The baht has reached a three-month low against the dollar, but Deputy Finance Minister Paopoom Rojanasakul believes this is beneficial for exports. He mentioned that the baht’s depreciation is advantageous for trade and is in line with other currencies in the region. Mr. Paopoom stated that the current exchange rate of around 35 baht to the dollar is comfortable and ideal for exports, although he prefers to see it at 34.50 to 35.
Looking ahead, there are concerns about the baht becoming one of the most vulnerable emerging market Asian currencies if Donald Trump secures a second term in the White House. Thailand heavily relies on trade, making the baht sensitive to external factors such as Trump’s policies. Data shows that the baht is overvalued compared to other Asian currencies and could face challenges similar to those experienced in 2018 after Trump’s tariff announcements.
In contrast, currencies like the Philippine peso and Indian rupee may be more resilient to Trump’s policies, as they were less affected by the dollar’s rise in October. The uncertainty surrounding the timing and extent of tariff implementation could impact Asian currencies, especially those of trade-reliant nations like Thailand. Experts suggest that the baht and Taiwan dollar are among the most exposed in Asia to potential tariffs.
Thailand’s high level of trade openness, with trade volume accounting for 129% of GDP, could pose a risk if Trump imposes restrictions on imports. China and the US are Thailand’s top two trading partners, receiving a significant portion of the country’s exports. Analysts warn that if the dollar strengthens due to Trump’s policies, Asian currencies may face further challenges.
Overall, while the baht’s current depreciation may benefit exports in the short term, the currency could face greater vulnerability in the future if global trade dynamics shift under a Trump administration. Monitoring the currency’s movements and external economic factors will be crucial for Thailand’s economic stability in the coming months.
