Thai baht poised to extend rally as tourism booms

The baht is poised to extend its rally as the Chinese reopening buoys the outlook for tourist arrivals, helping to propel Thailand's growth this year to the highest in five years, according to the nation's Finance Ministry.

The Thai currency is expected to grow by 32.50 to a US dollar this year, stronger than the 36.68 the ministry predicted in October, officials said at a briefing in Bangkok on Friday. In the last year, the baht averaged 35.07 to a dollar and fell to a 16 year low before staging a rebound with the dollar weakening and foreign tourist arrivals gathering momentum with the scrapping of pandemic-era travel curbs.

The ministry said that Thailand is projected to generate 1.2 trillion baht $36.5 billion in tourism revenue from an estimated 27.5 million travelers to the Southeast Asian nation this year. It said that it was a much higher than the 360 billion baht in receipts from 11.2 million visitors last year.

The baht has gained more than 5% this year, making it the best start to the year in 17 years. While that sounded the nation's exporters, the central bank remained unfazed and ruled out any special measures to temper the rally for now, saying the moves are reasonable and not disorderly. The ministry said that Thai exports will be hurt this year because of a stronger currency and a global economic slowdown, while slashing its growth forecast for overseas shipments to 0.4% from 2.5% in October. Imports are expected to drop 0.1% this year, compared with a prediction of 3% growth earlier in the year.

The Finance Ministry maintained its gross domestic product growth forecast of 3.8% for this year, but it cut its expansion estimate last year to 3% from 3.4% earlier in the year due to lower-than-expected exports and a slowdown in public investment. The government will report GDP on February 17.

Pornchai Thiraveja, the director of the Fiscal Policy Office, told the ministry that the buoyancy in tourism from Chinese reopening is seen as a tailwind to growth, monetary policy tightening in major economies, geopolitical conflicts and the global economic slowdown are some of the risk factors.

The ministry said the current-account surplus is $3.1 billion this year, down from $5.6 billion estimated in October. The shortfall was $19.8 billion last year, more than the $13.9 billion estimated in October, it said.

The baht fell by as much as 0.7% against the dollar on Friday and is poised for its first weekly decline this year.

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