World-Beating Currency Gives Thailand Major Economic Headache - BLOOMBERG

September 12 2019



  • Baht is best performer globally against dollar over five years

  • Growth estimates cut for economy relying on trade and tourism


Thailand’s effort to revive economic growth with more than $10 billion of stimulus faces an obstacle from its surging currency.

The baht has strengthened more than 6% against the dollar in 2019, the most among major Asian currencies, and its appreciation leads the world over the past five years, according to data compiled by Bloomberg.

The climb has hurt tourism and exports, contributing to the weakest economic expansion since 2014 as the U.S.-China trade spat also hits home. The baht is seen as a safe haven and officials will be wary of intervening too much in foreign-exchange markets as the U.S. closely monitors countries’ currency policies, according to Australia & New Zealand Banking Group Ltd.

“Tourism is one of the keys for reviving Thai economic growth, because the industry can turn around quickly,” said Komsorn Prakobphol, a senior investment strategist at Tisco Financial Group Pcl in Bangkok. “But it faces tough challenges as long as the baht strengthens faster than regional peers.”

Bank of Thailand Governor Veerathai Santiprabhob said Tuesday the baht’s appreciation is a big concern for Thai exporters. He’s signaled the central bank may cut its 3.3% economic growth estimate for 2019.


Strongest Gainer

The Thai baht is the top performer against the U.S. dollar over five years

Source: Bloomberg

As of 6 p.m. in Bangkok on Sept. 11

An annual current-account surplus estimated at around $29 billion and near-record foreign exchange reserves of $220 billion underpin the baht. An interest-rate cut and steps to curb some inflows have failed to put a major dent in the currency.

Slowing Growth

Economic growth dipped to a near five-year low partly on easing tourism

Economic growth slowed to 2.3% last quarter, partly on sluggish tourism. Officials hope for a revival after they waived visa fees for some nationalities, and as travelers seek alternatives to Hong Kong amid unrest there.

Market Impact

Slide in shares of electronic parts exporters shows how the baht can hurt

Exporters of electronics components are among firms most exposed to baht swings. The SET Electronic Components Index slid 23% this year as the currency surged.

Foreign Expansion

Thai firms are taking advantage of baht strength to invest abroad

The baht has been resilient despite an increase in foreign-direct investment by Thai firms. As a share of the economy, outbound FDI exceeds its inbound counterpart.

— With assistance by Karthikeyan Sundaram

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Read Comments

Steven Rich
Sep 17, 2018:
Well done

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