Thai Baht: Limited gains as Oil stays elevated – OCBC

OCBC’s Sim Moh Siong and Christopher Wong note that USD/THB fell after the post-US Consumer Price Index (CPI) decline in US Dollar (USD) but quickly retraced, signalling limited follow-through in Thai Baht gains. Elevated Oil prices, uneven tourism recovery and Bank of Thailand’s (BoT) tolerance for orderly Thai Baht (THB) weakness suggest some policy acceptance of depreciation, with they favouring buying USD/THB on dips around 33.40–33.20.

Policy tolerance keeps Baht lagging

"The post-US CPI decline in USD pulled USD/THB lower, but the pullback was partially retraced into NY session. This suggests limited follow-through in THB gains. Elevated oil prices and uneven tourism recovery remain headwinds."

"Recent remarks from BoT Governor Vitai Ratanakorn also suggest no immediate discomfort with orderly THB weakness, with recent moves seen as broadly consistent with wider market trends."

"He reiterated that THB depreciation also continues to support Thailand’s exports and tourism. This may well suggest some policy tolerance for depreciation though excessive volatility would likely still draw attention"

"Near term, THB may recover alongside broader Asian FX if USD softness extends, but pace of gains could lag broader Asian FX especially when oil prices remain elevated. USD/THB last seen at 33.50 levels."