Export Competitiveness at Risk
Roong Sanguanruang, senior director of global markets planning at Bank of Ayudhya, warned that if the baht breaks through the 32-per-dollar level, it would pose significant obstacles to Thai exports.
The currency is expected to trade within a 32.25-32.85 range this week.
“We see potential for the baht to strengthen beyond 31 per dollar in the fourth quarter, as US trade protection measures will likely make the American economy more sensitive and increase the probability of Fed rate cuts,” Roong said.
The analysis suggests that Thailand can no longer rely solely on exchange rate advantages to boost exports.
Government intervention may be necessary to support industries affected by currency fluctuations, with assistance potentially needed on a product-by-product basis.
Regional Currency Trends
Asian currencies broadly strengthened on Monday, with Malaysia’s ringgit leading gains of nearly 1% against the dollar to 4.233 ringgit per dollar. Indonesia’s rupiah and Taiwan’s dollar also posted strong gains of up to 0.7%.
The dollar fell more than 1% on Friday following disappointing US employment data, which reinforced market expectations of Fed rate cuts in September.
Christopher Wong, currency strategist at OCBC Bank, noted that aggressive dollar selling has lifted Asian currencies as markets bet heavily on Fed policy easing.
The focus now shifts to monetary policy decisions across Asia, with central banks in Japan and Singapore having kept rates unchanged last week. India’s central bank meets Wednesday, whilst Thailand’s monetary policy committee convenes next week.
Thailand’s central bank is expected to cut rates 2-3 times this year, potentially bringing the policy rate down to 1%, though analysts consider a reduction to zero percent unlikely in 2024.
The currency dynamics reflect broader global economic shifts, with the so-called “US exceptionalism” that previously supported the dollar now being questioned following weaker economic data.