BANGKOK, THAILAND – Thailand’s surging baht has turned the country into one of Asia’s most expensive destinations for foreign visitors, even as growth at home remained weak.
Tourists feel the stronger baht
At Bangkok’s Suvarnabhumi airport, visitor Alfred received just 3,700 baht for 100 euros in December 2025, compared with more than 3,900 baht on his last trip three years earlier, cutting his holiday budget by around ten percent overnight. He was one of millions who felt the impact of one of Asia’s strongest currency moves in 2025. The baht climbed to about 31.50 per US dollar, roughly 37 per euro, its firmest level in more than four years.
Currency strength defies weak economy
Since the start of 2025, the Thai currency gained more than eight percent against the dollar, making it Asia’s second-strongest unit after the Taiwan dollar. This performance contrasted sharply with an economy described as anything but robust. Siam Commercial Bank cut its 2025 growth forecast from 2 percent to 1.8 percent and warned of a possible slowdown to 1.5 percent in 2026.
Gold trade at the core of the rally
Analysts traced much of the paradox to a boom in gold. Thailand became one of Asia’s key gold trading hubs in 2025, with gold exports in the first seven months jumping nearly 70 percent to more than 254 billion baht, or about 6.9 billion euros. Shipments worth 71.3 billion baht, roughly 1.9 billion euros, went to Cambodia alone.
The surge created an unusually tight link between the gold price and the currency. In June, the correlation reached 0.88, the highest in almost three years, meaning that a rise in global gold prices was followed almost automatically by a stronger baht. Thailand imported most of its gold from Switzerland, Hong Kong and Singapore, processed it and re-exported it as part of a regional trading hub role.
Central bank steps in
The Bank of Thailand intervened to curb upward pressure, tightening foreign-exchange forwards for gold traders in December 2025. The central bank held record foreign reserves of 272.3 billion dollars, around 253 billion euros, as a buffer. In October 2025 it kept its key rate at 1.5 percent, defying expectations of a cut to 1.25 percent after an earlier reduction in August to support the weak economy.
Weak US dollar amplifies gains
A softer US dollar added fuel to the baht’s rise as the American currency lost significant value during 2025 amid US economic uncertainty. Signals of rate cuts from the US Federal Reserve prompted capital to flow out of dollar assets into other markets. Thailand also benefited from a current-account surplus that had already reached 13 billion dollars, about 12 billion euros, by August, exceeding the central bank’s full-year projection.
Tourism downturn as prices rise
The flip side of the strong baht hit tourism hard. Between January and the end of September 2025, Thailand welcomed only 23.45 million visitors, a decline of 7.44 percent from a year earlier, with Chinese arrivals dropping sharply. According to calculations cited in the report, a Chinese visitor paid on average about four percent more for goods and services in Thailand than in other regional destinations, while Vietnam became roughly six percent cheaper.
Pattaya and Phuket count the cost
In Pattaya, bar owners and other businesses reported marked changes in spending patterns. One beer bar operator said a stronger baht meant fewer tourists with money to spend, especially from Western markets, and warned that the city’s tourism-driven “heart” was now struggling. Thaneth Tantipiriyakij, president of the Phuket Tourist Association, estimated that the currency had pushed costs for foreign visitors up by about ten percent.
Export sector slows under currency pressure
Beyond tourism, exporters also felt the strain as Thai goods became more expensive on world markets. Export growth slowed in August to its weakest pace in almost a year, while competitors such as Vietnam benefited from weaker currencies. The Federation of Thai Industries warned of long-term risks, noting that gold had become one of the three most important export products to Cambodia, rising from 12 billion baht in 2023 to 105 billion baht in 2024, or from about 324 million to 2.8 billion euros.
Regulating the gold boom
Thailand planned to introduce its own gold benchmark price in the first quarter of 2026. The five largest gold dealers, which handled transactions worth more than four trillion baht in 2024, about 108 billion euros and over 60 percent of the regional market, were working on the new reference. The price was to be set twice daily in both US dollars and baht to reduce reliance on the London gold fix.
The central bank cautioned, however, that larger trading volumes could expose the currency to even greater swings. Officials feared that further inflows linked to gold could amplify volatility in the baht and complicate monetary policy.
Money-laundering concerns emerge
Rapidly rising gold exports to Cambodia also raised suspicions. Activist Sonthiya Sawasdee called on the Anti-Money Laundering Office to investigate the flows, saying he suspected that money from Cambodian gambling and fraud operations might lie behind the baht’s rise. The Federation of Thai Industries also voiced concern, with Kriengkrai Thiennukul warning that the exports could be tied to money laundering or fraud networks.
Thailand mainly bought raw gold from Switzerland, refined it and sold it via Singapore into Cambodia. Observers questioned what Cambodia was doing with such large quantities of the metal and whether the pattern pointed to illicit financial activity.
Regional rivals gain advantage
While Thailand wrestled with a strong currency, neighbouring countries reaped benefits. The Vietnamese dong lost 3.5 percent against the dollar in 2025, making Vietnam significantly more attractive for price-sensitive travellers. Malaysia and Indonesia also reported rising tourist numbers as relative costs shifted in their favour.
