BANGKOK, Thailand – The Thai baht has rallied ahead of other Asian currencies, supported by the return of Chinese tourists during Chinese New Year. The baht appreciated to a nine-month high of 32.65 baht per dollar on Friday, Jan. 20, just before Chinese New Year last weekend, then strengthened again, touching 32.60 baht per dollar.
The baht has risen 5.8% since the beginning of the year, while the South Korean won, Indonesian rupiah, and the Malaysian ringgit have increased by less than 3% per currency. Analysts from Malaysia’s Maybank stated that investors are buying baht due to the continuous increase in spending by tourists in Thailand and the rising current account surplus in Thailand.
Thailand is the most searched destination by Chinese internet users on Agoda and Trip.com. The University of the Thai Chamber of Commerce predicts that Chinese New Year spending will be $45 billion, and the recovery of the tourism sector during Chinese New Year has boosted investor confidence.
In December, Refinitiv reported that investors holding Thai bonds rose to 1.04 billion dollars, amid expectations that China will ease travel restrictions. The Thai government estimates that at least 5 million Chinese will visit Thailand this year, compared to 11 million in 2019.
However, the holding of Thai bonds is likely to continue to increase this year, as investors predict that the dollar will begin to weaken and the US Federal Reserve will begin to slow down on raising interest rates.
The Bank of Thailand is expected to raise interest rates another 2-3 times this year, with the Monetary Policy Committee raising interest rates by 0.25% in three past meetings, and the next meeting scheduled for Wednesday, Jan. 25.