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December 2, 2019<\/span><\/p>\n The last time the Thai baht\u2019s value against the USD touched 29 baht\/US dollar was back in 2013. But the currency appreciation situation was quite different then. Today it\u2019s floating around 30 baht in its 22nd year as a floating international currency.<\/p>\n How will all that affect the Thai economy in 2020?<\/strong><\/p>\n Now the strong baht is a result of the Kingdom\u2019s huge current account surplus, caused mainly by the export-weighted economy. The surplus, valued around US$26.4 billion, stems from lower import values when compared to the value of exports, the rising inflows of tourism revenue and near-record foreign reserves of about $222 billion.<\/p>\n The impressive foreign reserves make Thailand stand out as a safe haven for investor capital, both real investment and speculation. At the same time, the US dollar is in retreat, rattled by the soft global economy, the US Federal Reserve\u2019s policy of monetary easing and the engineered trade tiff between the world\u2019s two largest economies.<\/p>\n Thailand\u2019s economic growth was 2.4% in Q3, up from Q2\u2019s 2.3% but down from Q1\u2019s 2.8% growth. And regionally, the Thai baht is the top-performing currency in Asia, gaining nearly 8% against the USD so far in 2019. All that is happening whilst Thailand\u2019s local economy remains, well, sluggish.<\/p>\n The Bank of Thailand has rolled out a range of tepid measures to blunt the baht\u2019s strengthening value\u2026 cutting the policy interest rate, cutting the short-term bond supply, and lowering the cap on the outstanding balance of non-resident accounts by a third<\/p>\n But all that work still leaves the strong baht a challenge for Thai exporters and the tourist industry. Despite the rise in costs for foreign tourists, some more than others, the country\u2019s tourist intake will still end up higher in 2019 than last year.<\/p>\n The outlook is that the baht\u2019s value is likely to keep surging next year, but analysts say the rise will be less dynamic than in the past few years.<\/p>\n Kasikorn Bank projects the baht to reach 28.70 against the dollar in 2020, based on assumptions that exports will start to rebound and the number of inbound tourists will be greater than the locals heading overseas for holidays.<\/p>\n The big \u2018unknown\u2019 is the ongoing, and unpredictable, US-China trade war. The results of this could have a big effect on some world currencies, depending on how the two economies patch together a workable plan. Or perhaps they can\u2019t and it will drag on, increasing uncertainly in a patchy world economy \u2013 neither China or the US will gain anything from that situation.<\/p>\n The two other economic ticking bombs are the US Presidential election in November 2020 and the on-again, off-again Brexit farrago which continues to bedevil attempts to keep the British economy out of recession.<\/p>\n With export shipments accounting for 70% of Thailand\u2019s GDP, all eyes will be on the Thai Government\u2019s attempts to stimulate exports and the new RCEP trade bloc, which Thailand is signed up to \u2013 the largest trading bloc in the world which should take effect from Q2 and Q3, 2020. The RCEP will involve countries covering about half of the world\u2019s population and 39% of the world\u2019s GDP. RCEP is all the ASEAN nations plus, China, Australia, Japan, New Zealand and South Korea.<\/p>\n