Why is the Thai Baht So Strong?

Strong Thai Baht

The Thai Baht has been performing incredibly well against most other major currencies for the last few years. On the surface, this might appear beneficial for the Thai economy, but is that truly the case? Thailand is a significant importer of parts related to the engineering sector, making these components naturally cheaper. However, with foreign goods becoming much more affordable than domestically produced ones, a multitude of other products are now being imported, adversely affecting the balance of payments (BoP). Additionally, Thailand’s tourism industry might not be reaching its full potential.

 

Thai Economy and Thai Politics

 

 

Naturally, the Thai economy and domestic politics will always play a prominent role in shaping any country’s currency. The Thai economy has maintained stability for several years, with the country’s fiscal policy contributing to this stability. However, many, including both Thais and foreigners, perceive the currency as excessively strong, possibly even artificially so. While numerous theories may underpin this belief, there is a dearth of evidence to substantiate it. This is not to dismiss the possibility outright; rather, it acknowledges the absence of supporting evidence.

 

 

Other Countries

 

 

Firstly, the US is keen to lower interest rates, with the US 10-year bond yield rate expected to drop as it is the highest among other developed nations. The Fed supports this notion, as they cannot afford to sustain current interest rates. This move will likely result in US dollars flowing into safer havens with high GDPs, such as Switzerland, thereby reducing the value of the US dollar, including against the Thai baht. Other countries, like Australia, have also significantly reduced their interest rates, leading to a decline in their currency value.

Thailand is another country with a high ratio of international reserves, coupled with a high GDP. This makes Thailand a “safe haven” for cash, particularly with Thailand’s 10-year bond yield standing at 2.1%. Consequently, this will attract more capital into Thailand, thereby driving up the value of the Thai baht.

 

Brexit

 

 

Brexit has negatively impacted the performance of sterling against almost all currencies. With uncertainty surrounding the UK’s future, capital and cash reserves are being moved to safer havens, consequently reducing their value. Little can be done about this presently, especially with the new Prime Minister vowing to leave the EU on October 31, 2019, regardless of a deal or no deal. Once there is some certainty, the currency may recover depending on the terms, or lack thereof, of the divorce agreement.

 

Conclusion

 

 

The Thai Baht is undoubtedly performing well, not least because of the country’s high GDP. However, it appears that the performance of other countries’ currencies is having a larger impact. Would devaluation help boost tourism? Undoubtedly, it would. However, tourism isn’t the be-all and end-all of the Thai economy, and anyone who thinks otherwise may be shortsighted or blinkered. Yes, the impact on a city such as Pattaya is negative, but it isn’t likely to change in the near future. What is the most efficient method for sending money to Thailand?

 

 

Transferring money to your Thai girlfriend ?

 

The best way to transfer money to Thailand depends on various factors, such as the amount you’re sending, the urgency of the transfer, and your personal preferences. However, one of the most common and convenient methods is to use online money transfer services like Wise (formerly known as TransferWise). These services often offer competitive exchange rates, low fees, and fast transfer times. Additionally, you can initiate transfers conveniently from your computer or mobile device, making it a popular choice for many individuals sending money internationally. It’s essential to compare different transfer options to find the one that best suits your needs in terms of cost, speed, and convenience.

 

 

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