Thai baht likely to appreciate modestly to 30.5 against USD by end-2019

The reputation of Thai baht as a safe haven currency continues to grow. However, with the Thai baht nominal effective exchange rate at its strongest levels since 1997, policymakers are worried about the currency’s effect on exports.

The Bank of Thailand would be wary of depending too much on FX intervention, to avoid being placed on the U.S. Treasury’s Monitoring List for currency manipulation. Other measure to curtail the THB strength have had moderate and short-lived effects in the past. More measures might be introduced to encourage capital outflows, as opposed to more restrictions on inflows, said ANZ in a research report.

“Baht’s safe-haven appeal looks set to stay. Given our expectations that Thailand will continue to run current account surpluses and the uncertain global trade environment will persist, THB is likely to remain an outperformer in the region. We forecast further modest appreciation to 30.5 by the end of 2019 and to 30.0 by the end of 2020”, added ANZ.