The baht is almost as good as gold

The baht is undoubtedly the strongest currency in the region. Over this year, the baht has appreciated 4.45% against the dollar while the Vietnamese dong has depreciated 8.47%.

- Chartchai Parasuk

That means that Vietnam has a 12.92% competitive edge over Thailand in international trade and tourism markets. With such a large competitive gain, it will be difficult for Thailand to compete against Vietnam.

That would be fair if Vietnam were a weak economy, and a weak economy deserves a weak currency to boost its exports. However, the opposite is true. Vietnam's GDP grew 7.96% in Q2/2025, and its exports grew 18.0%. Thai GDP grew 2.8% in the same quarter, and our exports only grew 12.2%. What is wrong with economic theories?

Not only does Vietnamese trade growth outpace Thailand, its interest rates are also substantially higher. Vietnam's benchmark interest rate is 4.5% which is three times higher than the 1.5% policy rate of the Bank of Thailand. Theory says that, under the conditions of high interest rates and buoyant export growth, capital should pour into Vietnam at an unprecedented rate, making the Vietnamese dong the strongest currency in the region. Not the Thai baht.

The first thing that enters people’s minds must be that the Bank of Thailand (BoT) is incompetent. Before blaming the BoT for not doing enough to defend the baht to support the country’s competitiveness, let me give readers these numbers. The BoT lowered interest rates four times from 2.5% to 1.5%.

Unfortunately, lowering domestic interest rates failed to deter hot money from flooding into Thailand. On the contrary, more hot money seems to have flown in. The reason is that interest rates were never an issue of concern. Speculative gain on currency appreciation is the issue.

If speculators believe the baht will be stronger by 0.5% in a week, the expected speculative gain would be 26% per annum.

If speculators leverage their bets, which is a common practice, the potential gain would increase to 52%-260%. Is this not a very tempting bet? An interest rate loss of 4-5% a year is nothing to be concerned about.