Thailand: Volatile Baht Predicted in 2023 Amidst Political and Financial Uncertainties

A new financial outlook released on Tuesday said that the Baht has become increasingly volatile, which has also affected foreign investment in Thailand.

financial analysis by Kasikorn Research Center, a research company and a subsidiary of KBank in Thailand, has said that internal and external factors like the US interest rate outlook; the Yuan outlook and views towards China’s economic recovery; and Thai politics, especially in the context of its May 2023 elections has led to a more volatile Baht this year.

The Thai currency has become the second most volatile currency in Asia after the Japanese Yen, although its movements have been aligned with that of other Asian currencies.

Kasikorn Research Center informs that most leading currencies globally have been affected by the US dollar and the Fed’s interest rate outlook. However, the Baht’s increased volatility is also attributed to specific factors in Thailand, including those related to politics, and especially the country’s sensitivity towards global gold prices (which have increased by 12.3 percent). Hence financial analysts need to keep their eyes peeled on the domestic political situation, following the general elections, to ascertain how the Baht performs in the coming months.

In the near future, the Baht is expected to move within a wider range of THB 33.80-35.40/USD over the short term (projection made by KBank) due to uncertainties caused by numerous factors including the US debt ceiling, the Fed’s interest rate outlook, and the political situation in Thailand.

Hence Thailand’s tourism outlook is of great importance this year because if the recovery in Thai tourism is consistent and can be sustained, it will be a boon for the overall Thai economy and also help strengthen the Thai Baht.