BANGKOK – Thailand’s Baht has climbed to its strongest level in four years, and the timing could not be worse for two pillars of the economy. An 8% rise against the US dollar since January has chipped away at Thailand’s price edge.
The increase in the baht is turning holidays more expensive for visitors and squeezing exporters on thin margins. With peak travel season approaching, the gains threaten to slow a fragile tourism rebound and add pressure to exporters already hit by US tariffs.
The move has been swift. On 1 January 2025, one US dollar bought 34.23 baht. By late September, it traded near 31.75, with brief dips to 31.665 on 17 September. It is the sharpest quarterly rise in decades, outpacing peers such as the Vietnamese dong and Malaysian ringgit, which have been steadier in similar conditions.
Analysts at SCB Economic Intelligence Center call it the biggest appreciation since the 1997 crisis. They point to a weakening dollar after Donald Trump’s second inauguration, a surge in gold prices on safe-haven demand, and capital returning to Thai bonds.
The rally jars with soft domestic numbers. Growth this year sits below 2%, held back by weak spending at home and a slowdown in factories. Early in the year, Kasikorn Research Centre expected the baht to end 2025 near 35.50 per dollar, helped by expected US rate cuts and trade frictions.
Stabilizing the Baht
The opposite has happened. Policymakers are now on the back foot. Outgoing Bank of Thailand governor Sethaput Suthiwartnarueput has called urgent meetings on possible steps. Incoming Prime Minister Anutin Charnvirakul says stabilizing the baht is a priority.
The Federation of Thai Industries, through vice chairman Nava Chantanasurakon, stresses the need for a joint response that respects central bank independence.
Tourism is feeling the strain the most. The sector accounts for more than a tenth of GDP and supports one in five jobs. After COVID-19, hopes were set on 40 million foreign arrivals in 2025, close to pre-pandemic highs. The numbers tell a different story.
From January to 21 September, international visitors reached 23.45 million, down 7.44% from 2024. The Tourism Authority of Thailand has cut its forecast to 33.4 million for the year, a 6% drop. East Asia has faded fast, with Chinese arrivals down 35% and ASEAN markets down 8%.
A stronger baht has made Thailand look pricey. TAT governor Thapanee Kiatphaibool warns that visitors now view Thailand as costlier than Japan or Vietnam. She estimates revenue could fall 15% to 17% as travellers spend less on hotels, spas and dining.
Americans, who spend about 2,000 dollars per trip, have pulled back. US arrivals rose 22% in January but fell 2% from May to August, then dropped another 5% in September. The weaker dollar, alongside tariff tensions from April and uncertainty in July, has cut buying power. A Bangkok hotel room that cost 50 dollars last year now costs about 57.
Travellers Turn to Vietnam
Europe has held up better. Arrivals from the UK, France and Germany have risen by double digits since April, helped by cheaper fares, now around 50,000 to 60,000 baht for a return ticket from Europe. Even so, Thai Hotels Association president Theinprasit Chaiyapatranun warns the support will fade if the baht stays stronger than 31 per dollar into 2026.
High-season bookings are softening. Hotels are shifting towards premium segments, while mass-market travellers turn to Vietnam, which is up 21% in arrivals. Non-performing loans among tourism SMEs are up 7.6%, hurting local economies from Phuket to Pattaya.
Exports, which make up roughly 60% of GDP, face a harsh backdrop. Thailand ships about 300 billion dollars of goods each year, led by electronics, autos and farm products. A 19% US tariff wall, Thailand’s largest market, had already cut into sales. The stronger currency makes it worse by lifting production costs in dollar terms and dulling price competitiveness.
FTI chairman Kriengkrai Thiennukul says Thai goods are now about 8% more expensive in dollars than rivals. Vietnam’s stable dong helps it undercut Thai offers, even with a 20% tariff. Rubber, cassava and shrimp, which draw on local inputs, are hit hard. Revenues in baht shrink even when volumes hold steady.
The auto sector shows the pressure clearly. Plants that supply Toyota and Honda are absorbing losses to keep orders. Margins have thinned, and some firms report profits down 10% to 15% since June.
Associate Professor Dr Anusorn Thamjai of the University of the Thai Chamber of Commerce warns of a feedback loop. Lower export income reduces hiring and spending at home, which deepens the slowdown. Volatility has also risen, up 8.7% this year, which makes hedging costly for SMEs. Smaller firms account for about 70% of shipments.
Policy Rate Cuts
There are benefits to a strong baht, but they are limited for most exporters. Oil imports are cheaper, down about 7% in baht terms, and dollar debts weigh less for large companies in sectors like petrochemicals and airlines.
For firms that rely on overseas sales, these positives do not offset lost pricing power. Wisit Limluecha at the Thai Chamber of Commerce says the currency gains clash with a weak recovery.
Attention now turns to the Bank of Thailand’s board and the new cabinet under Anutin. Cuts to the policy rate, currently 1.75%, could ease the baht. Kasikorn’s Burin Adulwattana expects only a small reduction in the fourth quarter.
TAT is pushing fresh marketing, visa waivers for Indian travellers, and targeted promotions in Europe. Exporters are pressing for tariff relief and quicker refunds. Thapanee urges a shift to value over price, through sustainable tourism and higher value exports.
Some expect the currency to settle near 32 baht as gold cools and US fiscal risks ease. SCB’s analysts, including Pulia, see scope for stabilization. For 70 million Thais, the outcome matters. Tourism and exports are not abstract numbers.
They are beach vendors, factory workers and family businesses across the country. If the baht keeps climbing, the strain will spread, and the country’s trademark smile could start to fade.
