Thailand’s baht has gone from being one of Asia’s strongest currencies before the pandemic to one of its worst performers this year as the coronavirus crisis ravages its crucial tourism sector.
The Thai currency is down more than 9 per cent against the dollar since the end of 2020, placing it among this year’s weakest performers globally alongside peers such as the Turkish lira and Peruvian sol.
The loss of tourism dollars on which Thailand’s economy relies, combined with a wave of Covid-19 infections that has quashed hopes of a quick economic recovery, have turned formerly bullish buyers of its assets into bears.
“The baht is uniquely exposed to the collapse in cross-border services, and obviously tourism is the big one,” said Mark Baker, investment director with Aberdeen Standard Investments. “That number has basically collapsed to zero, and there has been a massive balance of payments shock.”
In 2019, the last pre-pandemic year, Thailand hosted a record 40m foreign visitors. Tourism was a reliable source of foreign exchange that kept the current account in significant surplus, and foreign investors’ interest in the baht, high. Since the start of the pandemic, the reversal of fortunes has been stark.
In the 12 months to the end of June, Thailand’s current account deficit was $2.2bn, a “massive turnround” from the $40bn surplus the country reported before the pandemic, said Khoon Goh, head of Asia research for ANZ in Singapore.