(Dec 15): Thai authorities are ramping up efforts to curb the baht’s strength after the currency climbed to a four-year high amid record gold prices and peak tourist season.
The government plans to ask state-owned firms to accelerate imports and repay foreign debts, Finance Minister Ekniti Nitithanprapas said Monday (Dec 15), adding he is discussing the currency’s rally with Bank of Thailand Governor. The central bank is also tightening oversight on gold traders’ currency transactions.
The latest measures underscore policymakers’ growing unease with the currency’s persistent strength, which has hurt the country’s key export and tourism sectors. The baht has gained more than 8% this year to trade around 31.44 per dollar on Monday, its strongest since June 2021.
“In the current economic environment, a baht that is too strong creates impact — it’s simply unacceptable,” Ekniti said. “As a net exporter, our economic structure is not ready to absorb this degree of currency volatility.”
The baht has rebounded from a four-month low in October as gold prices regained momentum and tourist arrivals improved. Capital inflows have also increased after the Federal Reserve reduced interest rates, Ekniti said.
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Ekniti said the currency’s strength will likely be a topic of discussion at the BOT’s policy meeting on Wednesday. The central bank is expected to lower benchmark interest rates by 25 basis points to 1.25%, according to a Bloomberg survey, after keeping it on hold in October.
“We see the excessive baht strength as unwelcome given sluggish growth, disinflation, and political uncertainty,” Wee Khoon Chong, a senior strategist at BNY, wrote in a note to clients. “Baht strength is one reason we still see easing risk in 2026.”
The baht’s rally may lose some steam as an ongoing border clash between Thailand and Cambodia undermines investor confidence. Political risk is also set to weigh ahead of an election, which may be held early February.
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Still, the baht is likely to continue to benefit from a softer US dollar environment and positive fourth-quarter seasonality, Barclays Bank plc strategists including Audrey Ong wrote in a note to clients. That said, “baht political risk premium could build into the new year should it take time to form the new government”.
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