Thai baht is too strong, impacting economy, finance minister says

[BANGKOK] Thailand’s baht is too strong and affecting its export-driven economy, the country’s finance minister said on Monday (Dec 15), as the currency reached its highest level against the dollar in more than four years.

The baht traded at 31.46 per dollar on Monday. It has strengthened by 9 per cent against the dollar so far this year to become Asia’s second-best performing currency, putting further pressure on South-east Asia’s second-largest economy, which has struggled with US tariffs, high household debt and weak consumption.

Ekniti Nitithanprapas said he had been in discussions with the central bank to manage the strength of the currency, with a need to put greater focus on addressing volatility.

“The baht’s excessive appreciation is affecting economic growth,” he told reporters. “Thailand’s economic structure cannot withstand such a strong currency as we are a net exporter,” he added.

The baht’s strength has been driven by global financial conditions, Ekniti said. “The strength of the baht is tied to global money flows, with capital inflows increasing after the US reduced interest rates.”

In a bid to tackle the currency’s strength, the central bank earlier on Monday said it had instructed financial institutions to tightened controls on forward foreign exchange transactions by gold traders to mitigate potential volatility in the baht.

The central bank is also seeking public feedback on proposed regulatory changes that would require large-scale gold traders to report transaction details to the central bank, it said.

The finance minister said that Thailand’s GDP is expected to grow by at least 2 per cent this year, supported by earlier stimulus measures aimed at reviving a sluggish economy.

He predicted at least 1 per cent annual economic growth in the final quarter of 2025. The economy expanded 2.5 per cent last year, lagging regional peers.

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The government will consult with the Election Commission to determine whether the next phase of a consumer subsidy programme can proceed, Exniti said, as a caretaker government is unable to introduce new policies after the dissolution of parliament.

“However, we reassure everyone that the government has prepared the budget and is ready,” he added.

Thailand dissolved parliament on Friday, paving the way for a snap poll as soon as February. REUTERS