Depreciation

So far, Thai baht has been outperforming other currencies in the region while earning the title of best performer in emerging Asia in 2018, and continues to rally against the greenback. It was reported in January that the current-account surplus widened to $5 billion in December from $1.6 billion in November, which was higher than the estimate of a $3.5 billion excess. The appreciation in Thai baht gave Thai firms the opportunity to import products at a lower cost. However, things are about to change after a report of lower-than-expect Thai export in January to plunge -5.65% YoY against the forecast of -2.1% and -1.7% in December 2018. On the other hand, Thai import marks higher results at +14% YoY, resulting in a trade deficit of $4.03 billion or equivalent to ฿126 billion. Moreover, exports to China, Thailand’s No.1 trade partner, shrank 16.7% YoY as well, and faster than 8.9% drop in December. The decrease in export expresses a sign of weakened economy due to the appreciation of Thai baht. Amid weakening global demand and the remaining trade dispute between the US and China, Thai baht may return to where it belongs, surrendering the best performer title.