Thai Baht has surged to THB31.23/USD or up 4.4 percent from the beginning of this year due mainly to a weaker US dollar. The movement of Thai Baht was in alignment with other currencies in the region. However, from the beginning of this year, the Thai currency hit a record high in nine months and became the second-best performer in the region after Indonesian Rupiah on the back of dollar downsize and the Federal Reserve’s hints that the interest-rate increases may be put on hold, resulting in a selloff of the greenback.
For the outlook of Thai Baht, the downward trend of the US dollar remains the key factor pushing the value of the Thai currency during the first half of this year. The US politics continues to be the main factor to weigh on the market outlook. The budget votes and negotiations over the debt ceiling in March have raised concerns over the possible shutdown. These factors will cause the US dollar to slide further in the first half of the year. As for the second half of the year, Thai baht volatility persists because of the US politics and the market’s perception toward the US economy which will determine the direction of the US dollar. The US political situations in the second half remain unpredictable and such uncertainty will cause further downfall of the dollar. Nonetheless, if political events unfold positively with improved market perception of the US economy in response to future economic data and the Fed’s hints at necessity of rate hikes, the US dollar may regain its strength and cause Thai Baht to decline.