Thai baht firms to 31.60, strongest in three months, as political risks watched
The Thai baht gained in morning dealings, buoyed by a weaker greenback and shifting rate expectations, but upside momentum could be tempered by capital outflows and a pullback in gold prices.
- The Thai baht strengthened to 31.60 against the US dollar, its firmest level in nearly three months.
- The currency's appreciation is primarily driven by a weaker US dollar, as markets anticipate interest rate cuts by the US Federal Reserve.
- Domestic political uncertainty, following the dissolution of parliament, is being closely monitored as a key risk that could slow the baht's further gains.
The Thai baht strengthened in early trade on Friday (12 December), touching its firmest level in almost three months (since September 18) and edging towards the THB31.60 per US$ area.
It later eased back to around THB31.65–31.67 per US$ at 9.57am, compared with Thursday’s close of THB31.76.
Kanchana Chokpaisalsilp, a research executive at Kasikorn Research Centre (KResearch), said the baht continued to appreciate amid broad US$ selling, as markets have increasingly priced in the likelihood of US policy rate cuts next year.
However, she noted that the baht’s intraday gains could start to look more limited, given signs of foreign outflows from Thailand’s bond market and a pullback in global gold prices on profit-taking after recent rises.
On domestic politics, following the dissolution of parliament ahead of a new election next year, KResearch does not yet see a clear, immediate impact on the currency.
For now, the main driver remains the softer US dollar backdrop, linked to expectations of further Federal Reserve rate cuts through 2026.
Even so, political developments are expected to remain a key factor to watch closely.
KResearch put the baht’s trading range for today at THB31.55–31.75 per US$.
Key variables to monitor include overseas fund flows, moves in other Asian currencies, global gold prices, Thailand–Cambodia tensions, and signals on US interest rates from remarks by Fed officials.
He added that if market participants opt to gradually take profit on long baht positions (betting on a stronger currency), the baht could face additional resistance.
Foreign investors may also continue to trim Thai assets, particularly equities.
In contrast, long-dated Thai bonds have become more attractive after the recent rise in long-term yields, provided investors remain confident that the Bank of Thailand still has room to cut rates further.
