The baht is set to weaken

The Thai Baht is certainly a strong currency at the present time and this is true of its performance against all major currencies. If we were to use the US dollar as a benchmark, as indeed there is a close connection between the two currencies, we can see that the Baht has continued to strengthen since the start of November – unquestionably since the election of Donald Trump as the next president.

So there will naturally be question marks with this in mind, is it that the Thai Baht is performing well or other currencies are performing badly? Well, if we are talking in terms of the last month for the US dollar you would have to say that it is the weakening dollar that is the major contributing factor. However, if we look at the overall picture over a longer period of time you would have to say that it is the strength of the Baht rather than the performance of other currencies that is the most significant factor. We can assume this as the Baht has gained strength against almost all major currencies regardless of their own performance.

This leads to the next question, is this a good or a bad situation for the overall Thai economy? Well this one is very debatable depending on which side of the fence that you sit. For those involved in imports and those paid in or holding large amounts of Baht the situation is certainly good. For those involved with exports or those looking to change other currencies into Baht it is not so good – on the face of it at least. However, you have the added complication of the confidence in the strength of Thai economy so although short term it is not so good, long term it could be very positive indeed.

A strong Thai Baht is also attractive for overseas investors who are looking medium to long term rather than short term. This applies to businesses that can benefit from assistance the BOI, whilst at the same time capitalising on cheaper imports – ideal if you are looking at purchase machinery or supplies from overseas during the initial setup.

A strong Thai Baht is also beneficial to investors in the property market looking a guaranteed rental returns. A strong currency and strong economy will breed stability which in turns creates confidence. Confidence is nearly always a good thing, certainly in terms of economics at least, so this strength and confidence is likely to result in rising property prices in the medium to long term. This means investors get guaranteed returns in the short and medium term and capital appreciation in the medium to long term – a win, win situation that cancels out any currency exchange issues.