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USD/THB has remained steady around 30.0 despite Bank of Thailand’s measures late last year and the domestic political situation. Growth headwinds are worrying. The Thai baht is expected to trade in a tight range this year, with gradual appreciation from Q2 onwards, strategists at ANZ Bank brief. 

Key quotes

“Persistent headwinds to growth from virus-related curbs remain a key. A second pandemic wave late last year meant that the Thai economy is off to a weak start this year, while high economic dependence upon tourist arrivals means that a strong growth rebound will have to wait longer.”

“Thailand’s current account surplus has fallen, as imports have gradually gathered momentum. However, we expect it to remain sizable enough to not drag the baht much in the near-term. In addition, a gradual return of tourists is forecast to begin in Q3, which will be a positive for the currency.” 

“We are watchful of rising US yields. Though they are not an immediate threat to the baht or Asian currencies in general, a significant break higher might lead to debt outflows and therefore currency weakness.” 

“We expect the baht to trade in a tight range, with the risk complex still biased towards a mild weakening in the near -term. Beginning Q2, we expect gradual appreciation, taking USD/THB to 30.00 by the year-end.”

 

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