Baht Slides to 15-Month Low as Krungsri Unveils Multi-Currency FX Strategy for 2026

 

 

Krungsri points to an oil-driven deficit for the baht's slide, forecasts a Q4 rebound to 32–34, and expands its digital and multi-currency FX services.
 

 

The Thai baht has fallen to its weakest level in 15 months, depreciating by more than 6% since the start of the year, as soaring global energy costs and lingering Middle East tensions push Thailand's current account into deficit.

 

Against that backdrop, Krungsri (Bank of Ayudhya PCL) used a press conference on Wednesday to set out its FX business strategy for 2026, centred on expanding multi-currency capabilities, deepening digital FX channels and sharpening risk-management tools for corporate clients.

 

 

Oil Import Bill Weighs on the Currency

The baht's first-half weakness reflects Thailand's structural exposure to energy imports rather than any deterioration in underlying fundamentals, according to Roong Sanguanruang, senior vice president of Krungsri's Global Markets Planning Division.

 

As a net oil importer, Thailand has faced a sharp rise in energy-security-related imports this year, pushing the current account into deficit and adding sustained pressure on the currency.

 

"The baht's movement is currently a reflection of surging global oil prices," Roong said. "This leads to a deficit because we have to import oil at high costs. If oil prices stabilise and don't spike further, the pressure on the baht should ease."

 

Despite the slide, Roong pointed to Thailand's foreign reserves as a source of resilience, noting they remain sufficient to cover roughly six months of imports – a buffer she described as important protection against external shocks.

 

 

 

 

A Less Predictable Fed, a Firmer Yen

Globally, markets have largely shifted focus away from Middle East geopolitics and towards the policy path of the US Federal Reserve, even as ceasefire negotiations remain fragile.

 

Under Chairman Kevin Warsh, the Fed is reportedly reducing forward guidance and reforming its communications approach – a shift Krungsri expects will bring greater asset-price volatility around major US data releases and ahead of the US midterm elections.

 

By contrast, the Bank of Japan is expected to continue raising rates gradually, providing ongoing support for the yen. Krungsri noted this trajectory could eventually see Japanese policy rates exceed Thailand's — a historically rare occurrence that would mark a further shift in regional currency dynamics.

 

Domestically, Krungsri expects the Bank of Thailand to hold its policy rate at 1.00% for several quarters, provided growth and inflation do not shift materially.

 

With cost-push inflation pressures seen as temporary, the Monetary Policy Committee is likely to weigh domestic demand conditions and macroeconomic stability more heavily than external factors.

 

"We believe the Bank of Thailand will maintain the interest rate at 1%," Roong said. "They will likely use targeted measures to address debt for vulnerable groups rather than broad rate changes... Keeping rates at 1% prevents people from borrowing too much, which would risk long-term stability."

 

 

 

 

Krungsri’s Three-Pillar FX Strategy for 2026

To address shifting client demand and structural changes in trade settlement, Krungsri Global Markets outlined three strategic priorities for 2026:

Full-scale digital FX: Continued investment in online execution via FX@Krungsri, deeper integration between client platforms and the bank’s FX API, and real-time market updates delivered through its Krungsri FX LINE Official Account.

Cross-border and multi-currency solutions: Expanded support for non-dollar and local-currency settlement. Having added the South Korean won, UAE dirham, and the Saudi riyal, Krungsri is targeting growing trade connectivity between Thailand, the Middle East, and the wider region.

Risk management and investment solutions: Tailored FX option structures matched to client-specific exposures, AI and automation tools to support dealers and improve execution quality, and investment products drawing on the capabilities of parent group MUFG.

 

Hirotaka Kuroki, head of Global Markets Group, said the strategy responds to a fundamental shift in how Thai businesses manage currency risk.

 

He noted that while Thailand’s import-export value has grown by more than 60% over the past decade, the volume of FX transactions for trade purposes processed through commercial banks rose by just 5.7% over the same period — evidence, he said, that businesses now have far more options for managing exposure than in the past.

 

"In today's market, characterised by volatility in FX and energy prices, our role is not just providing financial services but being a business partner that helps clients manage risk, identify opportunities, and plan with confidence," Kuroki said.

 

This client-centric approach has underpinned strong financial results. Krungsri’s FX and trading business has expanded steadily over the past five years, with gains on trading and FX transactions growing at a compound annual rate of 16% to reach 7.4 billion baht in 2025.

 

Kuroki emphasised that these results reflect the deep trust clients place in the bank to help them navigate an increasingly complex risk landscape, rather than simple transaction volume.

 

 

 

Year-End Currency and Inflow Expectations

Looking to the second half of the year, Krungsri expects the baht to stabilise and appreciate slightly, trading within a range of 32.00 to 34.00 per US dollar in the fourth quarter.

 

The base case assumes the Fed holds rates steady and Thailand’s trade balance continues to improve, with US inflation flagged as the key risk to that view.

 

Adding to the more constructive outlook, foreign portfolio capital has begun returning to Thai equities after years of net selling. Roong said investors increasingly view Thai stocks as a value play and potential safe haven, given the market’s relative stability and lower valuations compared with international indices at record highs, adding that some of the renewed flows appear to reflect long-term positioning rather than short-term trading.