Economic Implications of Thailand’s Weakening Baht in 2022

Thailand’s financial experts believe the plunging value of the baht is ominous and have raised concerns about its impact on the Thai economy.

On Monday (July 19), the Thai currency to 27.73 to the US dollar, its lowest in 15 years and eight months, according to Kasikorn Research Center.

Foreign investors sold a total of 1.1 billion baht worth of Thai shares between July 11-15. Since early this year, net buys have totalled 122 billion baht. Since early this year, they also sold Thai bonds resulting in net capital outflows of 2.1 billion baht from the Thai bond market.

Due to the fast-rising inflation rate, consumers in Thailand and many other countries may feel the pinch.

Bank of Thailand (BOT) senior director said some people had lost money while others had gained from the weakening Thai currency.

As raw material and energy prices rise, the manufacturing sector complains about rising production costs.

Daranee Saeju, senior director at BOT’s financial markets department, told Thai PBS, “We don’t hear complaints from other groups.”

The net positive impact of the baht

According to Daranee, people should compare the Thai currency’s exchange rate with other currencies, adding that other regional currencies have also weakened against the dollar.

According to the nominal effective exchange rate, the baht depreciated only 1.5 percent against the dollar on July 5 despite a 7.6 percent decline in value against the dollar.

Thailand’s economy depends heavily on exports of goods and services, which make up 67 percent of the country’s gross domestic product (GDP), according to Pisit Puapan, executive director of the macroeconomic policy bureau Fiscal Policy Office.

In export markets, Thai products are more competitive due to a weak Thai currency.