US Dollar/Thai Baht FX Spot Rate

Foreign investors net sold 635 million dollars of Thai bonds in September, the largest monthly outflow from the bond market since March, or the biggest in six months, amid a surge in US government bond yields and expectations of interest rate hikes that reduced the appeal of Thai debt. In the same month, foreign investors also net sold 781 million dollars of Thai equities. The selling pressure came as government bonds worldwide posted their worst quarterly performance since 2024, after oil prices hit 100 dollars a barrel. The yield spread between 10-year Thai government bonds and same-maturity US government bonds widened, with Thai bond yields sitting 298 basis points below US yields, close to a record high. Meanwhile, the baht swap market reflected expectations that Thai interest rates could rise by a total of about 42 basis points over the next 12 months, up from just 25 basis points expected at the end of August, as inflation pressure led investors to increase the weight they place on the chance that the Bank of Thailand will raise interest rates for the first time in three years.

Kasikorn Research Center reported that outstanding balances in foreign currency deposit accounts, or FCDs, have already fallen by about 2.4% this year as of the end of July 2026, in contrast to the previous four years when they rose continuously by double digits. In 2022 they rose 18%, in 2023 they rose 38%, in 2024 they rose 20%, and in 2025 they rose 32%. Dr. Kanchana Chokpaisarnsilp, research executive at Kasikorn Research Center Co., Ltd., said the cause is that the baht has weakened this year, unlike previous years when the baht strengthened, making this a good moment to convert back into baht for a larger amount of money. The decline in outstanding balances covers both US dollar and Japanese yen holdings. Meanwhile, the US central bank's latest interest rate hike has widened the gap with Thai interest rates further, though Thai rates remain unchanged at 1%. Separately, Patrick Pulia, Head of Financial Markets at Siam Commercial Bank, said the bank has an e-FCD account in the SCB EASY application offering interest of up to 5% for US dollar deposits of at least 25,000 dollars but not more than 100,000 dollars, with deposits required between August 1 and December 31, 2026.

Pi Securities stated that US economic data came in below expectations, combined with crude oil prices beginning to pull back, pressuring US government bond yields to ease slightly, which in the short term is seen as a supportive factor for the stock market. Meanwhile, the DJIA closed down 131 points, or 0.26%, last night, and Brent crude closed down 3.5% after signs that crude oil exports in the Middle East are starting to recover. Tonight, the market awaits US PCE inflation for August, which consensus expects at 0.3% month-on-month, and most recently the CME FedWatch tool sees only a 50% chance of a rate hike in October. As for the Thai stock market this morning, the baht has strengthened slightly, which could be a supporting factor for fund flows. From here, the market awaits China's long holiday, with survey results showing Chinese tourists still view Thailand as one of their top destinations. Pi Securities expects the SET INDEX to trade in a range of 1,585-1,605 and recommends large-cap sectors such as banking, telecommunications, electronics, industrial estates, airlines, hotels, and power plants. It also gives a target price for AWC of 3.30 baht, based on expected normal profit in the second half of 2026 growing strongly year-on-year, supported by room bookings growth of 20%-30% year-on-year and clarity on a plan to establish a REIT within 2026, and a target price for BA of 22.40 baht, as the third quarter of 2026 is the high season for tourism on Koh Samui.

JPMorgan Chase & Co expects the Bank of Thailand to raise its policy rate three times in 2027, by 0.25% each time, starting in the first quarter of the year, which would push the policy rate up from its current level of 1% to 1.75% by the end of 2027. That forecast runs counter to analysts at other financial institutions, who expect the Bank of Thailand to hold the rate at 1% through 2027 to support a Thai economy struggling to expand by more than 2%. JPMorgan continues to expect Thailand's economy to grow 2.5% in both 2026 and 2027, above the Bank of Thailand's estimates of 2.3% and 1.8% respectively. It also nudged up its forecast for Thailand's headline inflation slightly to 2% for 2026 and 2.5% in 2027, citing higher oil costs and broad-based price pressures. JPMorgan expects Thai inflation to breach the Bank of Thailand's 1% to 3% target range this month and to accelerate to around 4% in the first quarter of 2027.