Analysts at Siam Commercial Bank calculated that Chinese tourists paid roughly four percent more in Thailand than elsewhere, while Vietnam was about six percent cheaper. The price gap widened as the baht strengthened, posing a growing threat to a Thai economy heavily dependent on tourism.
Mixed forecasts for the baht
Patrick Pulia of Siam Commercial Bank predicted that the baht’s strength could ease moderately in the second half of the year, with a projected range of 31.50 to 32.50 per dollar, driven by expected US Federal Reserve rate cuts and capital outflows from the United States. Nomura Securities was more optimistic on the Thai currency and saw it rising to around 31.30 per dollar by year-end. Both expected the central bank to step in if gains became excessive.
Burin Adulwatana from the Kasikorn Research Center anticipated two Thai rate cuts in October and December to weaken the baht. He argued that lowering borrowing costs could relieve pressure on tourism and exports, even though core inflation stood at a modest 0.9 percent and consumer prices in September were 0.72 percent lower than a year earlier.
Investors face a dilemma
For foreign investors, the strong currency posed a complex choice. On one hand, the firm baht offered stability and reduced exchange-rate risk for investments in Thailand. On the other, the same strength threatened the country’s fragile recovery and raised questions about longer-term prospects.
The trade-weighted baht index reached its highest level since the 1997 Asian financial crisis, underscoring the unusual nature of the situation. The central bank allowed economic fundamentals to guide the currency and intervened only to smooth out extreme volatility, wary of undermining investor confidence.
Retirees and visa rules under pressure
Foreign retirees in Thailand also felt the impact. Those required to show a monthly income of 65,000 baht for an annual visa saw the euro value of that threshold rise as the baht strengthened. At 37 baht per euro, the amount equalled about 1,757 euros a month.
If the baht advanced to 35 per euro, retirees would need around 1,857 euros, a difference of 100 euros a month that could be critical for those on tight budgets. Many expected that the government might eventually have to adjust visa requirements if the currency remained strong.
Government seeks a balancing act
Prime Minister Anutin Charnvirakul moved to reassure markets after Fitch revised Thailand’s rating outlook to negative in September, citing weak growth and political uncertainty. The government said it aimed to balance investor confidence with relief for the domestic economy. The Tourism Authority promoted a strategy of “quality over quantity,” targeting wealthier visitors who spend more per trip.
The push for higher-spending tourists clashed with the reality of a pricey currency that risked deterring exactly those travellers. Higher hotel, restaurant and transport costs made Thailand look less competitive compared with its neighbours, undermining efforts to upgrade the sector.
Economists puzzle over the paradox
Economists described the situation as a macroeconomic puzzle. Normally, a strong economy supports a strong currency, but Thailand’s case showed the reverse: a strong baht alongside a weak economy. External drivers such as gold exports and the soft dollar played a central role and bore little relation to domestic economic performance.
Dr Amorntep Chawla of CIMB Thai Bank attributed the appreciation mainly to the repatriation of gold-export revenues. These inflows were converted into baht, artificially boosting demand for the currency, while underlying domestic activity remained subdued.
Capital flows heighten volatility
Despite sluggish growth, Thailand attracted substantial capital inflows into its stock market. Periods of strong inflows tended to coincide with baht appreciation, while outflows usually led to a weaker currency. This pattern magnified exchange-rate volatility and made policy timing more difficult.
As a fast-growing emerging economy, Thailand regularly drew significant investment, but history showed that in times of financial crisis money often fled to safer currencies. Policymakers warned that the current bout of baht strength could reverse quickly in a global downturn, posing fresh risks.
Uncertain outlook for tourism and trade
The coming months were seen as decisive. Continued US rate cuts could further weaken the dollar and strengthen the baht, intensifying problems for tourism and exporters. A global recession, by contrast, might prompt capital to flow out of Thailand and loosen the currency.
The Bank of Thailand faced the challenge of choosing the right moment to act. Intervening too early could shake investor trust, while moving too late risked deeper damage to key sectors. Officials described an increasingly narrow path between exchange-rate stability and economic growth.
Implications for future visitors
For travellers from Europe and other Western regions, the message was clear: Thailand had become more expensive. Those planning holidays were advised in the report to watch exchange rates closely and consider neighbouring countries that now offered better value, even though Thailand continued to appeal with its range and quality.
The article asked whether the government would step up support for tourism, for example through tax breaks for hotels, subsidies for airlines or targeted marketing. Yet it concluded that as long as the baht stayed strong, such measures could only partly offset the loss of price competitiveness.
Many forces behind one strong currency
Multiple factors combined to create Thailand’s unusual position: a weak US dollar as the backdrop, booming gold trade as a direct driver of currency demand, cautious interest-rate policy that avoided aggressive easing, and ongoing capital inflows into financial markets. Together, they pushed the baht higher even as domestic growth faltered.
The situation illustrated how globalised and interconnected modern finance had become, with exchange rates increasingly shaped by flows and trades far removed from local factories or hotels. For Thailand, it meant a delicate balancing act between short-term currency gains and the long-term health of tourism and exports.
The report noted that the coming months would show whether the government and central bank could maintain this balance. For travellers like Alfred, the outcome would be visible not in policy statements but in the number of baht they received at the exchange counter—and in how far their holiday money would go in an ever more expensive paradise.