We are, however, less optimistic about the baht's long-term outlook, especially as the key fundamentals that originally supported the currency have deteriorated.
A smaller current account surplus, portfolio outflows and lesser foreign direct investment (FDI) inflows are among the reasons why we think that the baht remains on a depreciatory trend.
Looking at the short-term outlook (3 to 6 months), we note that the baht has depreciated by nearly 7% in the year to date, making it one of the worst-performing currencies in the region. For now, movements in the baht will rest mostly on the interest rate trajectory, both domestically and in the US.
An eventual stabilisation in monetary conditions will pave the way for the currency to stabilise. We forecast it to end the year at 37.50, about 2.0% weaker than the current spot rate of 36.78.
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Full story: https://www.bangkokpost.com/business/ge ... teriorated
By all normal economic standards, THB fundamentals have been deteriorating for the past decade since the junta seized power. Over 40 baht to the greenback again as it was from 2000 to 2005 would be marvellous!
