Published on : Monday, July 26, 2021
The Thai baht was once the strongest-performing currency in Asia before the pandemic; however, it has been steadily declining in 2021 and is the worst-hit currency in the region this year.
The Thai baht declined more than 10% against the U.S. dollar year-to-date, as of Monday morning, as per Refinitiv Eikon data.
In 2021, Thailand’s currency is the weakest-performing compared to other major Asia Pacific currencies, according to Refinitiv.
In 2019, before the Covid pandemic, there were concerns about the strengthening Thai baht, which was supported by its large trade surplus. A stronger currency makes a country’s exports more expensive, making them less attractive in global markets.
The sharp decline in tourism numbers has, in fact, multiplied the “Covid devastation” on Thailand’s economy.
As of May this year, Thailand had only 34,000 tourists compared to more than 39 million in 2019, according to its tourism ministry data as well as the World Bank.
The Southeast Asian nation relies a lot on tourism dollars for economic growth. Tourist spending accounted for about 11% of Thai GDP in 2019, before the pandemic. Lesser number of tourists also signifies lower demand for the Thai baht.
Thailand’s over-reliance on tourism is going to be “very challenging” for the country as it reopens for tourists while still battling with the pandemic, said Nomura’s Chief ASEAN Economist Euben Paracuelles.
Tags: Lack of tourism