The Baht hit its 2-month high, underscoring the challenge of exchange rate risk management for businesses. Thailand’s trade is becoming increasingly connected with China and ASEAN, but most trade settlements still rely on the US dollar.

Over the past two decades, Thailand's international trade structure has changed significantly, particularly with the growing role of China. China's share of Thailand's total trade value rose continuously from just 8.9% in 2005 to 21.5% in the first half of 2026. Meanwhile, ASEAN remains a key trading partner, although its share has declined to 17.6%. Combined, China and ASEAN account for as much as 39.1% of Thailand's total trade, up from 29.0% in 2005. This reflects a significant increase in Thailand's trade connectivity with countries in the region.

However, the currency structure used for trade settlements has not changed substantially over the past 20 years. The US dollar (USD) still accounts for as much as 79% of Thailand's international trade transactions, while local currencies account for only around 17%. Even when focusing solely on intra-regional trade, the situation remains similar. For Thailand-ASEAN trade, approximately 77% of transactions are settled in USD, compared with 21% settled in local currencies, namely the Thai Baht (THB), Singapore dollar (SGD), and Malaysian Ringgit (MYR). For Thailand-China trade, the combined use of the THB and Chinese Yuan (CNY) accounts for only about 18% of settlements. This indicates that although Thailand's trade structure has become more regionally integrated, trade settlements still rely primarily on the USD.

KResearch views the high reliance on the USD for trade payments and receipts as beneficial because the USD is a widely accepted and highly liquid currency. However, businesses may face risks arising from fluctuations in the US dollar. Most recently, on August 24, 2026, the Baht hit its 2-month high at THB32.58/USD. In terms of volatility, the USD/THB exchange rate showed volatility of approximately 8.0%, which was higher than that of CNY/THB at 7.0% and SGD/THB at 5.1%. From this perspective, the use of local currencies could provide an alternative means for businesses to manage foreign exchange risk, particularly for companies with revenues and expenses denominated in the same currency. It would allow businesses to use the currency received to settle obligations in the same currency, thereby reducing the need for currency conversion. In addition, financial services supporting local currency transactions have become more widely available. Recently, several banks in China have incorporated the Baht into their currency services, which enable direct THB-CNY settlements, providing businesses with more transaction options.

Nevertheless, the availability of supporting services does not automatically mean that businesses will switch to local currencies. The choice of settlement currency depends on multiple factors, including exchange rate volatility, liquidity, transaction costs and conversion fees, trading partner readiness, and the compatibility of the currency with each company's revenue and expense structure. Therefore, promoting local currency usage should be viewed as expanding options for foreign exchange risk management rather than reducing the role of the US dollar or pursuing de-dollarization. At the same time, the increasing trade connectivity between Thailand and China, as well as Thailand and ASEAN, suggests that there is still room for local currencies to play a greater role in trade settlements, provided that they can effectively meet business needs and deliver tangible benefits to the business sector.​

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