According to Bloomberg, the Thai baht exchange rate against the US dollar has increased by more than 6% this year, the largest among major Asian countries. Against the backdrop of the decline in Asia-Pacific currencies such as the Korean won and the RMB, this performance is undoubtedly particularly eye-catching, and the current rise of the Thai baht shows no sign of a stop. According to Bloomberg, the Thai baht exchange rate against the US dollar has risen by more than 6% this year, the largest among major Asian countries. Against the backdrop of the decline in Asia-Pacific currencies such as the Korean won and the RMB, this performance is undoubtedly particularly eye-catching, and the current rise of the Thai baht shows no sign of a stop.
analysts pointed out that two major factors have brought about a strong increase in the Thai baht. First, the Thai baht has become the first choice for safe-haven among Asian currencies, followed by domestic factors in Thailand.
Bloomberg research shows that when the Sino-US trade tensions escalated in the past three times, the trend of the Thai baht was not affected. Among the eight major Asian currencies, the Thai baht ranks second to last in correlation with the renminbi fluctuations.
On August 7, the central bank of Thailand announced its first rate cut in four years, 25 basis points, which surprised economists, but is already in the market's view of its prospects.
. From this month's situation, the 6-month implicit interest rate for the Thai baht is only 9 basis points lower than the 1.5% policy interest rate, which means that the prospect of further relaxation is much smaller than the 56 basis points before the August meeting, and most economists also believe that they will remain unchanged.
Although the Bank of Thailand is still worried that the baht is too strong, the tone of the Fed's interest rate meeting this month is more hawkish than expected, helping boost the dollar and strengthening the possibility of Thailand's decision-making.
The central bank may be more inclined to counter the uptrend of the Thai baht in other ways to limit inflows, for example, they have been reducing the supply of short-term bonds in recent months and cutting the limit on non-resident Thai baht accounts. However, these policies have hardly achieved results and there is no sign that such policies can be successful in the future.
Source: Global Forex Network
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