Baht weakens 5% to rank third in Asia as REER helps exports

The baht has weakened by about 5% since the beginning of the year, making it the third-biggest decliner among major Asian currencies.

A broader measure of its value against Thailand’s trading partners, however, suggests the depreciation continues to support the competitiveness of Thai exports.

Kasikorn Research Center data showed the baht had fallen 4.9% through August 5, behind only the Indonesian rupiah, which declined 6.9%, and the Indian rupee, down 5.5%.

Over the same period, the US Dollar Index gained 1.5%, while the baht moved from 31.55 per US dollar at the end of 2025 to 33.18.

Several other Asian currencies strengthened against the dollar.

The Chinese yuan rose 3.5%, the South Korean won gained 1.0%, the Singapore dollar advanced 0.2% and the Vietnamese dong edged up 0.1%.

Poon Panichpibool, money market strategist at Krungthai GLOBAL MARKETS, said the baht had depreciated by around 5% since the start of the year, surpassed only by the Indian rupee and Indonesian rupiah.

He attributed pressure on the two weaker currencies partly to foreign investor selling of assets and, in Indonesia’s case, concerns over political confidence.

REER gives Thai exports a competitive edge

Despite the baht’s decline against the US dollar, its performance against Thailand’s trading partners points to an even larger adjustment.

Thailand’s real effective exchange rate, or REER, has fallen 6.6% since the beginning of the year, compared with the baht’s roughly 5% depreciation against the dollar.

The REER measures the baht against currencies of Thailand’s trading partners while taking relative prices into account.

Its decline therefore indicates an improvement in the relative price competitiveness of Thai goods, particularly against countries whose currencies have strengthened.

China is one example, with the yuan gaining more than 3% against the dollar this year.

The pattern was also evident in 2025.

Although the baht appreciated against the US dollar during that year, its effective exchange rate weakened, helped by Thailand’s lower inflation relative to its trading partners.

This year, the baht has faced stronger depreciation pressure from Thailand’s position as a net energy importer, the indirect effects of the war on tourism and movements in gold prices, which have continued to influence the currency.

Fed and US data could drive next move

Poon said the baht faced two-way risks in the short term, with its direction depending heavily on shifts in market expectations for US Federal Reserve monetary policy.

Those expectations will in turn be influenced by US economic data, particularly non-farm payrolls and inflation, as well as the uncertain situation in the Middle East.

He recommended that market participants diversify their currency hedging strategies, particularly through options, to improve risk management during periods of heightened uncertainty.

Yen intervention reverberates across Asian currencies

Dr Kanjana Chockpisansin, head of research at Kasikorn Research Center, also pointed to developments in the Japanese yen as another factor affecting Asian currency markets.

Discussing reported co-operation between US and Japanese authorities in intervening in the yen, she described such joint action as unusual.

She said the last US-Japan co-ordinated intervention took place in 2011, although the objective then was the opposite: to prevent excessive yen appreciation. The previous intervention aimed at preventing excessive yen weakness dated back to 1998.

Kanjana said the latest action followed an exceptionally sharp fall in the yen.

Against the US dollar, the Japanese currency had weakened to levels not seen for around 40 years, while against the euro it had fallen to a record low.

Although intervention by Japanese authorities did not fully reverse the yen’s weakness, it helped curb market pressure and prompted the currency to rebound.

Other currencies subsequently strengthened as well, including the baht, helped by selling of US dollars.

The yen’s longer-term direction will depend partly on how quickly the Bank of Japan raises interest rates, whether the situation in the Middle East eases and the resulting direction of oil prices, as well as whether the Federal Reserve raises interest rates.

Kanjana said the yen could continue to weaken gradually if those three sources of pressure remain unchanged.