PATTAYA, THAILAND – A persistent strong baht despite a sluggish economy has eroded the spending power of European tourists and retirees in Thailand.
Everyday shock at the ATM
In Pattaya, Thomas from Munich stood at a cash machine and realised that 1,000 euros now yielded only 37,000 baht, compared with 40,000 or more in previous years. His pension suddenly felt smaller as restaurant meals and hotel stays became noticeably more expensive. For visitors and long‑term residents alike, the strong baht meant less purchasing power and a need to rethink budgets.
Currency decouples from weak domestic economy
On the surface, the situation appeared contradictory: Thailand’s economy grew only slowly, and household debt was high, conditions that would normally weaken a currency. Yet the baht remained robust, with economists describing a decoupling from the sluggish domestic economy. The exchange rate followed global capital flows rather than local demand, leaving tourists and retirees facing a more expensive Thailand.
Gold trade and tourism fuel demand for baht
Thailand acted as a key hub for gold trading in Southeast Asia, directly benefiting when global gold prices rose. Dealers sold holdings for US dollars and converted those dollars into baht to finance their Thai operations, creating heavy demand that pushed the currency higher, especially during 2025 when gold prices were often elevated. At the same time, millions of tourists brought foreign currency back into the country, and each euro exchanged in hotels and restaurants strengthened the baht regardless of weaknesses in other sectors.
Weak US dollar and export surplus add support
Part of the baht’s apparent strength reflected a weaker US dollar, after the Federal Reserve cut interest rates in 2025 and investors moved funds into emerging markets. Thailand’s currency was viewed as a relatively stable regional option and attracted disproportionate inflows. In addition, the country exported more than it imported, from electronics and auto parts to rice, generating a steady stream of foreign currency that had to be converted into baht.
Cautious central bank and moderate inflation
The Bank of Thailand maintained a cautious stance, keeping interest rates steady for longer in 2025 while other central banks cut aggressively. This restraint signalled stability and drew investors who favoured conservative monetary policy and reasonable yields. Inflation stayed moderate compared with Europe and the United States, so the baht lost less value over time and looked more attractive to global investors and traders.
Foreign factories, China link and reserves
Foreign companies, notably Chinese electric vehicle manufacturers, continued to invest heavily in Thai production sites, requiring large volumes of baht to buy land, pay workers and source materials. Thailand’s tight economic connection to China, its most important trading partner, also played a role: when the Chinese economy picked up and the yuan stabilised, the baht often moved in parallel. Substantial foreign exchange reserves gave the central bank the ability to step in if volatility spiked, discouraging speculators from betting against the currency.
Safe haven status and pressure on exporters
In times of turbulence in neighbouring countries, investors frequently parked money in Thailand, treating the baht as a relatively safe regional haven. This status attracted additional inflows even when the global outlook was uncertain. However, the strong baht hurt Thai exporters, making rice and auto parts more expensive abroad and prompting calls from affected industries for government intervention that ran up against market forces.
Rising property prices and higher living costs
For foreigners looking to buy property, the firm currency turned condominiums in Bangkok and other cities into far costlier investments once converted into euros. While this cooled demand from some overseas buyers, volumes remained too small to shift the overall exchange rate. Early 2026 saw the euro trading at around 37 baht, far from the 40 or even 50 baht that visitors had received in earlier years, and expats faced higher living costs as local inflation combined with the stronger currency.
No quick relief for retirees and travellers
Analysts saw no short‑term trend reversal as long as gold prices stayed high and the dollar remained soft, leaving many retirees’ hopes for a return to 40 baht per euro unrealised. Travellers were advised to monitor exchange rates closely, avoid airport currency booths with high fees, use online exchange services offering fairer rates and consider opening Thai bank accounts for longer stays to cut transfer costs. Retirees living permanently in Thailand reviewed their finances, sometimes splitting savings and sending only essential amounts or moving to cheaper areas away from major tourist centres.
A more expensive, but still attractive, Thailand
Psychologically, the strong baht hit expats who had come to see Thailand as a low‑cost paradise and now felt disappointed as the country became relatively pricey compared with neighbours like Vietnam or Cambodia. Some considered relocating, though Thailand’s infrastructure, healthcare and security still weighed heavily in its favour. For pensioners such as Thomas at the ATM, the “golden years” of feeling wealthy on a Western pension were effectively over, even as Thailand remained a desirable, if no longer exceptionally cheap, place to live.