Kasikornbank (KBank) expects the baht to briefly dip to 31 against the US dollar in April because of dividend repatriation by foreign investors.
Dividend payments of SET-listed companies are scheduled from March to May.
For this year, dividend payments to foreign investors are expected to peak at 20.6 billion baht from April 19-23, with total dividend payments to offshore investors estimated to top 33.7 billion for the whole month in April.
Dividend repatriation is the key factor depreciating the local currency to around 31 baht per dollar next month, said Kobsidthi Silpachai, KBank's head of capital markets research.
Thailand's lower current account surplus is because of a significant decline in foreign tourist arrivals, putting pressure on the baht against the greenback.
The Bank of Thailand's Monetary Policy Committee meeting on Wednesday confirmed a lower current account surplus supporting a weaker baht against the dollar.
A sharp fall in the number of foreign tourist arrivals because of the Covid-19 outbreak would weaken the country's current account surplus, according to the central bank, prompting it to slash its growth forecast this year to 3% from 3.2% while lowering its estimate for international travellers from 5.5 million to 3 million.
KBank, the country's second largest lender by total assets, predicts the local currency would resume appreciation in the second half as a result of global economic recovery, which would trigger foreign capital inflow to Asia including the Thai markets. Global economic recovery would also support Thai export growth.
The Bank of Thailand upgraded its export growth forecast to 10% this year from 5.7% thanks to improving external demand.
At the same time, the US Federal Reserve is expected to ease its treasury purchase plan faster than expected. With this scenario, the country's current account would turn positive, according to KBank.
"We forecast the baht will be firmer to 29.75 to the dollar at the end of this year, a slight adjustment from 29.25 baht earlier," Mr Kobsidthi said.
The baht was quoted yesterday at around 31.09 baht against the US dollar.
Regarding structural economic problems, he said Thailand needs to improve domestic investment, balancing the country's savings to reduce the current account surplus. This solution requires proper foreign exchange management, said Mr Kobsidthi.
Before the Asian financial crisis in 1997, domestic investment represented 43% of GDP. The ratio has declined to 29% now.
Meanwhile, the country's exports have increased their global market share at a slow pace the past several years, while Vietnam's shipments have thundered ahead, he said.
As of Nov 30, 2020, Thailand's exports made up only 1.44% of the world market, edging up from 1.28% in the same period of 2011.
Vietnam's exports surged to 1.9% of the world market in the same period from only 0.5% in 2011.