Surat Tanboon, Senior Director of the Monetary Policy Department at the Bank of Thailand, disclosed that the baht is currently moving mainly in line with the US dollar, driven by developments in the global economy, monetary policy actions of major economies, and geopolitical tensions. As for concerns over the interest rate differential between Thailand and the United States, the Bank of Thailand assesses that financial markets have already anticipated and priced in this factor in advance, as reflected in the baht's continued good stability in the recent period. Meanwhile, the Bank of Japan's decision to raise its policy rate to 1.25% is a level that is not significantly far from Thailand's interest rate, and the Bank of Japan's 7-to-2 vote clearly reflects a lack of consensus, prompting financial markets to scale back expectations for Japan's next rate hike. Surat stressed that Thailand's current policy rate is appropriate for the country's context, and that monetary policy going forward will be guided mainly by economic trends. He assessed that the Thai economy is still recovering below its potential and that the recovery is uneven, while inflation is likely to rise on supply-side factors and is expected to gradually decline in 2027. On the external stability of Thailand's financial system, it remains strong with thick buffers, reflected in net international reserves of more than 300 billion US dollars, which exceeds international benchmark standards and covers short-term external debt by 2.8 times. Surat said that given this strong stability, the risk of severe capital outflows is limited in scope. Although some capital flowed out of Thailand during the conflict in the Middle East, it was a very small proportion compared with regional neighbours. The Bank of Thailand is therefore not concerned about the current capital movement situation. In addition, statistics from the start of 2026 to the present show that capital flows remain in a net inflow position into Thai assets, totalling more than 50 billion baht, with continuous accumulated buying in both the stock market and the bond market.

The Financial Markets Group at Siam Commercial Bank assesses that the baht will move in a range of 33.15-33.40 baht per dollar today, with the baht strengthening again in line with slightly lower crude oil prices, while the US dollar index held steady and the yield on 10-year US Treasury bonds declined, following a sharp drop in UK government bond yields. The Bank of England kept interest rates at 3.75% and warned that it may raise rates if inflation picks up due to conflict in the Middle East, while the United States may postpone the announcement of tariffs on imports of goods with excess production capacity, at least until after the meeting between Trump and Xi Jinping.

The minutes of the Monetary Policy Committee meeting No. 4/2026 disclosed that the committee voted unanimously to keep the policy rate unchanged at 1.00% per annum, in order to preserve the capacity of monetary policy and support Thailand's still-uneven economic recovery. The economy is expected to expand close to the previous assessment, driven by the technology and artificial intelligence cycle that has boosted exports and private investment, which grew better than expected through investment in data centres and by leading technology companies. However, the committee noted that the benefits to the Thai economy remain limited, because exports are concentrated in AI-related goods that rely heavily on imports, investment in data centres creates lower value added and employment than past investment, and other export goods and small and medium-sized enterprises still face declining competitiveness. Private consumption has slowed amid high living costs, slow recovery in household income, and accumulated household debt problems, and is expected to slow again in the fourth quarter of 2026, while SME credit continues to contract in almost every business sector. Inflation is expected to rise temporarily on oil prices and the effects of El Nino on fresh food prices. The committee assessed that further rate cuts in a non-crisis situation may not be worth the cost, because keeping rates too low for too long could accumulate vulnerabilities from debt accumulation and inefficient resource allocation. The long-term solution therefore must rely on coordination with fiscal policy, targeted financial measures to help SMEs, and economic restructuring to raise productivity, while preserving policy space to cushion future geopolitical and global trade uncertainty.

