The baht has been the best performing Asian currency with a 1.3 percent gain since mid-August, and has held steady through the year.
Thailand has a large current account surplus partly driven by very strong tourism growth, ANZ Head of Asia Research Khoon Goh told CNBC in an email. Typically, a strong surplus supports a country’s currency because it means the nation is less dependent on foreign currencies.
“We can credit persistently high trade and current account surpluses, steady GDP growth, low inflation and, more importantly, economic policy certainty for the Thai baht’s outperformance in the recent global currency market turmoil,” Prakash Sakpal, Asia economist at Dutch bank ING, said in an email to CNBC.
Thailand is a big exporter of autos and other goods, which contributes to its account surplus. Its status as an economic center is also unlikely to be challenged by the ongoing U.S.-China trade war, Goh said on CNBC’s “Street Signs” on Wednesday. He explained that the autos sector there is geared toward exporting to the region, and not to the U.S.
Vishnu Varathan, Mizuho Bank’s head of economics and strategy, told CNBC that the country is “potentially standing to gain, from trade and supply-chain diversions” with manufacturers possibly relocating their factories there to avoid tariffs.
Additionally, Goh said, Thailand’s economic growth is looking stronger and its central bank could soon raise interest rates — which would support the currency further.
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