Thailand’s baht could weaken further after reaching its lowest point since late 2017 level of 33 baht per USD, an analyst at Krungsri Securities said on Wednesday, as the economy is challenged by its most severe Covid-19 outbreak so far.
The Thai baht has fallen more than 9 per cent against the USD since the end of 2020, making it one of the world’s worst performers this year.
“We see another 3-4 per cent downside risk to the THB depending on the Covid-19 situation and economic and political landscape in the coming quarters,” Isara Ordeedolchest said in a research note.
Isara pointed out that the divergence started between late of the first quarter this year and early of the second quarter when the third wave emerged in Thonglor cluster venues then followed by more infections from Thai New Year holidays.
Isara noted that the downturn in Thailand’s long-term government bond yields and broad money growth has weighed on the growth aspect of Thai baht.
“The THB is unlikely to recover meaningfully as Thailand’s economic growth trajectory is expected to trail behind regional economies until at least 2022,’ he warned.
“Thailand’s baht has gone from being one of Asia’s strongest currencies before the pandemic to one of its worst performers this year,” a Financial Times report said, as the pandemic wreaks havoc on the country’s vital tourism industry.
The loss of tourism money, which the Thai economy relies on, has crushed prospects of a quick economic rebound, turning formerly bullish buyers of its assets into bearish, it said.