Why is Thai baht depreciating?
BANGKOK — The Thai baht has plunged to a 15-month low against the dollar in the foreign exchange market as the delta-strain epidemic dims hopes among investors for an early recovery of the country’s tourism and economy. … It is rapidly approaching the level of 33.2 per dollar recorded in April 2020.
Why did Thailand devalue its currency?
The central bank of Thailand’s decision yesterday to devalue the currency, which caused it to tumble as much as 20 percent against the dollar, represents a gamble by Thai policy makers to shore up the country’s faltering economy.
Is the Thai baht overvalued?
Based on that, and on current fundamentals, the Thai Baht is not really overvalued. The Thai central bank has significant foreign currency reserves, adequate gold reserves, and strong economic growth, which should keep the currency risk for property investors in check.
Is the baht going to weaken?
The Thai baht, once the strongest-performing currency in Asia before the pandemic, has been steadily falling in 2021 and is this year’s worst-hit currency in the region, according to Mizuho Bank.
Why did they peg their currencies value to the U.S. dollar in the first place?
A country that pegs its currency to the U.S. dollar seeks to keep its currency’s value low. A lower value currency vis-à-vis the dollar allows the country’s exports to be very competitively priced. Compared to the floating exchange rate, dollar-pegging promotes anti-competitiveness in trade with the United States.
How did Thailand recover from the financial crisis 1997?
It realigned the banking sector by first closing down 56 financial firms, and then urged commercial banks to dispose of their nonperforming-loans (NPLs) and increase their capital bases. For small- to medium-sized banks, it promoted nationalization and mergers with foreign banks.
What is the future of the Thai baht?
Over the longer term — six to 24 months — we expect the baht to gradually appreciate as the outlook for tourism improves and uncertainties around the country’s growth outlook abate. We forecast the exchange rate to average 31.00 in 2022, compared with 30.60 in our previous forecast, and 30.00 in 2023.