Thai Baht: Do oil risks signal weakness against the US Dollar? - MUFG

MUFG remains cautious on the Baht and has retained its USD/THB forecast, with Lloyd Chan noting that the Bank of Thailand (BoT) held its policy rate at 1.00% for the fourth consecutive meeting. The central bank continues to anticipate modest Gross Domestic Product (GDP) growth in 2026 and 2027. While AI-related demand provides some support for exports, higher oil prices and household debt are holding back tourism and consumption.

How Are Low Yields Weighing on the Baht Outlook?

"Meanwhile, the Bank of Thailand left its policy rate unchanged at 1.00% for a fourth straight meeting yesterday. This is in line with our expectations. The central bank expects Thailand’s GDP growth at 2.4% for 2026 and 2.1% for 2027."

"AI-driven demand could help support growth, with exports rising 24%yoy in September. However, the BoT noted that tourism and private consumption remain constrained by higher oil prices, elevated household debt and weak purchasing power."

"We remain cautious on the baht given the low yield, and we maintain our USD/THB forecast of 34.10 by end-2026, with risks tilted towards further THB weakness should the oil shock intensifies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)