Mr. Withai Rattanakorn, Governor of the Bank of Thailand (BoT) revealed that since the beginning of December The baht strengthened by 2.5%, mainly due to the weakening of the US dollar. Additionally, the baht was under additional pressure from factors specific to Thailand, such as seasonal factors at the end of the year that led to higher money inflows. both from tourism and exports Including funds flowing in to invest in stocks and bonds. In addition, there are transactions from gold traders who have a high volume of transactions selling US dollars. To buy baht increased significantly
The BoT therefore took over the value of the baht and tightened controls on US dollar sales transactions. To buy baht from the gold business He has ordered commercial banks to strictly inspect documents in transactions selling foreign currency in exchange for buying baht in gold businesses. And it is in the process of requesting to issue an announcement from the Ministry of Finance to give the BoT authority to request information related to foreign currency trading from large gold traders. Including increasing strictness in supervising US dollar sales transactions. To buy baht, this is because the foreign currency trading transactions of the gold business in some periods accounted for as high as 20% of the total foreign currency trading. This has an effect on the fluctuation of the value of the baht. In addition, the BoT has discussed with the Ministry of Finance to request that there be an appropriate agency to supervise the gold business. Especially online gold trading through platforms with much larger transaction sizes. and clearly results in fluctuations in the value of the baht
Also The BoT will inspect transactions in the sale of foreign currency to buy baht. To prevent the entry of money into the country that is not desired or is not related to the normal business operations and money transfers of natural persons. Commercial banks will strictly monitor the inflow of foreign currency.
SCB gives the year 2026 frame at 33.00-34.00.
Dr. Yanyong Thaicharoen, Chief Executive Officer of Economic and Sustainability Research Siam Commercial Bank give an opinion that The baht returned to strengthen, leading regional currencies. In addition to making financial conditions tighter in the short term, This may be another factor that pressures Thai inflation to remain at a low level continuously through the import of cheap products.
The baht returned to strengthen following the weakening of the US Dollar Index (DXY), partly due to the reduction of the policy interest rate by the Federal Reserve (Fed). Since the 4th quarter, the baht has strengthened, leading almost all major currencies in the region. Except Malaysian Ringgit (MYR)
“This year our currency value has stood out once again. In some periods it has decreased. But now it has come back to stand out again. It is almost the top of the region. If we go back since 1997, our NEER basket of currencies has now returned to the same level as in 1997. It is considered that our currency advantage has disappeared. The benefits that we had from the weak currency in 1997 made us become an export base. It has become a tourist base and has disappeared. Now, compared to other countries, the baht is stronger than other countries. It affects our ability to compete,” said Dr. Yanyong.
Dr. Yanyong further said that SCB’s Financial Market team estimates that in the short term, until maybe the first quarter of next year, the baht will likely strengthen. Because right now the United States is still lowering interest rates. Meanwhile, it comes from internal factors in Thailand. And the price of gold began to rise again. But in the medium-long term (from the 2nd quarter of 2026 onwards), it is seen that the baht may depreciate from
External factors
- The US Dollar Index tends to strengthen. from capital flows including FDI that may flow into the United States This makes the current account balance less likely to be in deficit.
- Concerns that the Fed will intervene are likely to subside. This reduces concerns about US assets. Moreover, it is expected that the Fed’s monetary policy will not change much even if there is a new Fed chairman who has a more Dovish view.
Domestic factors/specific factors
- The Thai economy tends to weaken. Including political uncertainty, there is also concern about the downgrading of Thailand’s credit rating, which will affect the confidence of world investors.
- Thailand may not benefit from the AI trend as much as countries in the region. Because they are still unable to compete in technology. And Thai products still do not meet the investment needs of this trend, causing capital that tends to flow into Asian markets (such as Taiwan, Korea) may flow into Thailand limited. and does not affect the baht much
- The price of gold is likely to increase at a lower rate in 2026, including the BoT trying to reduce the relationship of the baht with the price of gold. As a result, the strength to support the baht next year may decrease.
SCB FM expects the baht to the US dollar range at the end of 2026 to be at 33.00-34.00.
