Thai Baht: Oil risks point to weakness against US Dollar - MUFG

MUFG’s Lloyd Chan notes that the Bank of Thailand (BoT) kept its policy rate at 1.00% for a fourth consecutive meeting and still expects modest Gross Domestic Product (GDP) growth in 2026 and 2027. AI-related export demand offers some support, but tourism and consumption are constrained by higher Oil prices and household debt. MUFG stays cautious on the Baht and keeps its USD/THB forecast unchanged.

Baht outlook weighed by low yields

"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.)