Thai baht best currency performer in Asia - Commerzbank

The Thai baht has been the best currency performer in Asia. The THB, on a year-to-date basis, strengthened 8 percent against the US dollar. This might be slightly surprising as Thai economic growth just appears fine at the first glance. On Monday, Thailand’s second quarter economic growth data was released that surprised on the upside.

The Thai economy grew 3.7 percent year-on-year in the second quarter from the first quarter’s 3.3 percent. Following the seasonal adjustment, the Thai economy grew 1.3 percent quarter-on-quarter, unchanged from the first quarter. The headline figures appeared to be decent; however, it was well below other Asian peers, such as China, India, Philippines and Malaysia.

But the FX story is not related just to growth, but also balance of payments, noted Commerzbank in a research report. It is not easy to image that Thai current account surplus has been over 10 percent of GDP since the first quarter of 2016. The strong trade surplus is the major driver of the solid current account surplus. Moreover, the increasing tourism flows have also contributed considerably. Given that the strength of Thai baht is justified, stated Commerzbank.

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