Foreign speculators pressure baht
Foreign investors have been heavily speculating on the baht as Thailand's twin deficits this year have pressured the local currency to weaken.
Offshore investors, especially from the US, have been buying two Asian currencies, the baht and South Korea's won.
Foreign investors expect the local currency to further depreciate compared with the dollar, due to Thailand's twin deficits of budget balance and current account, said Kobsidthi Silpachai, head of market research at Kasikornbank (KBank).
According to KBank data, Thailand's current account deficit stood at US$10.3 billion in August.
The bank forecasts the current account deficit would be above $10 billion this year.
The Bank of Thailand has revised the current account deficit for 2021 from the earlier projection of $1.5 billion to $15.3 billion, in line with lower foreign tourist arrivals.
The central bank projects tourist arrivals for this year at 200,000, a decline from the previous assessment of 700,000.
However, the country's reopening plan in November will gradually help curb the current account deficit.
In this scenario, KBank expects foreign investors to stop baht speculation in November and the local currency will gradually pick up in December, Mr Kobsidthi said.
From now on until the end of this year, he expects the baht to fall to the lowest rate at around 34 baht to the greenback, rising to the highest level at 32.4 baht.
KBank forecasts the foreign exchange rate would be 32.75 baht against the dollar by the end of this year.
KBank predicts Thailand's GDP growth rate for 2021 would contract at 0.5% and the country's reopening in Nov 1 would not help contribute much to GDP growth this year because after the reopening it will have only two months before the end of the year.
At the same time, it would take more time before the number of foreign tourist arrivals reaches the 40 million level in 2019.
According to a survey conducted by the United Nations World Tourism Organisation, 58% of the respondents in Asia-Pacific believed international tourism would return to pre-pandemic levels in 2024.
Some 76% of the respondents believed rapid and widespread vaccination rollout is the main factor contributing to the effective recovery of international tourism.
In Thailand, the ratio of those fully vaccinated to the total population is 31.7%, behind 78% in Singapore and 61.7% in Malaysia.
The global ratio is 34.8% and Asia's ratio is 38.1%.