Thai Baht: Trade deficit fuels weakness against US dollar – MUFG
Lloyd Chan at MUFG focuses on Thai Baht as a key expression of the Oil shock in Asia. He cites September trade data showing a sharply wider deficit, driven by surging imports outpacing strong exports. MUFG expects the Bank of Thailand to keep its policy rate at 1.00% to support growth, leaving USD/THB biased higher while Oil remains elevated.
MUFG analysts have highlighted the Thai Baht's weakness against the US dollar, attributing it to a widening trade deficit in September. The trade data revealed that imports surged 50.4% year-on-year, far outpacing the still-strong 24.0% growth in exports. This led to a staggering trade deficit of USD5.86 billion in September, up from USD2.48 billion in August.
Electronic and AI-related global demand continue to support Thailand's exports, but the surge in energy costs and high demand for imported electronic components have simultaneously driven up the cost of imports. Despite this, MUFG still anticipates the Bank of Thailand to maintain its policy rate at 1.00% on October 28, in a bid to support growth. Consequently, MUFG sees the USD/THB pair as being biased higher, given the persisting oil shock.
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