Thai Baht Slides as Record April Trade Deficit Hits USD 10 Billion

Thailand’s Baht weakens despite portfolio inflows. A record USD 10.0 billion April trade deficit, driven by strong imports, pressures the Baht. Authorities warn of continued weakness if imports remain high, even with AI export growth.

Key Points

• USD/THB fell to 32.55 despite Thailand’s record April trade deficit of USD10.0bn, driven by portfolio inflows.
• Authorities cautioned that persistent strong imports could pressure the Baht, which has already depreciated 3.2% year-to-date.
• Factors like higher oil prices and strong USD demand are contributing to the Baht’s weakness, overshadowing AI-related export growth.

Record Trade Deficit Impacts Baht

Commerzbank’s FX analysts note that the USD/THB exchange rate experienced a decline to 32.55, primarily attributed to portfolio inflows. This movement occurred despite Thailand’s April trade deficit widening significantly to a record USD10.0 billion. This substantial deficit, considerably exceeding the Bloomberg consensus of USD5.3 billion, represents the seventh consecutive monthly deficit and marks the largest on record. The widening gap between imports and exports is a key concern for the Thai currency’s stability in the coming period.

Import Strength Fuels Baht Pressure

The Director-General of the Trade Policy and Strategy Office, Nantapong Chiralerspong, has issued a warning regarding sustained pressure on the Thai Baht (THB). This pressure is directly linked to the persistence of strong import levels, which are contributing to the widening trade deficit. While the government maintains a base-case forecast for export growth at 3% for the year, with potential ranges from -3% to +8%, the current import dynamics pose a significant challenge. The Baht has already seen a year-to-date depreciation of 3.2% against the US Dollar, even with growth in AI-related exports.

Global Factors and Baht Weakness

Beyond domestic trade imbalances, external factors are also exerting downward pressure on the Thai Baht. Since mid-April, the currency has demonstrated a steady weakening trend, influenced by higher global oil prices and a robust demand for the US Dollar. This combination of factors, including the record trade deficit and global economic influences, underscores the multi-faceted challenges facing the THB. Despite some positive export segments, the overall economic picture suggests continued vulnerability for the Thai currency.

Source : Thai Baht: Pressured by record deficit against US Dollar – Commerzbank

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