Currency Strength Sparks Tourism Concerns
Bangkok – The Thai Baht has reached a four-year high, raising concerns for the country’s vital tourism sector ahead of the high season. While lower hotel rates and cheaper flights are intended to attract visitors, industry representatives warn of a potential decline in spontaneous, independent travelers.
The Baht climbed on Tuesday to its highest level since June 2021, gaining roughly eight percent this year. For export-dependent Thailand, already impacted by a 19 percent U.S. tariff increase on its exports, the strong currency adds further pressure.
Tourism Industry Expresses Worry
Udom Srimahachota, Vice President of the Western Chapter of the Thai Hotels Association (THA), fears that undecided travelers may turn to more affordable destinations like Vietnam or Japan. Japan has benefited for years from a weak Yen, drawing tourists from around the world.
Despite these concerns, the industry expects an influx of long-haul visitors, particularly from Europe, in the fourth quarter. Many have already booked trips through agencies at discounted contract rates. International flight prices have also fallen: direct flights from Europe to Thailand, which previously cost between 70,000 and 80,000 Baht, are now priced at 50,000 to 60,000 Baht.
Hotel rates are expected to remain moderate during the peak season. Due to high room availability and a drop in arrivals, THA anticipates occupancy rates of 70–80 percent in Hua Hin and Cha-am in the fourth quarter. Room prices are likely to be only 15–20 percent higher than off-season rates, similar to last year.
Central Bank Promises Intervention
The Bank of Thailand (BoT) has announced measures to manage currency volatility. Assistant Governor Pimpan Charoenkwan said Monday: “The Bank of Thailand continues to closely monitor Baht movements and is prepared to manage volatility to mitigate the impact on businesses.”
The central bank identifies a weak U.S. dollar and rising gold prices as the main drivers of Baht strength. Thailand is a major hub for gold trading, and the Baht shows a stronger correlation to gold prices than other emerging-market Asian currencies. When Thais sell gold—a popular investment—the dollar proceeds are converted into local currency, further strengthening the Baht.
“Gold has performed very strongly,” noted Alan Lau, a currency strategist at Malayan Banking, highlighting Thailand’s role as a gold trading center.
Political Calm Supports the Currency
In addition to gold, easing political uncertainty has contributed to Baht strength. Following Anutin Charnvirakul of the Bhumjaithai Party being elected Prime Minister on Friday, $131 million flowed into Thai government bonds on Monday—the largest inflow in roughly three months.
Tourism Numbers Lag Behind Last Year
Thailand welcomed 22.3 million foreign tourists by September 7, a 7.1 percent decline year-on-year. China, the largest individual market, contributed 3.16 million arrivals, about one-third fewer than last year.
Udom hopes the new tourism minister under Prime Minister Anutin will implement swift measures to revitalize the sector, including a co-financing program for domestic travel and the introduction of safety certification for travel providers.
Threshold at 31 Baht per Dollar
As long as the Baht stays below 31 per dollar, the impact on tourism should remain limited, Udom said. He urged the new government and the central bank to adopt currency measures that benefit the economy most.
The Joint Standing Committee on Commerce, Industry and Banking, a private-sector association, reiterated last week its concern over the persistent Baht strength, which does not align with the slowing economy.
The Bank of Thailand warned that financial market prospects remain highly uncertain and urged the private sector to regularly hedge currency risks to minimize the impact of exchange rate fluctuations.