Baht may experience significant fluctuations in 2025, KResearch says
Projects depreciation to 35.50 baht per US dollar by year-end
Kasikorn Research Centre (KResearch) forecasts that the Thai baht may experience significant fluctuations in 2025, with a projected depreciation to 35.50 baht per US dollar by year-end. Key factors to monitor include potential additional pressures stemming from US policies under President-elect Donald Trump.
At the close of 2024, the baht stood at 34.11 baht per US dollar. While this rate appears close to the year-end figure for 2023, the currency demonstrated wide fluctuations during the year, reflecting increased volatility.
Daily exchange-rate data reveal a 5.03-baht difference between the strongest point (32.15 baht per US dollar) and the weakest point (37.18 baht per US dollar) in 2024. This gap surpasses the 4.67-baht range recorded in 2023, signalling heightened uncertainty in the baht’s movements.
In 2024, the baht’s trajectory shifted in response to changes in the US Federal Reserve's monetary policy. Early in the year, the Fed maintained high interest rates to curb inflation. However, by late in the third quarter, the Fed acknowledged rates had peaked and signalled a shift toward rate cuts.
These changes prompted the baht to weaken in the first half of the year, strengthen in Q3, and depreciate again after Trump’s victory in the US presidential election.
Key Factors to Monitor in 2025
KResearch identifies three critical factors shaping the baht’s performance in 2025:
- US Economic Policies: The Federal Reserve's interest-rate direction and the impact of Trump’s policies could exert significant influence.
- China’s Economic Slowdown: Continued deceleration in China’s economy may place additional pressure on regional currencies.
- Thailand’s Economic Fundamentals: Weak fundamentals and risks of a sluggish recovery could contribute to further depreciation.
Uncertainty around US economic policies is expected to weigh heavily in 2025, particularly during the first 100 days of Trump’s presidency, as his economic team outlines trade strategies.
Escalating US-China trade tensions may also affect the yuan and other Asian currencies, impacting Thailand’s exports and delaying economic recovery.
The baht’s depreciation is likely to intensify in the second half of 2025, coinciding with the Fed nearing the conclusion of its rate-cutting cycle.
Amid these challenges, KResearch anticipates heightened market volatility, with the baht potentially depreciating to 35.50 per US dollar by year-end.
Trump’s preference for a weaker US dollar adds another layer of uncertainty, potentially increasing volatility in global currency and financial markets.
