Thailand’s FPO forecasts stronger baht as capital-flow risks remain
The baht is projected to average THB32.5 per US dollar in 2026, with US interest rates, geopolitical tensions and Thailand’s current account among the main volatility risks.
- Thailand's Fiscal Policy Office (FPO) forecasts the baht will strengthen in 2026, expecting it to average THB32.5 per US dollar, a 1.4% appreciation from 2025.
- The baht is also projected to appreciate against a basket of currencies from Thailand's main trading partners, including the US dollar, yen, and South Korean won.
- Key risks that could cause capital-flow volatility include potential US Federal Reserve interest rate hikes, a decline in Thailand's current-account surplus, and global market uncertainty from geopolitical events.
Warothai Kosolpisitkul, international economic adviser at the Fiscal Policy Office (FPO), outlined the agency’s baht outlook for 2026.
The FPO expects the currency to trade between THB32.0 and THB33.0 per US dollar, with a full-year average of THB32.5, representing a 1.4% appreciation from the 2025 average.
Although the projection still points to a stronger baht than in 2025, it represents a slight weakening from the FPO’s previous estimate in April 2026, when it projected THB32.0 per US dollar.
Baht projected to outpace regional peers as trend tracks dollar
A closer look at the nominal effective exchange rate (NEER), which measures the baht against 15 currencies of Thailand’s main trading partners, shows that the FPO expects the index to average 120.8 points in 2026, up from 119 points in 2025.
This would indicate an average appreciation of 1.3%.
The outlook indicates that the baht will strengthen against the yen, Indonesian rupiah, Vietnamese dong, South Korean won and US dollar, but weaken against the Hong Kong dollar, Taiwan dollar, pound sterling, Singapore dollar and euro.
The currency could weaken during the third quarter before beginning to strengthen slightly in the fourth.
Warothai noted that the relationship between the baht and the US Dollar Index (USD Index) is now significantly stronger than in the past.
The index has recently risen by almost 3%, supported by energy prices and foreign capital outflows.
Three risks could drive capital-flow volatility
A key issue for markets is the expectation that the US Federal Reserve (Fed) may raise interest rates to curb inflation.
Such a move could act as a magnet for capital, drawing more funds back to the United States.
The FPO also highlighted three major risks that could increase baht volatility:
- Thailand’s current-account balance is an important economic buffer. If export and tourism receipts fall, narrowing the surplus or pushing the account into deficit, this could become a major source of pressure on the baht, causing it to weaken and become more volatile.
- Cross-border capital flows will also depend on the direction of global markets, which could react sharply to uncertainty over wars and geopolitical developments, particularly fighting in the Middle East.
- Policies pursued by major powers, including US monetary and trade policies, together with the direction of the global economy, could influence whether investors sell risk assets and shift into “safe-haven assets” such as US government bonds and gold.
