Thai Baht Expected to Maintain Weakness Against Dollar: BMI

The Thai baht is expected to maintain its weak trajectory against the US dollar towards the end of 2026, according to BMI, Fitch's research arm. The institution forecasts the USD/THB pair to trade around the 32.00 level by year-end. This projection is supported by macroeconomic factors and anticipated monetary policy decisions influencing the Thai economy.

BMI identifies two primary factors contributing to this anticipated weakness. Firstly, the Bank of Thailand (BoT) may prioritize economic growth, potentially cutting interest rates by 50 basis points in 2026, bringing the policy rate down to 0.75%. Another BMI report suggests the BoT will lower its policy rate from the current 1.50% to 1.00% by the end of 2026, driven by slowing growth and persistent deflationary pressures. Secondly, the Thai government's intensified regulatory measures on gold transactions are expected to diminish the positive correlation between gold prices and the baht. Starting March 1, 2026, a daily cap of 50 million baht will be imposed on gold transactions, with prior approval required for amounts exceeding this limit, affecting capital flows.

This outlook could have various implications for investors and the broader Thai economy. A weaker baht might provide a competitive edge for exporters but could also increase import costs, potentially fueling inflationary pressures. Market expectations reflect this sentiment, with Exchange Rates UK forecasting the USD/THB rate to reach 33.191 by September 2026 and 33.084 by December 2026. While the Thai baht strengthened by 2.54% over the past month, it has depreciated by 0.72% over the last 12 months, with USD/THB trading at 32.8640 as of August 20, 2026.

The potential interest rate cuts by the Bank of Thailand aim to counter slowing economic growth and persistent deflationary pressures in the country. Global economic conditions and the trajectory of the US dollar also play a significant role in the baht's performance. In this context, the BoT's monetary policy decisions, international capital flows, and Thailand's trade balance will be crucial in determining the baht's future value.

Analysts and market participants hold differing views on the future of the Thai baht. While BMI projects a weaker trend towards the end of 2026, the Thai Fiscal Policy Office (FPO) stated in November 2025 that it anticipated the baht to strengthen to 31.8 per US dollar in 2026, supported by a weaker dollar, capital inflows, and a robust current account surplus. These contrasting expectations highlight market uncertainties, with the Bank of Thailand's upcoming actions and global economic developments being decisive factors in shaping the baht's direction.