The baht is expected to continue strengthening after it surpassed 34 to the dollar on Tuesday. This shift follows Donald Trump’s inauguration speech, which disappointed investors and led to significant dollar selling for profit-taking, according to Kasikorn Research Center (K-Research).
During early Asian trading on Tuesday, the Thai currency reached a two-week high, trading at 33.97 to the dollar, a decrease from Monday’s close of 34.30. This movement came after Trump decided against imposing tariffs on his first day in office.
The postponement of tariff increases on imports from China and Canada, pending further impact assessments, stands in contrast to Trump’s campaign commitment to enforce tariffs of 10-20% on all imports and as high as 60% on China.
The newly inaugurated president hinted at possible policy changes in the coming days.
“Investors had accumulated the dollar based on high expectations for Trump’s trade policies, alongside forecasts that the US Federal Reserve would cut interest rates less than projected for 2025,” said Kanjana Chockpisansin, head of research in the banking and financial sector at the think tank. “However, Trump’s speech altered their perspective.”
The Chinese yuan was the strongest performer among Asian currencies against the dollar, with investors expressing relief as Trump did not mention immediate tariffs on China, the world’s second-largest economy.
China’s blue-chip CSI300 Index rose by 0.8% at the market’s opening, while an index of Chinese stocks traded in Hong Kong also increased by 1%.
Ms. Kanjana noted, “We see the baht potentially reaching 33.8 to the dollar in this cycle, but this trend could reverse if Trump references China in his upcoming policy statements.” Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), stated that no tariff war announcements are expected for now, as Trump has also pledged to establish an “External Revenue Service” to analyze trade conditions with China and determine appropriate tariff rates.
Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities, remarked that the baht’s appreciation could attract inflows that may help boost the declining Stock Exchange of Thailand. “However, this won’t happen overnight; if this trend persists, we can expect a gradual rebound in the Thai index,” he explained.