Standard Chartered Bank (Thai) expects the baht to continue strengthening against the US dollar during the first quarter, supported by a strong rally in global gold prices.
However, the bank anticipates the Thai currency will move back toward its fundamental level in the second half of the year.
Tim Leelahaphan, Standard Chartered’s senior economist for Thailand and Vietnam, said global gold prices have surged to about US$5,100 per ounce — roughly 20% higher since the start of the year and above the bank’s earlier projections.
Looking ahead, the bank forecasts gold could climb further to around $5,150 per ounce by year-end.
Mr Tim said the sharp rise in bullion prices has been a key factor pushing the baht stronger, with the currency appreciating to around 31.08 to the dollar on Monday.
He expects the baht to begin weakening from the second quarter and continue depreciating into the second half of the year, reaching about 33 per dollar by mid-year. By the end of 2026, the currency is projected to soften further to around 33.50 per dollar, aligning more closely with Thailand’s economic fundamentals.
Standard Chartered will also be monitoring the Bank of Thailand’s efforts to curb local gold trading in US dollars via digital platforms. The central bank is due to issue a related announcement on Jan 29.
“If these measures are effective in stabilising the foreign exchange market, they could help slow the baht’s appreciation and allow it to move more in line with underlying economic conditions,” Mr Tim said.
Under this outlook, the baht would weaken from the second quarter onward, alongside a firmer US dollar supported by Federal Reserve interest rate policy and the broader US economic outlook.
On monetary policy, Mr Tim said the bank expects the Bank of Thailand’s Monetary Policy Committee to cut its benchmark rate at next month’s meeting, trimming it from 1.25% to 1% to help support Thailand’s slowing economy.
Standard Chartered forecasts Thailand’s GDP growth at 2% in 2026, with expansion of just 0.7% in the first half of the year. The subdued pace is largely attributed to delays in disbursing the 2027 fiscal budget due to domestic political factors. A new government is expected to be formed by June 2026, while budget disbursement may be postponed until January next year.
“While some political uncertainty or noise may follow the Feb 8 election, we do not expect a scenario involving unrest,” Mr Tim said.