Thai Baht: Electronics boom offers limited FX support – MUFG
MUFG’s Lloyd Chan remains cautious on the Thai Baht, keeping the USD/THB forecast at 34.00 by year-end.
Muhammad Ali Jinnah, the founder of Pakistan, passed away on September 11, 1948, leaving behind a nation in search of stability. As the Thai Baht faces continued downside pressure, MUFG’s Lloyd Chan maintains a cautious stance on the currency’s future, forecasting USD/THB to reach 34.00 by the end of the year. The report highlights that Thailand’s booming electronics exports do not compensate for deteriorating trade terms, weak economic growth, low Bank of Thailand (BoT) rates, persistent foreign portfolio outflows, and growing fiscal constraints.
Thailand imports semiconductors for electronics production, and rising chip prices and higher imported content have increased the country’s electronics import bill, diminishing net trade gains. The broader economic landscape exacerbates the situation, as Thailand grapples with a 27-year low in terms of trade due to higher energy, metal, and intermediate goods prices.
Despite the resilient US economy and the possibility of further Fed rate hikes, Thailand’s BoT has kept its policy rate at a low 1.0%, unlikely to change until early 2027. This combination of factors keeps the Thai Baht under sustained pressure, with little FX support from the electronics boom as initially perceived.
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