The baht is currently at a satisfactory level and supporting exports, Deputy Finance Minister Paopoom Rojanasakul said on Thursday, as Thailand’s currency reached a three-month low against the dollar.
The depreciating baht is competitive for trade and its movements have been in line with those of regional peers, Mr Paopoom said as the currency hovered around 35 to the dollar.
“The baht is weak due to many factors, but it is at a comfortable level,” he said.
Mr Paopoom said he would like to see the baht stay at 34.50 to 35, which would be appropriate for exports.
In any case, he said, the Bank of Thailand will need to monitor volatility in the currency, which has weakened by 2.8% against the dollar so far this year.
In the longer term, the baht is poised to become one of the most vulnerable emerging market Asian currencies as Donald Trump returns to the White House, given Thailand’s heavy reliance on trade.
The baht is also highly sensitive to the Chinese yuan and one of the most overvalued Asian currencies on a trade-weighted basis, according to data compiled by Bloomberg.
Data on emerging market currency moves in 2018, following Trump’s tariff announcements early that year, also portends choppy months ahead for the Thai currency.
Meanwhile, the Philippine peso and Indian rupee are showing signs that they would be more resilient to Trump’s policies, which are expected to include heavy tariffs and tax cuts. These currencies were among the least affected when the dollar index rose in October as investors priced in US election risks.
Asian currencies may slump further if the dollar extends gains due to Trump policies that fuel US output. Early market reactions to the US election indicate the prospects of trade-reliant nations are particularly more vulnerable.
“The timing and degree of tariff implementation may matter, and these are still uncertain,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp in Singapore.
Thailand’s openness to trade could be a liability if Trump restricts imports. The country’s trade volume stands at 129% of gross domestic product, among the highest in the region, according to World Bank data. Its top two trading partners are China and the US, which collectively receive one-third of total exports.
Citigroup strategists said this week that the baht and Taiwan dollar appear to be the most exposed in Asia to any across-the-board tariffs.
- Commentary: Trump tariffs spell trouble for Thailand