The baht’s value is likely to remain firm until the beginning of 2020 amid a weaker dollar and expectations of US monetary stimulus, says Citi Thailand.
Despite lacklustre growth in exports and tourism, short-term foreign capital inflows have caused the local currency to appreciate recently, said Citi Thailand economist Nalin Chatchotitham.
“There is still high sensitivity in terms of currencies and special attention is required, especially for the US dollar, which is likely to weaken due to the US growth outlook markedly slowing,” Ms Nalin said.
As US fiscal stimulus fades, this could prompt the Federal Reserve to cut interest rates in an attempt to shore up economic growth, she said.
Such a scenario would induce some currencies to appreciate in value, including the Japanese yen, the Chinese yuan, the Canadian dollar and the baht, Ms Nalin said.
Citi Thailand forecasts the baht’s value versus the dollar to be in a range of 31.20-31.50 at the beginning of 2020.
Thailand’s GDP is forecast to expand by 3.3% this year as growth momentum is weighed by an economic slowdown and tepid private investment seen in the first quarter, Ms Nalin said.
But economic growth is likely to pick up to 3.7% next year on expectations that exports and tourism will have an opportunity to expand at better rates compared with this year’s first quarter, she said.