The Thai baht is proving it’s resilience amid the unpredictable and rough waves that the ongoing trade war brings. As such, it is now being seen as one of the “safest bets” within the Southeast Asian region. This is a far cry from over 20 years ago, when the Thai baht was at the epicentre of the 1997 Asian financial crisis.
Over the past decade, the Thai baht has been among the strongest performing currencies versus it’s peers within the region. The Thai baht has seen little to no change during this month’s wave of trade war woes, while peers such as the won and rupee have weakened by almost 3 per cent. Strategists and economists are predicting that the currency is not likely to lose it’s solid status as a haven anytime soon, thanks to the kingdom’s rising current-account surplus and record foreign reserves.
“Thai baht remains a safe haven as we haven’t had significant impact from the worsening trade war like other emerging markets,” said Jitipol Puksamatanan, Bangkok-based chief strategist at Krung Thai Bank Plc.
The third most-accurate forecaster for the currency last quarter predicts the baht will rise to 30.25 per dollar by the end of the year.
As of late, the global marketplace has been hammered into the ground. Issues regarding the Federal Reserve, the Trump administration, deteriorating relations between Japan and South Korea, and the Chinese yuan have been contributing the economic downfall.
Recently, China let the yuan weaken past 7 against the US dollar amid threat of more US tariffs. This has spread even more worry among traders who are already unnerved by the Fed’s signal that it won’t pursue an extended easing cycle.
Unlike Taiwan and South Korea, which run current-account surpluses as well, Thailand is not in the direct line of fire in terms of the supply-chain impact of the global trade wars, said Sim Moh Siong, currency strategist at Bank of Singapore Ltd.
“The baht has become a refuge for investors in the region during times of risk aversion,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd in Singapore. “Its recent outperformance is a testament to that.”