Thai Baht becomes "weakest currency in Asia" under the impact of falling oil prices! After a 5% drop in one month, the decline is feared to be difficult to stop.

Noticeably, analysts point out that the historic surge in oil prices is putting Thailand, which heavily relies on energy imports, in a difficult situation. This not only exacerbates the depreciation pressure on the Thai Baht but also increases the risk of capital outflow. The Thai Baht has depreciated by over 5% this month, ranking bottom among Asian currencies. Kasikorn Bank strategists predict that due to the rising costs of energy imports and the seasonal repatriation of dividends, the Thai Baht may drop from the current 1 US dollar to 32.8 Thai Baht to around 33.5 by mid-year (a further 2% drop from the current level). The continued decline of the Thai Baht highlights the rapid changes in sentiment in the emerging Asian markets. Following a strong performance at the end of last year, Thailand is under severe pressure due to the sharp rise in oil prices in March, exceeding 40%, as a result of its deep dependence on imported crude oil. This dependence makes the Thai Baht vulnerable to fluctuations in commodities and capital outflows in the coming months. Jeffrey Zhang, a strategist at Orient Capital Bank, says that the oil price shock could drag down Thailand's fiscal situation and economic growth. He expects the Thai Baht to remain around 33 by the end of the year and believes, "there is still upward potential for the US dollar against the Thai Baht, but the pace of its rise may be slower than in March." Kobsidthi Silpachai, Head of Capital Market Research at Kasikorn Bank, points out that the global increase in aviation fuel prices will have a negative impact on Thailand's inbound tourism industry. Approximately 20% of hotel bookings in the southern resorts of Thailand have already been canceled, and if the conflict between the US and Iran persists, the number of foreign tourists could drop to a three-year low, increasing the risk of economic contraction. However, there are initial signs that if global risk sentiment improves (including a cooling of geopolitical tensions), the Thai Baht may stabilize. While the Bank of Thailand has room to suppress volatility, it is unlikely to take aggressive measures to defend the exchange rate. Audrey Ong, a strategist at Barclays Bank, says, "In the short term, we expect the US dollar against the Thai Baht to mildly rebound." She predicts that the exchange rate will remain basically stable by the end of the year. She also adds, "Considering the relatively high valuation of the Thai Baht, we doubt that the Bank of Thailand will actively intervene in further adjustments of the Thai Baht, except to manage excessive currency fluctuations." Data shows that seasonal factors are unfavorable for the Thai Baht due to major companies entering dividend payment periods. Over the past ten years, the Thai Baht has depreciated by an average of about 1.3% in the three months ending June 30. Kasikorn Bank's data shows that this year, companies are expected to pay approximately 151 billion Thai Baht (about 4.6 billion US dollars) in dividends to foreign investors, which will increase the demand for US dollars in April and May. Furthermore, capital outflows further intensify the pressure on the Thai Baht. According to data from the Thai Bond Market Association, global funds have sold a net of 788 million US dollars in Thai bonds this month, marking the highest record in over a year. Meanwhile, data from the Stock Exchange of Thailand shows that capital outflows from the stock market during the same period reached 1.2 billion US dollars, the largest since February 2023. Jitipol Puksamatanan, Chief Investment Strategist at Finansia Syrus Securities, says, "Investors are increasingly worried that the government is failing to effectively address the current economic situation, further exacerbating market concerns."