Thai reserves hit record high as central bank reins in baht

The Thai baht remains a key focus for investors and businesses as it continues to appreciate, gaining more than 5% since the start of the year. 

This sustained strengthening has driven Thailand’s foreign reserves to an all-time high, raising speculation in the market that the Bank of Thailand (BOT) has intervened to prevent the currency from rising too sharply.

Sanguan Jungsakul, senior director for money and capital markets business at Krungthai Bank, said the baht’s rise has been largely driven by external factors, particularly the US dollar’s persistent weakness since the beginning of the year.

He noted that the baht’s 5% appreciation mirrors regional trends, with currencies in South Korea and Taiwan strengthening by 6–8%. This has prompted the BOT to step in, buying dollars and selling baht to curb excessive or rapid appreciation.

Rising gold prices have added further support to the baht, reinforcing expectations that the BOT will continue to monitor and manage the currency closely. As a result, Thailand’s foreign reserves have increased significantly, reaching a record level of over US$280 billion.

“The situation today is similar to 2021, but with one key difference: the US Federal Reserve has not cut interest rates to 0% as it did back then,” Sanguan said. “Still, the dollar’s weakness persists, and many countries, including Malaysia and Indonesia, are also seeing their reserves climb to record highs, just like Thailand.”

Baht tipped to strengthen to 31.50 per dollar 

The Thai baht is expected to continue its appreciation in the coming months, with analysts projecting it could reach 31.50 per US dollar or even break below 32 by the end of the year. In the short term, the currency is forecast to trade within a range of 32.20–32.30 per dollar.

Sanguan noted that the BOT is likely intervening to curb volatility. “The continuous rise in foreign reserves reflects efforts to reduce fluctuations in the baht, ensuring the real economy can adjust and manage risk more effectively.” 

Kasikorn Research cites three drivers behind surging reserves

Thailand’s foreign reserves reached a historic peak of US$289.68 billion as of August 22, according to Kanjana Chokpaisansilp, head of research at Kasikorn Research Centre. She identified three key factors behind the record level:

Currency management by the BOT

Intervention to smooth volatility during the baht’s strengthening phase has contributed to the steady build-up of reserves.

Mark-to-market valuation of assets

Rising global asset prices, particularly gold, have boosted the market value of reserve holdings. Thailand’s gold share of total reserves has climbed to 9.5%, compared with 3.4% a decade ago and just 2.6% in 2005.

Positive balance of payments

Stronger exports, stable imports, and net capital inflows have kept the country’s balance of payments in surplus, providing further support to reserve accumulation.

Strong reserves boost Thailand’s resilience 

Thailand’s record-high foreign reserves are being viewed as a key buffer for economic stability, helping the country withstand external shocks and maintain financial market confidence.

Analysts note that reserves are more than adequate by global standards. Measured against short-term external debt, they stand at 2.7 times, highlighting Thailand’s strong repayment capacity. When compared with imports, reserves cover 9.5 months, well above international benchmarks, underlining the strength of the country’s external position.

The baht is currently trading at 32.28 per US dollar, close to its highest level this year, after appreciating 5.6% since January. While this performance places it mid-range compared with other Asian currencies, short-term forecasts suggest the baht could strengthen further to test the 32.10 level, its strongest point of 2025 to date.

Supporting factors include expectations of US Federal Reserve rate cuts, concerns about Fed independence, and the economic drag from Washington’s tariff policies, all of which are weighing on the dollar. Investors’ reduced appetite for holding the greenback has also lent momentum to regional currencies.

Despite the resilience, the baht has become more volatile. Over the past two to three years, volatility averaged just 3–5%, but has now risen to around 7–9%, reflecting increased uncertainty in global markets.

Baht gains from asset valuations and BOT intervention

Thailand’s foreign reserves have risen to successive record highs, supported by asset revaluations and the BOT’s efforts to manage the baht, according to Wachirawat Banchuen, senior financial market strategist at SCB Financial Markets.

He explained that the stronger euro had boosted the value of Thailand’s euro-denominated assets, contributing to the overall increase in reserves. At the same time, the central bank has intervened in the market to curb rapid baht appreciation, particularly when the currency strengthened to around 32.25 per US dollar, a level that has triggered heavy dollar-buying interest.

“Reserve accumulation is not just about slowing the baht’s rise but also about reducing volatility,” Wachirawat said.

Strong reserves enhance stability but raise US scrutiny risk

Analysts see both advantages and drawbacks in Thailand’s high reserve levels. On the positive side, the stockpile underscores the country’s external stability, boosting investor confidence. In the event of global risk-off sentiment, Thailand would likely face lighter capital outflows compared with less stable markets.

The country’s persistent current account surplus, supported by strong exports, has also reinforced baht strength in the third quarter.

However, Wachirawat warned that excessively high reserves could draw unwanted attention from Washington. The United States may view Thailand as manipulating its currency, raising the risk of being placed back on its monitoring list.