Tourists in Bangkok, Thailand. (Photo: AFP/VNA) Hanoi (VNA) – Thailand’s domestic currency (baht) is experiencing its worst January since 2020 with a loss of nearly 4% versus the US dollar, and heavy outflows signal more downfall for the currency.
The baht has become the biggest loser this year as global funds shun Thai assets amid a debate between with the nation’s government and central bank on how to stimulate the flagging economy, according to Bloomberg.
Thai Deputy Finance Minister Julapun Amornvivat said that the government last week was concerned that borrowing costs hovering at a 10-year high are holding back recovery. That’s after the central bank pushed back against rate cut calls, saying lowering borrowing costs can’t fix structural problems in the economy.
Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore, said that the baht will continue to feel the drag from the growing political backlash against its current level of policy rates.
He said he’s looking for dollar-baht to trade in a range of 36.0-36.50 in the coming weeks. Thai baht (THB) closed at 35.63 last week.
Foreign investors’ net equity outflows have reached 808 million USD this year totally while Thailand’s benchmark stock index fell to a three-year low last week amid growth concern. The country’s debt isn’t proving attractive either as the market saw outflows after recent bond defaults and a major accounting scandal shook investors.
Nicholas Chia, a macro strategist at Standard Chartered Bank SG Ltd, said that the ongoing recovery in Thailand’s tourism is baht-positive. However, per capita tourist spending and Chinese arrivals in 2023 lagged pre-pandemic levels./.
