Definitely, the Thai baht is flexing its muscles remarkably as it recently reached a seven month high, trading at 33.03 per USD. At first glimpse, this is good for Thailand as it seems to have foreign investment pouring in. But not all, especially those in the tourism hotspots such as Pattaya, seem to share such delight.
Clearly, bold investors are celebrating while hotel owners and tour guides are in a state of panic. What do you think that leads to? A decrease in tourists. Some shorten their trips, others don’t bother cutting. With the pandemic-induced slump in business, this is rough.
Strangely, while the plunging gold prices were initially causing a dip in the baht, it quickly rebounded once foreign capital started flooding into Thai stocks and bonds. Pair this with the Bank of Thailand lowering the interest rate to 1.75% in a bid to boost domestic consumption, and you have a buoyant currency. All this is going on while Moosdy’s has downgraded Thailand’s credit outlook to negative from stable. Additionally, the baht still partially riding the wave of the yuan’s boosted value due to the US-China trade talks, so it’s strong for now.
Foreign investors net purchased 1.49 billion baht worth of Thai stocks from April 28 to May 2, but concurrently divested 7.41 billion baht worth of bonds.
According to Kasikorn Research, the baht will stabilize between 32.80 and 33.80 per USD for a while, influenced by US and UK interest rate shifts, geo-political spasms, gold prices, and inflation in Thailand.
In Pattaya, business proprietors are on edge watching things unfold. Without a boost from somewhere, be it the government or a change in currency strategy, some predict that we could be in trouble again.
Because – lets be fair here. When there is a huge boom and good things are happening, it doesn’t do much for your beachfront café when there are no customers.
