forex Thailand Baht Plunged Significantly in the New Year

[Anzo Lim 0]

https://www.wikifx.com/cn_en/

On January 2^nd, the Baht dropped 1.8% against US dollar to 30.226 during Asia morning trading session. This has been the largest decline of the Baht against US dollar since 2007.

In February, 1997, international speculators signed a forward contract with the Bank of Thailand and borrowed Baht by the score through mortgage of local assets. They sold off THB for USD on the foreign exchange market; near the end of May in the same year, the Baht’s exchange rate against the US dollar went from 25:1 to 26.6:1 as international speculators began to short the Baht; by the end of June, the Baht against US dollar had breached 28:1; on July 2^nd,, 1997, Thai government was forced to cancel the Baht’s exchange rate peg to USD, leading to a 30% decline of THB on the same day and a further plunge of 60% in the next 25 days.

In fact, the Baht went up nearly 9% in 2019, but the appreciating of the currency also had some undesirable effect on the economy. For instance, tourists visiting Thailand fell to less than 40 million in 2019.

The Bank of Thailand had been trying to control the increase of Baht through a series of measures including interest rate cut and easing of capital outflow policies. Therefore, the market considers that the recent plunge of Baht could be partly attributed to the central bank’s regulative measures.

Edited January 3, 2020 by Anzo Lim