A report on Thailand's economic outlook, financial conditions, and monetary policy implementation by Warangkana Imudom of the Monetary Policy Department at the Bank of Thailand, presented to the 4/2026 meeting of the Economic and Academic Affairs Committee on 7 September 2026, states that the Thai economy is still expanding at a low and uneven pace, relying mainly on the technology and semiconductor cycle and the tourism sector. Against this backdrop, the strengthening baht and exchange rate volatility have become a drag on the country's competitiveness. The report notes that looking only at the baht-to-US-dollar exchange rate is insufficient; it is necessary to consider the NEER, which weights the baht against a basket of 25 currencies of trading partners and competitors, and the REER, which adjusts the NEER for inflation differentials to reflect true price competitiveness. In August 2026, the average NEER25 stood at 50, under an average exchange rate of 33.04 baht per US dollar. Meanwhile, the structure of technology and industrial exports relies on imported raw materials for as much as 70%, so although imported component costs benefit somewhat, the prices of finished export goods are at a disadvantage compared with Vietnam, Malaysia, Indonesia, and the Philippines, which manage exchange rate flexibility and REER levels better. The report raises the question of whether monetary and fiscal policymakers will seriously coordinate their tools to manage the exchange rate index in line with competitiveness, before the advantages of Thailand's export base are eroded beyond easy recovery.

Kasikorn Research Center has maintained its forecast for Thailand's economic growth in 2026 at 2.0%, assessing that the economy is likely to slow in the second half compared with the first half, weighed down by weaker purchasing power, softer exports after a strong surge in the first half, and imports growing faster than exports, which is pressuring the trade balance and the current account to a record high this year. Supporting factors still come from private investment and electronics exports, which are being boosted by the AI and data center cycle, as well as tourism, which is gradually recovering thanks to global events in the fourth quarter of 2026. Risks remain the conflict in the Middle East, El Nino conditions, and US trade measures. Thai inflation is expected to average 1.8% in 2026 and accelerate in the fourth quarter of 2026, while the Monetary Policy Committee is likely to keep the policy rate at 1.0% throughout the year. Dr. Kanchana Chokpaisarnsilp said Kasikorn Research Center is keeping its forecast for overall loan growth in 2026 at 0.5% from a year earlier, with large corporate loans expected to sustain momentum above 5.0%, while the non-performing loan ratio of the commercial banking system could edge up slightly from 2.76% of total loans at the end of the second quarter of 2026 toward a range of 2.80% to 3.00% by the end of 2026. The baht is expected to end the year at 33.80 per dollar. Dr. Rujiphan Assarat said Thailand's automotive industry is facing a major turning point, with domestic vehicle production likely to decline against continued growth in imports, especially battery electric vehicles, which accounted for as much as 72% of the total value of Thailand's vehicle imports in the first seven months of 2026. The government is considering measures using the excise tax mechanism to encourage operators to shift from imports to production using more local parts, and if this can be achieved as targeted, it is expected to help Thai vehicle production return to growth in 2027 after an estimated contraction of about 1.8% in 2026.

Krungsri Securities (KSS) expects the SET to move within a Sideways/Up range today, with resistance at 1,626 and 1,632 points and support at 1,610 and 1,605 points. Meanwhile, Brent crude oil prices this morning are hovering near the psychological resistance of 100 US dollars, following the prolonged war, which may pressure De-escalation-themed stocks and increase caution towards risk assets due to inflation and interest rate concerns. However, the average crude oil price this year at 87 dollars remains positive for SET market earnings if the full-year assumption stays below 95 dollars. The energy and energy security sectors are the standout themes, while fund flows have been net buyers of Thai stocks for 5 out of the last 6 trading days. The baht has strengthened to 32.9 baht per dollar, supported by the upcoming ECB meeting tomorrow, which is expected to raise interest rates, and the PDP2026 plan, which is expected to proceed, as well as the Thai Tiew Thai Plus project, which has reached a conclusion. Recommended stocks include DELTA, GPSC, and SCC.

Recent Thai Baht strength may slow as external conditions become less supportive, according to OCBC's Christopher Wong. The analyst notes that Bank of Thailand Governor Vitai's comments suggest further rate cuts are unlikely without another shock, which tempers easing expectations and could limit additional gains for the currency.

