Thai Baht May Weaken Against US Dollar Amid Oil Risks - MUFG

The Bank of Thailand (BoT) held its policy rate at 1.00% for the fourth meeting in succession and continues to anticipate modest Gross Domestic Product (GDP) growth in 2026 and 2027, notes MUFG’s Lloyd Chan. While AI-related demand for exports provides some support, higher oil prices and household debt weigh on tourism and consumption. Against this backdrop, MUFG retains a cautious view of the Baht, with no change to its USD/THB forecast.

Low yields weigh on the Baht outlook

"Meanwhile, the Bank of Thailand left its policy rate unchanged at 1.00% for a fourth straight meeting yesterday. This is in line with our expectations. The central bank expects Thailand’s GDP growth at 2.4% for 2026 and 2.1% for 2027."

"AI-driven demand could help support growth, with exports rising 24%yoy in September. However, the BoT noted that tourism and private consumption remain constrained by higher oil prices, elevated household debt and weak purchasing power."

"We remain cautious on the baht given the low yield, and we maintain our USD/THB forecast of 34.10 by end-2026, with risks tilted towards further THB weakness should the oil shock intensifies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)