kanjana explained.

 

For Thailand, maintaining competitive US tariffs is crucial. Failure to do so might lead to slashed exports and dwindling private investment, while consumers could tighten their spending. With the government’s fiscal budget already stretched, stimulating growth through increased spending could be challenging, she cautioned.

 

The MPC is set to convene thrice more this year—in August, October, and December—to contemplate rate cuts from the current 1.75%.

 

The Thai baht weakened to 32.68-32.70 against the US dollar following the Federal Reserve’s recent decision to keep US interest rates steady at 4.25-4.50% for the fifth straight meeting. Fed Chair Jerome Powell indicated that the US central bank is cautious about cutting rates as it assesses President Donald Trump's tariff policies and their inflationary impact.

 

"The Fed is unlikely to alter rates in September, with October or December being more probable," added Kanjana.

 

In light of potential economic slowdown due to US tariff implications, Asia Plus Securities anticipates the MPC might reduce rates by 25 basis points as soon as August. The brokerage noted, "Fiscal measures can’t yet fully bolster the economy, and Thailand’s inflation has declined for three consecutive months by 0.25% year-on-year."

 

Given the strengthening US dollar and robust economic data from the US, K-Research forecasts the baht could weaken further to 33.70 against the dollar in the latter half of 2025, according to Kanjana.

 

This economic backdrop demands vigilant monetary policy adjustments. With global economic uncertainties, the Thai economy’s resilience hinges on strategic interest rate decisions and favourable tariff negotiations. Balancing these elements will be critical to ensuring sustained growth in an increasingly competitive international market.

 

  Adapted by ASEAN Now from Bangkok Post 2025-08-01

 

2 hours ago, snoop1130 said:

Given the strengthening US dollar and robust economic data from the US, K-Research forecasts the baht could weaken further to 33.70 against the dollar in the latter half of 2025, according to Kanjana.

 

 

Want to see it back at 35.

2 hours ago, snoop1130 said:

Thailand's central bank may implement multiple interest rate cuts this year

Given they're already down at 1.75% there's not an awful lot of slashing to do!

4 hours ago, snoop1130 said:

Given the strengthening US dollar and robust economic data from the US, K-Research forecasts the baht could weaken further to 33.70 against the dollar in the latter half of 2025

At 33.70, the Thai Baht would still be overvalued by a considerable amount. With the local economy as weak as it is, I find it hard to believe that the THB isn't trading closer to 37 or 38 to the USD. With so little to offer in the way of trade, tourism and record high household debt - can the THB really be that strong? It makes little if any sense. Regarding tourism, the Viet Nam Dong is a huge winner over Thailand's overvalued currency by comparison (from a tourist's perspective). Japan's yen is still attractive - though not as cheap as it was a year ago.

Does anybody have any speculative opinions as to how this might affect the value of the Thai baht, if implemented? 

 

 

More bad news for the GBP

They MAY set up the interest rate to strengthen the baht. I think is what they will do

20 hours ago, snoop1130 said:

Thailand's central bank may implement multiple interest rate cuts this year to buttress the economy if looming US tariffs render Thai goods less competitive. Experts suggest that without intervention, the Thai export sector could face significant challenges.

Rather than negotiate a recyprocol trade deal... Go Thailand.

20 hours ago, snoop1130 said:

Given the strengthening US dollar and robust economic data from the US, K-Research forecasts the baht could weaken further to 33.70 against the dollar in the latter half of 2025, according to Kanjana.

Let's hope this will really happen. But I am sure Thailand will do something? to keep the Thai baht strong. 

On another note. Thailand would have had a better deal had they not wasted time trying to negotiate a deal that suits both the US and Thailand. Now they will have to make adjustments without any negotiating power to aid them. 

Lowering rates usually leads to lower currency value,

but not always , and with teflon baht , nothing is sure.

 

But go ahead, I keep minimal hostage money in the bank.

Back to 400k for 7 months.

4 hours ago, hotchilli said:

Rather than negotiate a recyprocol trade deal... Go Thailand.

Asleep at the wheel really.

3 hours ago, FlorC said:

with teflon baht , nothing is sure.

For what it's worth, my own sense (and from what I've read of other posters) is the THB is being propped up for the benefit of a small minority of wealthy Thais. Still can't see how they gain. Exports, already weak, just cost more. Maybe it benefits the owners of all the big name foreign franchises, or tourism and the hotel owners in some way - but even that doesn't make sense to me.. 

Thailand has insane import taxes and manipulates the Baht.

24 minutes ago, ronnie50 said:

For what it's worth, my own sense (and from what I've read of other posters) is the THB is being propped up for the benefit of a small minority of wealthy Thais. Still can't see how they gain. Exports, already weak, just cost more. Maybe it benefits the owners of all the big name foreign franchises, or tourism and the hotel owners in some way - but even that doesn't make sense to me.. 

A strong baht surely means its cheaper for elites to buy assets from other countries like NY or London , far east etc be it shares ( nice dividends), good property for long term investment. Its capital chasing more capital for better and future returns. The downside it effects exports and tourism as foreigners are getting smaller amounts for their currency.   

9 hours ago, ronnie50 said:

Asleep at the wheel really.

A common occurance

Okay this won't be liked, but flame away. First, an important caveat - I don't like Thaksin any better than the flamers - and I do wish he'd go away because he's yesterday's man (at best).

 

But I don't have illogical hatred for him, like some of the nationalists and ultraconservatives. But for those who were here post 1997 tiger currencies' crash, which Thai government since then has actually produced anything positive for the people of Thailand? Thaksin's majority government did, in fact, do several good things - including the 30 baht access to health care. Which administration since then - military and quasi-democratic - has done anything positive for the masses? I'm not advocating for Thaksin's daughter. The country is in a real mess, partly thanks to her (can't say anything about court decisions here), but what's needed is dissolution of parliament and let the young 'People's Party' (aka Move Forward Party) take the wheel if they strike a majority in the next election. Waiting for another coup is a really, really, stupid idea.

5 minutes ago, ronnie50 said:

Okay this won't be liked, but flame away. First, an important caveat - I don't like Thaksin any better than the flamers - and I do wish he'd go away because he's yesterday's man (at best).

 

But I don't have illogical hatred for him, like some of the nationalists and ultraconservatives. But for those who were here post 1997 tiger currencies' crash, which Thai government since then has actually produced anything positive for the people of Thailand? Thaksin's majority government did, in fact, do several good things - including the 30 baht access to health care. Which administration since then - military and quasi-democratic - has done anything positive for the masses? I'm not advocating for Thaksin's daughter. The country is in a real mess, partly thanks to her (can't say anything about court decisions here), but what's needed is dissolution of parliament and let the young 'People's Party' (aka Move Forward Party) take the wheel if they strike a majority in the next election. Waiting for another coup is a really, really, stupid idea.

 

Would agree in general....no intention of flaming.......the 30p health care is/was very good......but I'd be hard pressed to use that to justify Thaksin, his sister and then his daughter's time in power as being seen in anyway as a success......just more Thai politicians Lording it and enriching themselves......but then again, they all do that.