The rally in the Thai baht this year looks primed to peter out on escalating global trade tensions and a slump in the nation’s equities.
The baht has gained 2.7% over the past month to hit 33.817 per dollar on Thursday, marking the best performance among Asian currencies. But it may weaken to 36 per dollar in the second quarter after a seasonal boost at the start of the year loses steam, according to MUFG Bank Ltd.
The currency advanced as President Donald Trump has so far refrained from imposing sweeping trade tariffs on Asia ex-China countries, including Thailand, which economists said is among the most exposed to a tariff war. Easing crude prices also helped the currency of the net oil-importing nation, even as Thai stocks slumped to their lowest since November 2021.
“The Thai baht will eventually weaken, closing the divergence with the equity market,” said Lloyd Chan, a currency strategist at MUFG. It may happen in the second quarter “during off-peak tourism season, dividend outflow pressures and potentially more tariff actions following the ongoing US trade review, which is set to conclude by 1 April.”