Baht falls below fundamentals

 

"Foreign investors start to worry about the current account deficits in emerging markets," he said.

As Indonesia shows the deficit of 3-4 per cent of gross domestic product (GDP), the rupiah is now near 11,000 per US dollar. The Thai baht fell to 31.07 this morning, as the deficit in the first half stood at 1.9 per cent.

Still, Kampol said that the Thai economy should show improvement in the second half. If exports pick up, Thailand could show a balance in current account or even a slight surplus. In the worst case scenario, a deficit of less than 1 per cent of GDP is anticipated. In these scenarios, it is likely that the baht would strengthen against US dollar to around 31.5 later this year.