Baht rallies to 3-year high against Singdollar

But Thailand's slowing growth, fiscal policies and political uncertainty may curb currency's rise: Experts

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The baht's rally has pushed it to hit records and outshine regional peers as Asia's second-best performing currency for 2025, sparking fears of the impact on the country's exportdriven economy as well as tourism.

The currency climbed to its highest level against the greenback in more than four years on Dec 15, trading at 31.46 per US dollar.

The baht was trading at 31.43 on Dec 19, down about 9 per cent in a one-year period and 8.3 per cent in the year to date.

It has also appreciated to its strongest levels against the Singapore dollar in nearly three years - since January 2023 - at 24.35 baht.

The baht was last trading at 24.33 on Dec 19, steadily weakening to hit a one-year decline of 4.1 per cent and a year-to-date decline of about 3 per cent.

The Thai currency's rise is fuelled by a soft US dollar and recent Federal Reserve easing, as well as a "sharp acceleration in gold prices", with which the baht has a strong positive correlation, OCBC Bank foreign exchange and rates strategist Christopher Wong told The Business Times.

Thailand reportedly has a significant pool of commercial gold traders, on top of many households investing in physical gold as part of their personal reserves.

This comes amid greater US dollar sales to buy the Thai currency, compounding the baht's strength.

The strength of the renminbi likely contributed to the baht's outperformance as well, given Thailand's high trade exposure to China, Maybank analysts said in a Dec 16 report.

They noted that the baht is the second-most-sensitive currency to renminbi moves within Asia.