Strong Thai baht's largest six-year gain pressures economy, exporters, tourism

The Thai baht is experiencing its strongest annual gain in six years against the US dollar, reaching a four-year high despite Thailand's sluggish economic conditions and a 19% US tariff on Thai imports. This appreciation has been driven largely by gold flows, with Thailand's significant gold market activity and rising global gold prices fueling currency strength, alongside shifting investor sentiment and trade realignments as companies relocate investments to Thailand to avoid US tariffs on Chinese goods. However, the baht's strength is causing economic challenges; exporters face squeezed margins, and the tourism industry risks losing competitiveness as rising costs in baht terms make Thailand more expensive compared to regional rivals, leading to declines in international visitors, particularly from the US and Japan. Businesses across sectors, from agriculture to hospitality, are feeling the negative effects of the strong baht, which complicates business planning and undermines economic recovery efforts amid political instability. The currency's rise underscores a complex dynamic where external factors like US tariffs and global gold demand interplay with domestic economic vulnerabilities, presenting a significant policy challenge for Prime Minister Anutin Charnvirakul's government.