The US economy is forecast to enter recession in 2023, which will cause the dollar to weaken against a basket of currencies. This is good news for the Thai baht, which is predicted to continue strengthening against the greenback, possibly reaching an average of 33.80 baht to the dollar next year.
The baht opened Wednesday at 35.14 to the US dollar, weaker from Tuesday’s close of 35.09, but still tracking the trend of other regional currencies as global economic recession fears clouded markets.
According to KGI Securities, the Thai baht would continue to strengthen against the US dollar in 2023. Foreign market factors and positive baht fundamental conditions may drive the strengthening: 1) the dollar will likely weaken against several currencies, 2) long-dated UST yields will likely decline in 1Q23 and short-dated UST yields will likely decline in 4Q23, 3) Thailand’s central bank will probably increase policy rates by 0.50%, resulting in more NRs cash inflows in 1Q23, and 4) trade and services balances is expected to register surplus.
Thai baht is forecast to drop in the range of 32.00-35.30 against the greenback, averaging 33.80, strengthening from an average of 35.02, and ending in 2022 at 34.30.