BANGKOK, THAILAND – Thailand’s baht hit a five-year high, intensifying pressure on exporters, farmers and tourism while growth only edged up and criticism of the central bank mounted.
Baht at five-year high despite rate cut
The baht climbed this week to 30.98 per US dollar, its strongest level in almost five years, even though the Bank of Thailand had cut its policy rate by 25 basis points to 1.0 percent on 27 February.
The continued appreciation despite monetary easing highlighted a widening gap between the central bank’s stated stance and developments on the foreign exchange market.
Srettha urges weaker baht as growth lever
In a 27 February column in business daily Prachachat Business, former prime minister Srettha Thavisin described a
“currency that is running away”
said Srettha Thavisin, former prime minister. and called for more active exchange-rate management to improve competitiveness quickly.
He argued that a somewhat weaker baht would immediately support exports and tourism and raise the baht value of overseas earnings by Thai investors, feeding directly into higher liquidity and stronger domestic demand.
Growth picks up slightly but trails potential
The economy grew 2.4 percent year-on-year in the fourth quarter of 2025, beating earlier forecasts and prompting rating agency TRIS Rating to raise its 2026 projection from 1.7 to 2.1 percent.
Despite this, the expansion rate of around 2 percent remained below estimated potential and behind several neighbouring countries, limiting the scope for further baht appreciation.
Exports, farming and tourism lose price edge
The strong baht made Thai goods more expensive in foreign currencies, while production costs, wages and quality were unchanged, leading international buyers to switch towards suppliers with weaker currencies.
Agricultural and food products, traditionally a strength of Thailand, came under particular pressure because producers in nearby countries often offered similar quality at lower prices.
Farmers and small exporters squeezed on margins
For farmers and small-scale producers with already thin margins, exchange rate swings had an immediate impact on prices, Srettha said, as many firms lacked natural currency hedges.
He stressed that product quality was not the problem, but relative prices, and raised the question of whether a strong baht truly served the country’s economic interests.
Tourism hit by higher travel costs
The tourism sector recorded 3.3 million foreign arrivals in January, but the stronger baht increased the cost of staying in Thailand and could lead visitors to shorten trips or cut spending on excursions and shopping.
According to Srettha, even a slight, gradual depreciation could improve perceptions of value for money and help encourage guests to stay longer and spend more in the country.
Remittances lose purchasing power at home
Many Thais working or investing abroad received fewer baht for their transfers when the currency was strong, immediately reducing the domestic purchasing power of these incomes.
With a weaker baht, the same foreign-currency amounts would convert into more baht that could be used for consumption, housing, investment and family support, thereby boosting real economic activity without extra government spending.
Debt burden and political risks weigh on spending
Households were heavily indebted, with the debt-to-GDP ratio at 86.8 percent in the second quarter of 2025, the highest among ASEAN countries, significantly constraining consumption.
The consumer confidence index fell from 53.2 to 51.9 in December 2025, partly after the dissolution of parliament and amid unconfirmed 8 February election results, prolonging uncertainty over the budget and the economic outlook.
Delayed budget could weaken 2027 momentum
TRIS warned that adoption of the 2027 budget could be delayed by two to three months, as election results, legal proceedings and public sentiment slowed political processes.
As in previous election cycles, such a delay would push back government spending and investment and further weaken growth in the following year.
Trade conflicts and new US tariffs add external risks
Exports rose 12.7 percent in 2025 in US dollar terms, driven mainly by electronics and machinery, but this high base could mechanically dampen growth rates in the current year.
At the same time, US trade policy created fresh uncertainty after the Supreme Court struck down certain retaliatory tariffs as unconstitutional, while the administration used Section 122 of the 1974 Trade Act to impose a global transitional tariff of up to 15 percent for 150 days and kept existing 25 percent tariffs on cars, car parts, steel and aluminium.
Low inflation gives central bank room to move
Rating agency TRIS expected Dubai crude to average between 60 and 70 US dollars per barrel this year, which, together with a global slowdown and higher OPEC+ supply, pointed to limited price pressure.
It forecast headline inflation of 0.0 to 0.5 percent for 2026 after an average of minus 0.13 percent in 2025, while core inflation stood at 0.83 percent last year, leaving the central bank with room in principle for further easing.
Mixed January data with strong trade flows
The Bank of Thailand reported a 7 percent month-on-month rise in exports in January 2026, driven by computer components and telecommunications equipment bound for the US, while imports jumped 30.1 percent, mainly due to electronics and household appliances from Taiwan.
The import surge also reflected concerns about a global chip shortage, while private consumption grew only 1 percent after 2.3 percent in December as stimulus programmes expired, and investment in machinery, vehicles and electric cars was supported by the EV 3.0 measure.
Central bank flags four key risks
For the coming months, the central bank pointed to four key factors: unclear US trade policy and geopolitical tensions, volatile tourism dynamics, the financial position of industry and the timetable for the 2027 budget and related government measures.
It expected growth to cool after temporary impulses faded, increasing the importance of the exchange rate as an additional policy lever.
Debate over Bank of Thailand’s stance intensifies
Against this backdrop, the baht’s trajectory moved to the centre of economic policy debate, as the currency remained strong despite low inflation, high debt and only moderate growth, which critics said overstated the fundamentals.
Srettha called for a carefully communicated, gradual depreciation aligned with the economic structure, while the Bank of Thailand continued to prioritise stability and left open whether it was ready to adopt
“stronger and extraordinary measures”
said Srettha Thavisin, former prime minister.