Thai baht plunges to 38 against US dollar for first time in 16 years

The volatile Thai baht has depreciated to 38 against the US dollar even faster than foreseen by economists. The last time the baht reached 38 to the dollar was 16 years and two months ago on July 26, 2006.

The baht has hit the 38 mark even earlier than expected by the Head of Capital at Kasikorn Bank Kobsidthi Silpachai, who just a few days ago predicted that the baht would depreciate to 36.50 – 38 against the US dollar within the next month.

The baht’s depreciation is attributed to the rising strength of the US dollar. The dollar index has risen to 114, causing several currencies worldwide to depreciate. The US dollar continues to grow in value due to continued federal fund hikes.

The dollar has flown in 2022 amid the Federal Reserves’ aggressive interest rate hikes, Europe’s energy crisis, and China’s Covid-19 lockdowns. Cambridge University economist Mohamed El-Erian said the strength of the US dollar is bad news for the world economy…

“What is clear is we have this relentless increase in yields, this relentless appreciation of the dollar. They are both bad news for corporates and for the economy.”

Amid pressure from high inflation rates and the depreciating baht, Thailand’s Monetary Policy Committee will meet today to discuss raising the policy rate from 0.75% to 1%. The policy rate hike will increase interest rates between Thailand and the US with the goal of temporarily strengthening the baht and “supporting economic recovery.”

In the long term, Thailand is relying on the recovery of the tourism industry to strengthen the nation’s currency. K Bank predicts that the baht will rise to 35 to the US dollar before long as continually growing tourist arrivals pump money into the economy.

The Tourism Authority of Thailand predicts that Thailand will welcome a total of 9.3 million tourist arrivals in 2022.

SOURCE: Bangkok Biz News

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Leah is a translator and news writer for the Thaiger. Leah studied East Asian Religions and Thai Studies at the University of Leeds and Chiang Mai University. Leah covers crime, politics, environment, human rights, entertainment, travel and culture in Thailand and southeast Asia.

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