Many people pay attention to the Thai baht when traveling internationally, but in fact, the currency affects the cost of living for Thais. When the baht weakens, a country like Thailand that imports a high amount of energy must pay more, and importing machinery or goods from abroad requires more baht to exchange.
Recently, the baht weakened to its lowest level in 15 months. Thairath Money invites readers to understand the situation and the impacts that occur when the baht depreciates.
Let's begin with Kasikorn Bank explained that earlier this week, the baht hit its weakest point in over 15 months, reaching 33.868 baht per US dollar. The main cause is the strengthening US dollar amid ongoing tensions in the Middle East, including retaliatory attacks between the US and Iran around the Red Sea and Strait of Hormuz. Additionally, Brent crude oil prices surged to 100 US dollars per barrel, raising concerns about higher US inflation and increasing chances that the US Federal Reserve (Fed) will raise interest rates this year.
Meanwhile, Rung Sanguanruang, Senior Director of Global Markets Planning at Krungsri Bank, explained that the baht will not simply strengthen as in the past because Thailand still has a high current account surplus. Recently, the baht has not fluctuated much, partly because foreign capital inflows have supported it. Although there has been net selling from foreign investors, global volatility remains high, allowing Asian stock markets, including Thailand’s, to benefit from investment inflows into stocks, some of which may remain if Middle East tensions do not worsen or last longer than investors expect.
Regarding Thailand’s monetary policy, it is expected that the Monetary Policy Committee (MPC) will keep the policy interest rate at 1% for several more quarters. Even though inflation may rise above the MPC’s target range in the third to fourth quarter of 2026 due to higher food and energy prices, investors believe the MPC will use targeted measures rather than broad actions as long as inflation and economic outlooks do not significantly change.
This belief that the MPC will not raise interest rates contrasts with expectations for Japan, where interest rate hikes may gradually surpass Thailand’s policy rate, a rare occurrence.
Of course, the baht’s depreciation may put pressure on the cost of living and business costs because Thailand heavily relies on imports of oil, energy, and raw materials. This may lead to higher consumer prices and inflation domestically. Those with foreign currency debts will also face heavier burdens.
At the same time, a weaker baht benefits exporters, who can convert foreign earnings into more baht, improving their price competitiveness. Moreover, a depreciated baht may attract more foreign tourists who perceive Thailand as a cheaper destination.
In the short term next week (27–31 July 2026), Kasikorn Bank expects the baht to trade between 33.50 and 34.00 baht per US dollar. Key factors to monitor include upcoming central bank meetings—the US Federal Reserve, Bank of England (BOE), and Bank of Japan (BOJ)—as well as developments in the Middle East, foreign capital flows, and economic data from Thailand and the US, such as June’s PCE/Core PCE inflation indices and US Q2 2026 GDP.
Krungsri Bank forecasts that in the final quarter or by the end of 2026, the baht will fluctuate between 32.00 and 34.00 per US dollar. Important factors include global oil prices and ongoing conflict in the Middle East. It is expected that US President Donald Trump will not allow oil prices to remain high for long due to the approaching mid-term elections and is likely to pursue peace negotiations in the Middle East.
Source information: BAY, KBank,Bank of Thailand (BOT)
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