Baht’s position will improve as visitors started returning

 Monday, June 27, 2022 

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Thailand

The major drop in the official currency of Thailand – baht, to its weakest in five years may be coming to end as this South East Asian country attracts visitors back once again. As a result, the central bank moves slowly toward increasing rates.


This quarter, the drop of 6 percent in the currency versus the dollar, is worst in three-month performance as the pandemic destroyed the sentiment in early 2020, has occurred simultaneously with the biggest current account shortage in Thailand and still-record-low borrowing costs.


As the policy board of the Bank of Thailand turning more hawkish this month, both of those burdens are expected to get easy and the government untying the travel related restrictions that would boost revenue from international tourists.


EM FX strategist at a Singapore-based marketing company, Galvin Chia, said that once they get more dollar softness, a rise in tourism or hike in Bank of Thailand, there would a capture in this baht decline and a nice rally can be seen.


With the scrapping of the entry pass, management hope that around 1.5 million international tourists will come every month till the last phase of 2022 compared to fewer than 300,000 in April this year. That would go a long way to support the currency keeping in mind that the tourism sector accounted for about a fifth of the economy of Thailand prior to the pandemic.

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