Bank of Ayudhya (Krungsri) expects the Monetary Policy Committee (MPC) to hold the policy interest rate at 1% throughout 2026, viewing that a rate hike or cut is difficult due to limited policy space, and that using interest rate policy alone cannot solve structural problems. A senior director of the Global Markets division said that targeted measures, such as resolving debt for vulnerable groups and enhancing liquidity for SMEs, are more appropriate. He also recommended attracting foreign direct investment (FDI) to enhance competitiveness and escape the low and uneven economic growth. He noted that the Thai economy expanded 2.4% in the first half of the year, but private consumption remains weak, and SME loans have contracted for 16 consecutive quarters. Meanwhile, the baht is likely to strengthen slightly, with Krungsri estimating a range of 32.25-33.75 baht per US dollar. It also expects the Fed to hold rates this year, although some in the market expect one hike.

Strategists from Krungthai GLOBAL MARKETS, a unit of Krungthai Bank, expect the baht to move within a range of 32.80-33.00 baht per dollar today. The baht opened stronger this morning at 32.90 baht per dollar, from the previous close of 33.01 baht per dollar, following the dollar's weakness as the Japanese yen strengthened continuously and as FOMC member Christopher Waller's remarks were not very hawkish, leading the market to lower the probability of a Fed rate hike to about 33%. However, the baht's appreciation may slow as the market awaits U.S. labor market data and the situation in the Middle East. The next support is at 32.50-32.60 baht per dollar, with resistance at 33.00 baht per dollar.

The Bank of Thailand (BOT) has confirmed it will not lower its policy interest rate further from the current level of 1%, as it deems this rate appropriate and still has room to cut by 0.5% if an economic crisis occurs. BOT Governor Sethaput Suthiwartnarueput stated that quantitative easing (QE) measures would not be effective for Thailand because its financial system structure relies primarily on financial institutions. Meanwhile, the BOT may consider supplementary tools, such as reducing contributions to the Financial Institutions Development Fund (FIDF), which previously helped lower lending rates by 0.4%. However, rate cuts cannot address the real structural problems of the Thai economy, such as education quality, an aging society, high household debt, and corruption, which require serious government-led reforms.

The baht opened this morning at 33.18 baht per dollar, strengthening from the previous close of 33.32 baht per dollar, in line with the dollar's depreciation after the Japanese yen strengthened on concerns about intervention and the possibility that the Bank of Japan will raise interest rates by 25-50 basis points at its September meeting. The baht moved within a range of 33.10-33.34 baht per dollar. Meanwhile, gold prices rebounded to $4,388 per ounce, but the baht's appreciation was limited by tensions in the Middle East and high energy prices. Strategists from Krungthai GLOBAL MARKETS see the baht's 24-hour range at 33.05-33.30 baht per dollar, recommending the use of options strategies to hedge against high uncertainty.

Patrick Pouyanné, Head of Financial Markets Function at Siam Commercial Bank, said that the baht still has room to weaken in the short term but is likely to gradually strengthen towards the end of the year if war risks subside and the U.S. Federal Reserve does not raise interest rates further. He estimates the short-term baht range at 33.30-33.80 baht per U.S. dollar and the year-end strengthening range at 32.75-33.25 baht per U.S. dollar. Factors pressuring the baht in the short term include the risk of war with Iran, additional U.S. sanctions, and the possibility of a return to trade war after the U.S. imposes import tariffs on countries with excess production capacity, such as China, as well as the risk that Thailand may face additional import tariffs this month. Meanwhile, Wachirawat Banchuen, senior financial market strategist at Siam Commercial Bank, said that long-term U.S. Treasury yields remain high. Although the U.S. Treasury has increased its buyback of 10-30 year bonds to 28 billion dollars per quarter, that size is still small compared to the issuance of long-term bonds of about 250 billion dollars per quarter, limiting the impact of the measure. He estimates the 2-year bond yield at year-end at 4.00-4.20% and the 10-year yield at 4.50-4.70%. This bond buyback measure may be seen as an attempt to cap long-term yields without addressing the underlying issues of deficits and public debt, which could weaken the dollar in the long run and support baht appreciation, even though the Thai economy remains weak.